Transcript Slide 1

Network Contracting with
Generators (incl. Independent
Power Producers (IPPs))
Presentation to AMEU Pricing
Committee, 10 November 2010
Juan la Grange
Purpose of this presentation
• To provide background on the contracting requirements for
generators
• To clarify the network contracting framework for generators, taking
into consideration:
• Electricity Regulation Act, License, Grid and Distribution Code
requirements (technical and contracting)
• Physical vs contractual power flows
• Multitude of expected IPP generators, majority will be <100 MW and thus
embedded (within a distributor).
• The urgency and importance of efficiently connecting generators, especially
during the next few years of expected generating capacity shortages.
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Electricity Regulation Act (ERA) (Act 4
of 2006) requirements
• “A … distribution licensee must … provide non-discriminatory access
to the … distribution system to third parties. (Section 21, subsection
(3)).”
• Interpreted, this means fair treatment by the network provider ito
• Network pricing
• Network connections
• The use of the network
• Standard legal terms and conditions in agreements
• For all generators and loads
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Types of IPP energy transactions
1. Embedded in Munic, selling to the same Munic
2. Embedded in Munic, selling to Single Buyer (SB) or
Other (eg Wheeling)
3. Embedded in Distribution, selling to the same
Distribution region
4. Embedded in Distribution, selling to SB or Other, or
wheeling
5. Transmission connected, selling to SB or Other or
wheeling
6. Embedded in a customer’s plant, selling to that plant or
own use
7. Embedded in a customer’s plant, selling to SB or Other
or wheeling
8.
International IPPs selling to International Trader
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The split between energy and network
• IPPs will typically have Power Purchase Agreements (PPAs) with
some other party for the sale of their energy.
• But they also need an agreement with the network provider, to allow
connection and the use of the network or system.
• Thus Distributors and Transmission will need network-only
agreements with IPPs.
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Distribution Code contracting
requirements
• Distribution Code requires Connection, Use of System (UoS)
agreements, for generators and loads.
• Operating agreements where required by the Network Provider
license.
• Each Licensee should have standard legal terms and conditions, so
as to comply with their licence and the ERA requirement of nondiscriminatory access.
• We need to harmonise these agreements as far as possible.
• Other processes and principles also need a framework /
standardisation:
• Use of system pricing
• Connection standards
• Quotation process
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Transmission License and Grid Code
requirements
• Licensee (NTC) shall provide non-discriminatory access to users of
the Transmission System
• This implies standard contractual terms and conditions, and thus
standard contracts
• Three types of contracts are required:
• Connection agreement (for a new or upgraded connection)
• Transmission Use of System agreement
• Operating Agreement
• An Ancillary Services agreement is possible if the parties agree.
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Grid Code requirements: contracting
Figure 3: Contracting framework for TX service-providers
Embedded
Generator
UOS
Generator
Con,UOS,Op,AS
DNSP
TNSP
Con,UOS,Op
Distributor
NTC
End-use
customer
Retailer
Con,UOS,Op,AS
System
Operator
AS
UOS,AS
Con,Op
Con – Connection contract
UOS – Use-of-system contract
Op – Operating agreement
AS – Ancillary service contract
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TNSP
Embedded
A/S provider
(Gen or
end user)
Representing
Retailer
Con,Op
End-use
customer
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Physical vs Contractual electricity flows
• Contractual electricity flows assume that the electricity flows between
the contracting parties.
• Physical flows are subject to the laws of physics, cannot be
determined second to second, and change according to system
conditions and events.
• For example, an embedded generator may sell to the Single Buyer:
• The physical flow may normally be restricted to the surrounding
distribution system and loads (unless the loads disconnect due to an
abnormal event).
• The contractual flow will be across a number of distribution systems and
the transmission system to the Single Buyer. Or viewed differently, the
transaction is only possible if the distribution and transmission systems
exist.
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Contractual arrangements
Type of IPP
Type of network contracts
Embedded in Munic, selling to same
Munic or Single Buyer or Other (eg
wheeling)
Munic network agreement including
compliance to the Grid Code PLUS Operating
Agreement with Eskom Transmission and
System Operations when PS≥50 MW or
network configuration referred by Munic,
then Transmission to decide
Embedded in Eskom Distribution,
selling to same Distribution Region or
Single Buyer or Other
Distribution network agreement; including
compliance to the Grid Code PLUS Operating
Agreement with Eskom Transmission and
System Operations when PS≥50 MW or
network configuration referred by Eskom
Distribution, then Transmission to decide
Connected to Transmission selling to
Single Buyer or Other
Transmission agreements only
Note. The types of contracts will not be influenced by the energy transactions,
it is size and Distribution / Transmission connection point that matters.
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Contractual arrangements (cont.)
Type of IPP
Type of network contracts
Embedded in a Distribution connected
customer’s plant, selling to that plant or
own use or selling to Single Buyer or
Other (eg wheeling)
Distribution network agreement;
including compliance to the Grid Code
PLUS Operating Agreement with Eskom
Transmission and System Operations
(proposed) when PS≥50 MW ; or network
configuration referred by Distribution,
then Transmission to decide
Embedded in a Transmission-connected
customer’s plant, selling to that plant or
own use or selling to SB or Other (eg
wheeling)
Transmission agreements
International IPPs
Distribution and / or Transmission
agreements depending on connection
point
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Action Plan
Action
Name
1. Request SA Grid Code change to set
out the requirements for embedded
generators contracting with
Transmission (> 50 MW)
Eskom
Transmission to
submit to the
GCAC
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Date
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