NBSM 009 Revision Session November 2010 Topics Covered

NBS-M 009 Revision Session November 2010 Topics Covered in Module • Carbon Reduction Commitment • Building Regulations – Code for Sustainable Homes • Regulation in Electricity Supply – Implications on Diversity of Supply – Connection Charges and the Triad Demand • Renewable Electricity Options – The Renewable Obligation – Feed-in Tariffs • Other Topics • The Renewable Transport Fuel Obligation • The Future: Integrated Obligations? 1

Carbon Reduction Commitment Energy Efficiency Scheme - Changes since Comprehensive Spending Review New Consultation Document – published 17 th November 2010 • Timing of phases has been changed • Phase 1 is extended for an additional year - i. e. until 2013 – 2014 • Phase 2 was originally to start in 2010 – 11 with qualification year 2010 – 2011, Footprint year 2011 - 2012 and first compliance year 2012 – 2013 Qualifying Year – Original Timescale for Phase 1 2008 2010 -11 2011 -12 2012 -13 Footprint Year with Annual Report R – Revised Timescale Phase 1 2008 2010 -11 2011 -12 2012 -13 2013 -14 R R Registration Period Compliance Year with Annual Report Surrender of Allowances 2

Carbon Reduction Commitment Energy Efficiency Scheme - Changes since Comprehensive Spending Review • Timing of phases has been changed • Revised Phase 1 2010 -11 2011 -12 2012 -13 2013 -14 Footprint Year No Report Qualifying Year R • Phase 2 is delayed by 2 years – note change to Footprint Year • Original Phase 2 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 R – Revised Timescale Phase 2 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19 R Footprint Year with Annual Report Compliance Year with Annual Report R Registration Period Surrender of Allowances 3

Carbon Reduction Commitment Energy Efficiency Scheme - Changes since Comprehensive Spending Review Subsequent Phases delayed by two years and will each last 7 years Last Phase (7) starts in 2038 and runs to for 5 years to 2043 By amalgamating Footprint and First Annual Reporting Year there will be one less reporting year in each Phase saving Removes requirement for those who fall just below threshold and do not have to register from making Information Disclosures – likely to affect ~ 15000 organisation. 4

Calculating Emissions to be included in CRC -EES MUST: remove emissions from exempted transport and onward Supply All Energy Use Emissions Relevant Emissions Total Footprint Emissions Regulated Emissions CRC Emissions MUST: remove 100% of emissions covered by CCA exempt subsidiaries CAN: remove up to 10% of emissions, but not if measured by regulated meters or covered by CCA/ EU-ETS. MUST: account for at least 90% of emissions MUST: Remove all Emissions covered by CCA and EU-ETS 5

CRC-EES Purchase of Allowances: Phase 1 During phase 1 and unlimited number of allowances will be issued, but there will be a cap on total emissions in Phase 2 and thereafter. • Allowances will be purchased in April of relevant year at a FIXED cost of £ 12 per tonne • Additional allowances can be purchased in the Secondary Market from other participants (or traders) who have a surplus. • Additional allowances can also be purchased through the “Safety Valve System” which is analogous to the “Buy Out Prices” for ROCs 6

CRC – EES: Purchase of Allowances: Banking Allowances • Allowances surplus to an organisations needs can be sold on the Secondary Market or banked against future years. • However, it is not possible to carry forward banked allowances between phases. Operation of “Safety Valve” • • • AIM: To prevent price volatility in Secondary Market (as happened in Phase 1 of EU-ETS) Participants pay a deposit equal to prevailing Safety Valve price in preceding month. Government purchases extra allowances on EU-ETS and cancels same number of EU-ETS allowances. Participants reimburse Government (or receive a rebate) for an difference between deposit price and actual price subject to a minimum price of £ 14 (revised upwards from £ 12 – February 2010) 7

CRC – EES: Purchase of Allowances: • In October’s Spending Review the UK Government announced that the CRC will be simplified to reduce the burden on businesses, with the first allowance sale for 2011/12 emissions now taking place in 2012 rather than 2011. • Revenue from the sale of CRC allowances, totalling £ 1 billion a year by 2014/15, will be used to support the public finances, including spending on the environment, rather than recycled to participants. • But what about registration payments etc. Will these still be paid? ? ? • If 5000 organisations are involved this non-recycling will imply an effective tax averaging £ 200 000 per organisation per year 8

Issues relating to self generation of electricity • CHP – An organisation can claim credits for electricity exported to other organisations. Organisation does not declare own use of electricity – An organisation cannot claim credits for exported heat as under CRC it is deemed to have zero emissions. Could cause problems for District Heating Operations • Renewable Generation – – If no ROCs (FITs) are claimed then generation is treated as case with CHP – If ROCs are claimed then electricity generated must be declared and emissions calculated as though it was grid imported – i. e. at a relatively high carbon factor – even though the generation would have a low factor – will affect UEA. – Issue of geographic vs corporate emissions

Relative LEAGUE Weighting TABLES of Phases under CRC - EES Description Year Subsequent 1 2 3 Phases Absolute Compares the current annual emissions to the 0% 45% 60% 75%% Metric average emissions over the preceding five years Early Action Metric Recognition for good energy management undertaken prior to the start of the scheme. based on two factors, equally weighted, 100 % 40% 20% Not Applicable 0% 15% 20% 25% (i) % of non-mandatorily HH metered electricity and gas emissions covered by voluntarily installed automatic metering (AMR) by 31 March 2011. Growth Metric (ii) The percentage of the emissions covered by a valid Accreditation Scheme certificates on 31 March of each compliance year. Gives recognition to those organizations which are growing but emissions are growing as a slower rate as measured per unit of output compared with those in preceding years As Phase 1 has been extended. final year of that Phase? What will be relative percentages in 10

Example of Performance Company A has emissions which decrease from 2000 to 1800 tonnes between years 1 and 2 of Phase 1 and at the same time output increases from £ 1500000 to £ 16000000. Company B has emissions which increase from 3000 to 3100 tonnes over the same period when the output increases from £ 2000000 to £ 2500000. How do the two companies compare with regards to the absolute and growth metrics? . Carbon emissions kg per £ 1 of (tonnes) Output output Company A Year 1 2000 £ 1, 500, 000 £ 1. 33 Year 2 1800 £ 1, 600, 000 £ 1. 13 % change -10. 0% -15. 6% Company B Year 1 3000 £ 2, 000 £ 1. 50 Year 2 3100 £ 2, 500, 000 £ 1. 24 % change +3. 3% -17. 3% • • Company A performs much better with regard to absolute metric Company B is better with regard to growth metric 11

Carbon Reduction Commitment – Energy Efficiency Scheme Originally a new emissions trading system which will affect ~ 20 000 organisations in the UK – now a Taxation System. • ~ 5000 organisations will fully participate in trading, • remainder will only have to report emissions but may now be exempt from reporting following recent (Nov 2010 developments). Criteria for inclusion is based on electricity use. • At least one Half-hour Meter (HHM) and • an annual consumption > 6000 MWh [ annual consumption ~ equivalent to 1500 houses] If an organisation satisfies first criterion they merely have to report. CRC split into Phases • Phase 1 (Introductory) will have a fixed price of CO 2 allowances at £ 12 per tonne • Subsequent Phases will have a cap to limit emissions and allowances will be auctioned. Recent activity suggests that auctioning for Phase 2 may be reconsidered. 12

The Carbon Reduction Commitment Periods • The CRC will be divided into phases, each of which will be 3 or more years • Within each phase there will be: • A qualification period, Organisations must assess whether or not they qualify to make an information disclosure or participate fully in CRC • A registration period, Organisations must either submit their information disclosure or register as a participant with the administrator • A footprint year, participants must monitor their total emissions from energy use. Note some emissions are excluded such as those already covered by EU-ETS etc. • A series of compliance years, runs from April to March – now starting in April 2012, participating organisations must • purchase allowances for each tonne of CO 2 they emit, based on expected energy use, • monitor their usage. 13

Financing the CRC - EES • Will there still be charges to Participants for all aspects of operation now that no money is to be recycled? Latest Consultation document does not address this question. • Original Proposed Charges Activity Participant Registration Participant Annual Subsistence £ 950 £ 1290 Fixed price sale £ 10 participation fee Safety valve charge (per £ 300 transaction) There also other charges – see CRC Documentation

Electricity Security and Diversity Weekly fuel mix in electricity Generation 11 - 17 th January 2010 70000 France Wind Nuclear 60000 Hydro Coal Pumped Storage CCGT Demand (MW) 50000 40000 30000 20000 10000 0 1 Mon Tues Wed Thurs Fri Sat Sun Notice higher proportion of coal used during day time hence a higher carbon emission factor.

Shannon – Wiener Index of Fuel Mix Diversity • Shannon – Wiener Index is a measure of diversity originally developed as a measure of biodiversity. • Higher index values occur with higher diversity. • But there is no absolute upper limit. • There is a maximum diversity index for a given number of items (e. g. species, fuels) when all items are in same proportion, but index will be higher for a greater number items. • Index is low if one item dominates Variation in maximum value of Index with number of items. The situation occurs when all items have equal proportion. 2, 5 Index 2 1, 5 1 0, 5 0 0 1 2 3 4 5 6 Items 7 8 9 10 e. g. with 6 fuel types the maximum value of index would be 1. 8. 16

Shannon – Wiener Index of Fuel Mix Diversity • The Shannon-Weiner Index (H) is defined as: H = - p. I ln p. I where pi is the proportion of the ith item. The index value increases with number of items and also the relative proportions of items 1, 2 100% 1 80% 0, 8 60% 0, 6 40% S-W Index 0, 4 20% nuclear 0, 2 0% 0 With three fuels, the maximum value reaches 1. 09 when all the fuels are in equal proportions. Index 120% In Norway where Hydro provides 99. 5%, the index for the three fuels used is just 0. 035. 17

Shannon – Wiener Index of Fuel Mix Diversity How has diversity of Electricity Generation in UK changed over last 30 years? nuclear coal oil gas renewables Percentage 1980 2010 12. 2 14. 4 74. 5 32. 0 11. 2 1. 0 0. 6 45. 7 1. 5 6. 8 Shannon – Wiener: H = - p. I ln p. I Shannon Wiener Factor has improved from 0. 815 to 1. 231 but is set to decline post 2015 with closure of coal and nuclear plant. Fraction 1980 2010 0. 122 0. 144 0. 745 0. 320 0. 112 0. 010 0. 006 0. 457 0. 015 0. 068 nuclear coal oil gas renewables Total Must evaluate fractional proportions: NOT percentages when using Shannon-Wiener H = - p. I 1980 0. 257 0. 219 0. 245 0. 031 0. 063 0. 815 ln p. I 2010 0. 279 0. 365 0. 046 0. 358 0. 183 1. 231 18

Demand Connection Charges 2010 - 2011 • Charges are made for Connections to the Transmission and distribution Grids. • For generators charge is in two parts – A charge per installed k. W which varies across 20 charge zones ranging from >+£ 20 per k. W to <-£ 5 k. W – A charge per k. W according to local substation • For demand charge is made according to the TRIAD demand as a Unit Charge The TRIAD occurs in the period 1 st November – 28 th/29 th February It is the mean of the following: 1) The maximum demand in any one half hour in the above time period. 2) The second highest demand in any one half hour provided it is separated from (1) by at least 10 days. 3) The third highest demand in any one half hour period provided that it is separated from (1) and (2) by at least 10 days 19

Demand Connection Charges 2010 - 2011 Zone N. Scotland S. Scotland Northern North West Yorkshire N Wales & Mersey East Midlands Eastern South Wales South East London Southern South Western TRIAD Demand Energy Consumed (£/k. W) (p/k. Wh) 5. 865932 0. 790954 11. 218687 1. 547861 14. 523126 1. 993796 18. 426326 2. 552189 18. 344745 2. 520788 18. 891869 2. 62578 20. 934125 2. 886193 22. 692635 3. 184194 21. 835099 3. 026211 22. 524989 3. 028765 24. 63381 3. 377343 26. 756942 3. 602492 25. 49445 3. 53718 26. 057832 3. 553243 Subject to Revision on December 1 st 2010 20

Demand Connection Charges - Example All Demand periods > 55 000 MW in the 2008 – 2009 TRIAD Date 01/12/2008 14/12/2008 15/12/2008 17/12/2008 20/12/2008 03/01/2009 04/01/2009 05/01/2009 06/01/2009 07/01/2009 10/01/2009 11/01/2009 12/01/2009 13/01/2009 02/02/2009 Period 35 35 34 35 35 35 Demand (MW) 56401 55191 55876 55008 55015 57085 56301 55954 58049 56961 57194 56430 57137 57327 55195 The TRIAD periods are shown in YELLOW. Note: there are periods when demand is higher than 15/12/2008 or 01/12/2008, but these are not separated by at least 10 days from principle TRIAD period on 06/01/2009 NOTE: TRIAD periods are almost always between period 34 and 36. 21

Demand Connection Charges - Example 2500 MW 2000 1500 1000 Process Admin 500 Before 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 Half Hour Period Typical Daily profile in December/ January for a company Note: one of the two daily peaks coincides with the peak TRIAD period 35. Explore shifting Process Time Cycle by 2 hours 22

Demand Connection Charges - Example 2500 2000 MW 1500 Before 1000 After 500 0 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 Half Hour Period Before After 30 1792 1985 31 1837 2038 32 1783 1918 33 1928 1826 34 2010 1749 35 2040 1661 36 1800 1493 After rescheduling Demand over TRIAD period reduces from 2040 to 1661 – i. e. by 379 MW If in South West, Saving in connection charge = 379 * 26. 057832 = £ 9876 23

1 Generator Connection Charges under BETTA 2 3 4 6 A 7 5 10 8 9 11 > £ 20 per k. W B £ 15 to £ 20 per k. W C £ 10 to £ 15 per k. W D £ 5 to £ 10 per k. W E £ 0 to £ 5 per k. W F - £ 5 to £ 0 per k. W G - £ 10 to -£ 5 per k. W 13 12 14 15 20 18 19 16 17 24

Generation Connection Charges 2010 - 2011 Zone No. Zone Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 North Scotland Peterhead Western Highland & Skye Central Highlands Argyll Stirlingshire South Scotland Auchencrosh Humber & Lancashire North Anglesey Dinorwig South Yorks & Midlands South Wales & Central London South East Oxon and South Coast Wessex Peninsula Zonal Tariff (£/k. W) 20. 077673 18. 708975 22. 790380 17. 633272 13. 339264 13. 436032 12. 485883 10. 909540 5. 416173 8. 792347 6. 171408 5. 497379 3. 594137 1. 564328 0. 391732 -6. 414672 0. 806124 -1. 362801 -2. 635277 -5. 871777 In addition there is a local sub-station tariff which varies from as much as £ 4. 79 per k. W at Farr in the SHETL area to as little as -£ 0. 60 per k. W at Mark Hill in Ayrshire which was built specifically for a wind farm. These reflect the capabilities of the local regions around each substation Charges subject to possible amendment on 1 st Dec 2010 25

Renewable Obligation Certificates Notifies Regulator how much generated. ROC’s issued Renewable Generator The Regulator OFGEM Notifies OFGEM of compliance -i. e. ROCs or pays FINES recycled in holders of ROCs in proportion to number held SUPPLIERS Sells Electricity with or without ROCs Supplier Buys ROCs from Trader Sells ROCs to Trader and Brokers Because of recycling, ROCs have value greater than their nominal face value 26

Example of estimation of total value of ROCs • Explain how the Renewable Obligation mechanism used in the UK works and how the value of renewable electricity may be estimated. [50%] • As company operating a 1. 5 MW wind turbine which had a load factor of 27. 63% during the period 1 st April 2007 to 31 st March 2008, estimate the total income you would have received from electricity sales using data given in Tables 1 and 2. • You may assume that any imbalance charges are compensated by embedded benefits. Table 1 Wholesale Electricity Prices 2007 – 2008 Period Apr – Jun Volume of Electricity Traded (GWh) 1780 Table 2. Other relevant data for the period 2007 – 2008 Average price (£/MWh) 25, 551, 357 MWh 22. 10 Renewable obligation 2007 – 2008 16, 406, 751 Jul – Sep 2050 27. 00 Renewable Obligation Certificates presented Oct – Dec 2420 45. 95 Buy Out Price £ 34. 30 per MWh Jan - Mar 2310 54. 95 Climatic Change Levy £ 4. 30 per MWh 27

Example of estimation of total value of ROCs Volume traded (GWh) price Volume * price Product Apr - Jun 2007 1780 £ 22. 10 39338. 0 July - Sept 2007 2050 £ 27. 00 55350. 0 Oct-Dec 2007 2420 £ 45. 95 111199. 0 Jan-Mar 2008 2310 £ 54. 95 126934. 5 Totals 8560 332821. 5 Volume Weighted Average Price Renewable Obligation ---- 25, 551, 357 MWh ROCs presented £ 38. 88 ---- 16, 406, 751 Shortfall in generation/ ROCs presented = 9084606 Value of Buy out Fund = 9084606 * £ 34. 30 = £ 311 601 985. 80 So Mark up value = 311601985/80 / 16406751 = £ 18. 92 Total value of ROC = £ 34. 30 + £ 18. 92 = £ 53. 22 Total value of Renewable Generation = £ 38. 88 + £ 53. 22 + £ 4. 30 = £ 96. 40 A 1. 5 MW wind turbine @ 27. 63% load factor generates 3630. 582 MWh in year So total income = 3630. 582 * £ 96. 40 = £ 350 003. 05 28

Renewable Obligation and Feed In Tariff Changes • Generators < 50 k. W declare once a year under RO – will be mandatory to change to FIT from April 1 st 2010 • Generators 50 k. W – 5 MW will have option of a once only change from RO to FIT by a deadline • Generators > 5 MW remain in RO • RO is extended to 2037 subject to a maximum eligibility of 20 years. • Feed In Tariff will be banded and decremented year on year and will be fixed from inception of a project. It will run for a maximum of 20 years. • A small scale generator who uses electricity on site will benefit from: – A generation FIT, – An export FIT, – A reduced import of electricity 29

Feed in Tariffs – Introduced 1 st April 2010 Energy Source Scale Anaerobic digestion ≤ 500 k. W Anaerobic digestion >500 k. W Hydro ≤ 15 k. W Hydro >15 - 100 k. W Hydro >100 k. W - 2 MW Hydro >2 k. W - 5 MW Micro-CHP***** <2 k. W Solar PV ≤ 4 k. W new Solar PV ≤ 4 k. W retrofit Solar PV >4 -10 k. W Solar PV >10 - 100 k. W Solar PV >100 k. W - 5 MW Solar PV Standalone Wind ≤ 1. 5 k. W Wind >1. 5 - 15 k. W Wind >15 - 100 k. W Wind >100 - 500 k. W Wind >500 k. W - 1. 5 MW Wind >1. 5 MW - 5 MW Existing generators transferred from RO ***** for first 20000 installations Generation Tariff (p/k. Wh) to 31/03/2012 after 01/04/12 11. 5 9 9 19. 9 17. 8 11 11 4. 5 10 10 36. 1 33. 0 41. 3 37. 8 36. 1 33. 0 31. 4 28. 7 29. 3 26. 8 34. 5 32. 6 26. 7 25. 5 24. 1 23. 0 18. 8 9. 4 4. 5 9 9 Duration (years) 20 20 20 10 25 25 25 20 20 20 to 2027 30

Feed in Tariffs – Export and Issue of Deeming Payment for tariffs will be from a levy on Utility Companies which MAY see a cumulative rise in bills of around £ 1 billion or more. In addition there will be a payment of 3 p per k. Wh for any electricity exported as opposed to consumed on premises. BUT an export meter is needed to identify this. Householder will save on imported electricity at ~ 11 – 12 p per k. Wh, so optimum financial model may not be to generate as much as possible i. e. for each unit generated and consumed it is worth 41. 3+ 11 = 52. 3 p /k. Wh for each unit exported it is worth 41. 3 + 3 = 44. 3 p/k. Wh If no export meter is fitted – a transition arrangement of deeming that 50% of generation will be exported will be made - that may well not be as attractive to consumer. http: //www. decc. gov. uk/en/content/cms/what_we_do/uk_supply/energy_mix/re newable/feedin_tariff. aspx 31

From the National Infra-Structure Plan 2010 following Comprehensive Spending Review • The Government will reform the electricity market, so that it attracts the private sector investment necessary to meet the UK’s energy security and climate change objectives, including the investment in nuclear, carbon capture and storage and renewable technology. • In addition to supporting the carbon price, this will also assess the role that revenue support mechanisms (such as Feed-In Tariffs), capacity mechanisms and emission performance standards could play. • For complete information see Section 4 of http: //www. hm-treasury. gov. uk/d/nationalinfrastructureplan 251010. pdf 32

From the National Infra-Structure Plan 2010 following Comprehensive Spending Review The Government will assess proposals against the criteria of costeffectiveness, affordability and security of supply; • to ensure that regulation of national electricity networks enables the investment needed in transmission infrastructure to connect new low-carbon generation, such as nuclear power stations and offshore and onshore wind turbines; • maintain the Feed-In-Tariffs to support investment in emerging small-scale generation technologies in electricity, saving £ 40 M by improving their efficiency, and complement this with the Renewable Heat Incentive to reward groundsource heat pumps and other renewable heat sources, while making efficiency savings of 20% by 2014 -15 compared with the previous government’s plans. For complete information see Section 4 of http: //www. hm-treasury. gov. uk/d/nationalinfrastructureplan 251010. pdf 33

From the National Infra-Structure Plan 2010 following Comprehensive Spending Review The Government will (para 4. 18): • Support investment in low carbon energy supply by: maintaining Feed-In Tariffs for small-scale generation, funded through an obligation on electricity suppliers equating to a levy of almost £ 900 million over the period to 2014 -15. At the same time, the efficiency of Feed-In Tariffs will be improved at the next formal review [2012], rebalancing them in favour of more cost effective carbon abatement technologies. Equivalent to £ 36 per household May be an issue for PV as carbon abatement using PV is around £ 700 per tonne saved way above many other strategies – see German Example For complete information see Section 4 of http: //www. hm-treasury. gov. uk/d/nationalinfrastructureplan 251010. pdf 34

Changes in Electricity Supply Regulation • The Pool • NETA / BETTA • Deregulation • Changes in Company Ownership

Scottish Nuclear Scottish Hydro Consumers Потребители Scottish Power (Атомная) * Scotland Шотландия Electricité de France Power. Gen Independents. Независимые The BNFL (Magnox) Industry. Промышленность Nuclear Electric * Eastern ** Innogy Poo l Пул England Wales Англия и Уэльс Licensed Consumers Suppliers Лицензирова нные поставщики RECs Потребители Second Tier Consumers Вторичные потребители 36

1250 MW 1250 MW 10000 MW Bid from company E £ 19. 50 per MWh Bid from company D £ 19. 40 per MWh Bid from company C £ 19. 32 per MWh 32500 MW Bid from company B £ 19. 31 per MWh Bid from company A £ 19. 20 per MWh (0. 96 R / k. Wh) Range of bids from companies in range £ 18 - £ 19 per MWh 0. 90 - 0. 95 Roubles per k. Wh 10000 MW Range of bids from companies in range £ 15 - £ 18 per MWh System Marginal Price = £ 19. 31 SMP 0. 75 - 0. 9 Roubles per k. Wh 10000 MW Range of bids from companies in range <£ 15 per MWh 0. 75 Roubles per k. Wh Companies up to and including B successful £ 1 ~ 50 Roubles 37

Новая система оптовой торговли НЕТА How well has it performed since starting on 27 th March 2001? Langeled and Balzand Pipe Lines completed UK becomes net importer of gas in 2004 Wholesale prices rose rapidly in 2004/2005, fell sharply from mid 2006, rose rapidly since mid 2007 then fell but are less stable. The weighted average wholesale price of 18 th November 2010 was £ 43. 27 although the peak price was £ 73. 60 during period 34 38

The New Electricity Trading Arrangements Новая система оптовой торговли НЕТА The Balancing Mechanism • • Балансирующий механизм To allow system to remain stable Too little electricity on the system – Generators can OFFER to INCREASE output – Suppliers can OFFER to REDUCE consumption Time OFFER FPN Time • If OFFER is agreed then Generators / Suppliers are PAID for any electricity increased / reduced under the OFFER. 40

The New Electricity Trading Arrangements Новая система оптовой торговли НЕТА The Balancing Mechanism • Балансирующий механизм Too much electricity on the system – Generators can BID to REDUCE output – Suppliers can BID to INCREASE consumption OFFER Bid Time FPN Time OFFER Bid FPN • If BID is agreed then Generators / Suppliers PAY for any reduction in generation / increase in demand under the BID. 41

The Balancing Mechanism Балансирующий механизм Generators / Suppliers may submit OFFERs or BIDs which differ for different levels of deviation from the Final Physical Notification 50 - 100 MW: £ 50 per MWh (2. 5 Roubles per k. Wh) 25 - 50 MW: £ 30 per MWh (1. 5 Roubles per k. Wh) 0 - 25 MW: £ 20 per MWh (1 Rouble per k. Wh) FPN окончательная физическая нотификация Example of Differential Offers from a Generator National Grid Company normally accepts OFFERS / BIDS which are cheapest unless System Constraints prevent this. 42

The Balancing Mechanism Балансирующий механизм What happens if System Operator has got it wrong? • OFFERs / BIDs cannot be cancelled • UNDO BID removes an OFFER and is usually less than the OFFER • UNDO OFFER removes a BID and is usually more than the BID • OFFERs / UNDO BIDs [ or BIDs / UNDO OFFERs] are submitted in pairs OFFER / UNDO BID: Pair +2 OFFER / UNDO BID: Pair +1 BID / UNDO OFFER: Pair -2 FPN 43

Building Regulations – Topics covered • Review of Building Regulations in UK – Factors affecting energy consumption and carbon emissions – Standard Assessment Procedure • Approved Document • • • AD 1 a - New domestic Properties AD 1 b – New non-domestic Properties AD 2 a - Existing domestic Properties AD 2 b - Existing non-domestic Properties Other Topics Covered • Code for Sustainable Homes • Energy Performance Certificates • Introduction in Indian Building Regulations • Introduction to Chinese Building Regulations 45

U-Value Specification with different Regulations 1976 1985 1990 1994 2000 2005 2010 U – Values W m-2 o. C-1 SAP > < 60 60 External Wall 1. 0 0. 6 0. 45 0. 35 Roof 0. 6 0. 35 0. 2 0. 16 0. 25 0. 16 Floor 1. 0 0. 6 0. 45 0. 35 0. 25 0. 45 0. 25 3. 0 2. 0* 3. 3 2. 0 25% Windows Not specified Windows as % of external walls 17% 12% Windows as % of total floor areas - - - 15% 22. 5% 46

Compliance to Building Regulations • Compliance to Building Regulations may be achieved by one of several alternative methods. – Elemental Method • Specifies maximum U-value and perhaps maximum glazed area – valid until 2002 Regs but with restrictions in 2002 – Target U-value – weighted average U-value allowed some flexibility in design – valid until 2002 Regs – SAP Rating (1994 Regs) – largely an economic assessment – Carbon Index (2002 Regs)* – Target Emission Rate (Current Regs)* – * SAP Procedure is use for these methods. SAP Rating is also calculated but it no longer a means of compliance. 47

Building Regulation: Compliance Summary Up to and including 2000 Regulations • Elemental Method – specifying U-values of fabric elements • Target U-Value – allowed some flexibility of design. • SAP Rating – an economic measure – only permitted for compliance in 1994 Regs. 2000/2002 Regulations • Carbon Index Method- a distorted Carbon Measure 2005/6 Regulations • Dwelling Emission Rating must be better than Target Emission Rating. Latter is a derivative of the Target UValue Method. 2009/10 Regulations • Retains DER and TER but expects a 25% improvement on performance over 2005/6 standards 48