Utility Week

6 | 6TH - 12TH SEPTEMBER 2019 | UTILITY WEEK Policy & Regulation This week ESO to be funded under totex model Regulator's decision departs from its initial proposal to use a cost-passthrough approach Ofgem has opted to fund the electricity system operator (ESO) using the same total expendi- ture (totex) model applied to other network companies, but without a mechanism for sharing overspends or underspends with consumers. The decision is a departure from its initial proposal in December to use a cost-passthrough approach, with a disallowance mechanism for demonstrably ineffi- cient costs and profit margins being determined on an activity-by-activity basis dependent on risk. The ESO is currently funded through price control for electricity transmission. But following its legal separa- tion from the rest of National Grid in April, the company will begin its first individual RIIO price control in 2021. As part of the totex model, the ESO will recoup some of its expenditure as "fast money" in the year in which it is incurred. The rest will be added to the regulatory asset value (RAV) and repaid over time as "slow money". In the meantime, the ESO will receive a return on the RAV reflecting the average cost of securing capital. The ratio of fast to slow money will be set in advance and is expected to broadly mirror the split between operational and capital expenditure in the ESO's biennial business plans. Having confirmed the funding approach, Ofgem is now consulting on the financial parameters within the model. It has requested responses by 25 September to allow a decision to be made before the ESO submits its finalised business plan in December 2019. TG ELECTRICITY Solar deployment figures from BEIS branded 'inaccurate' The Solar Trade Association (STA) has criticised "meaning- less" solar deployment statistics published by the Department for Business, Energy and Industrial Strategy (BEIS) last week. The figures confirmed there were 2,644 installations in July, with an installed capacity of 7.5MW. This is 4.5 per cent fewer installations than in July 2018 – a result of the closure of the feed-in tariff (FIT) scheme at the end of March. The increase in installed capacity of 7.5MW was 40 per cent lower than the capacity increase seen in July 2018 because 2,339 (88 per cent) of the installations were small- scale devices that have a capacity of less than 4kW. The FIT scheme, which pro- vided a guaranteed payment to owners of small-scale renewable energy installations for each kilowatt hour of electricity gen- erated, expired on 31 March. At the same time, the government withdrew the export tariff. The STA called on BEIS to implement the recommenda- tions of the Energy Data Task- force, which include introducing a generation asset registration system. It said this was the only approach that would enable truly accurate monitoring of solar photovoltaic (PV) and battery storage deployment. STA chief executive Chris Hewett said: "It is time for BEIS to either get its house in order or stop publishing these meaning- less statistics, which clearly do not capture the full picture of UK PV deployment. "We are particularly con- cerned with the large-scale com- mercial and industrial roo¦op PV market, as these systems are too large to be captured by MCS [Microgeneration Certifica- tion Scheme] registration. Our members are seeing significant growth across this space, from supermarket roo¦ops to football stadiums, and the lack of vis- ibility of this capacity is holding back energy system innovation and decarbonisation. "As the Energy Data Taskforce stated in their report earlier this year, an estimated 10 per cent of assets are not visible to the elec- tricity system operator today. "How will we know if we are on track to reach net zero if the government cannot even be cer- tain of what is connected to the grid? This clearly demonstrates the urgent need for a coordi- nated asset registration strategy, and a centralised energy data catalogue that is accessible to industry. "We reiterate our call upon government and respective agen- cies to swi¦ly implement the recommendations of the Energy Data Taskforce." Blue sky thinking: departure from initial proposal Political Agenda David Blackman "The absence of the bill creates a legal vacuum" It is scarcely believable but the turmoil at Westminster hit new heights this week. The crucial vote designed to prevent the UK from crashing out of the EU without a deal, had yet to happen as Utility Week went to press this week. But while it may be enjoin- ing business to get ready for a potential 'no deal' Brexit, key elements of the government's own preparation for this sce- nario are not yet in place. The Environment Bill, which take enforcement action in the event of breaches of EU regula- tions, including those relating to water quality. Some will see conspiracy rather than cock-up behind this delay. Critics of those pushing a hard Brexit have always sus- pected that the underlying aim of the latter is to get rid of EU regulations that hold enterprise. Utility bosses, like those in many industries, would like a bit more light on these and many other issues from Westminster. was meant to establish a post-EU framework of environmental reg- ulation, hasn't even been tabled in the House of Commons, let alone passed. The absence of the bill creates a legal vacuum surrounding the EU regulations, which have provided much of the foundation for UK environ- mental law in recent years. The government has already admitted that breaches of envi- ronmental law will go unpun- ished until the UK establishes its own green watchdog in the event of a no deal Brexit. The Office of Environmental Protection, which the dra¦ bill is designed to establish, would have the powers to review and

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