Ofgem Review of Embedded Generation Benefits (CMP264 & CMP265)

Ofgem has recently raised concerns regarding the electricity transmission network charging arrangements for smaller Embedded Generators (EGs), including exemptions and payments collectively known as Embedded Benefits.

According to Ofgem, if a supplier uses sub-100MW (smaller) EGs to decrease the transmission use of system charges and for smaller EGs to be paid to assist others to avoid them, was, in fact, a distortion. In July and December 2016, Ofgem indicated that TNUoS Demand Residual (TDR) was a significant cause for concern. As a result, the industry introduced CMP264 and CMP265 as a means to address these distortions.

In June 2017, Ofgem confirmed their decision that the level of TDR payments to smaller EGs should be reduced to the level of Grid Supply Point (GSP) costs. Furthermore, the introduction of the new arrangement should be phased in over three years, from 2018 to 2020.