Generators and suppliers directly connected to the electricity transmission grid pay charges for use of the network refered to as Transmission Network use of System Charges (TNUoS). As signatories to the Balancing and Settlement Code (BSC), generators incur other charges including Balancing Services use of System charges (BSUoS) and BSCCo costs.
Smaller generators which are not connected to the transmission network but to a distribution network and are not signatories to the BSC, are not subject to these charges. These benefits from being embedded in the distribution network are known as 'embedded benefits'.
Suppliers which contract with distributed generators use the national grid less and so incur reduced charges from National Grid Company. Suppliers can pass on these savings to distributed generators (subject to negotiation).
Transmission Network Use of System charges
TNUoS charges are paid by generators to and suppliers directly connected to the electricity transmission grid to National Grid Electricity Transmission (NGET) for use of the network. The charges vary for generators and suppliers according to their location and the demand for grid usage at that location.
Balancing Services Use of System (BSUoS) charges
BSUoS charges are paid by suppliers and generators based on their energy taken from or supplied to the National Grid in each half-hour Settlement Period. These charges are paid to NGET to cover the costs of keeping the system in electrical balance and maintaining the quality and security of supply.
Transmission Losses
About 1.5 per cent of the electrical energy generated in England and Wales is lost in the transmission system.
These losses increase with the distance the electricity has to travel. Under the British Electricity Trading and Transmission Arrangements (BETTA), the cost of transmission losses is recovered by effectively scaling down the metered output of generators and scaling up the energy imported by suppliers. These losses are presently recovered on a uniform basis and divided between generators and suppliers on a 45/55 split.
Where a generator is embedded within the distribution system both the generator and the associated demand it supplies, benefit from avoiding scaling for transmission losses.
BSC Cost Recovery and Participation Charges
Elexon – the company that runs the BSC imposes a variety of charges on BSC parties to enable it to recoup its operational and development costs. Charges are also levied on BSC parties based on the metered volumes credited to their accounts as a proportion of the total energy in the trading system. See the BSC for the full list of applicable charges.
Generator Distribution Use of System (GDUoS) charges
Charging methodologies have been produced by each Distribution Network Operator (DNO) setting out the basis for charging.