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Providing a flexible solution to the UK's Energy needs


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Providing a flexible solution to the UK's Energy needs


WHO WE ARE

The Flexible Generation Group (FGG) represents the owners of and investors in small scale, flexible power generation. This new and innovative group of companies owns and operates approximately 800 MW of generation on the UK electricity system. Its members include Alkane Energy, Eider Reserve Power, Oxford Capital, PeakGen Power, Prime Energy Ltd, and Welsh Power.

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Mission


Mission


 

We believe that moves by Ofgem and the “Big Six” energy companies to change longstanding regulatory provisions would limit competition, increase costs to energy consumers and threaten security of supply.

 

Changes currently proposed by Ofgem through its Embedded Benefits Review would impact the market, making it more difficult for new market entrants to compete. They have already severely undermined investor confidence.

Peaking power plants are enablers, providing a flexible solution to the UK’s energy needs, benefitting consumers and ensuring security of supply by bringing in new investment. We believe that any changes should be addressed as part of a holistic review of network charging, rather than through a piecemeal approach which is threatening the viability of small businesses like ours.   

The process through which regulatory changes are being introduced is flawed and demonstrates the undue influence of the ‘Big Six’ on regulators and policy makers. We are concerned at how large generators proposed changes to the rules for charging to transmission access through the CUSC (Connection and Use of System Code) Panel and then voted on them as the majority members. Through these governance structures they were able to convince Ofgem to proceed at the expense of consumers, who will be subject to higher energy costs and lower security of supply if these changes are implemented.

The pace and magnitude of changes to charging arrangements that Ofgem is driving is not appropriate for long-term infrastructure investments. New entrants to the energy market will now be unable to raise the capital required to get projects off the ground, cost of capital will increase across the board for new electricity generation projects and existing projects will struggle to re-finance. There is a clear perception that these changes are being driven by large, established generators to stifle competition.

 

 
 

FGG Latest

 
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About


About


 

The Flexible Generation Group (FGG) represents the owners of and investors in small scale, flexible energy generation. This new and innovative group of companies owns and operates approximately 800 MW of generation on the UK electricity system. Its members include Alkane Energy, Eider Reserve Power, Oxford Capital, PeakGen Power, Prime Energy Ltd, and Welsh Power.

 
 

What we do

At present, small embedded generators are delivering the lowest cost new generation capacity to Britain. We can efficiently provide fast and flexible services to the grid that complement government’s policy of building intermittent renewables and base load nuclear. We have been – and will continue to be – part of the UK’s energy mix and its infrastructure, benefitting consumers and ensuring security of supply.

As new entrants into the energy market, we have been good for consumers by ensuring security of supply and keeping costs down. For example, we are reducing the peak pricing of energy during the winter peaks because we are fast acting and can be up to full load from a standstill in seconds. The efficiency and responsiveness of our plants means the energy they produce is faster and cheaper.

Generating energy as close as possible to where it is used represents a significant saving to the consumer, especially during peak periods of demand. This reduces the need to invest in highly expensive transmission infrastructure and to build more pylons across AONB, green belt and other countryside.


Why we exist

Many of the traditional power stations connected to national grid are coming to the end of their lives. The peak demand supplied by the national grid is about 50,000 MW. Of the generation currently meeting this demand much is expected to close over the next few years including about 13,500 MW of coal fired generation (As former Energy Secretary, Amber Rudd announced that she wanted coal generation to close by 2025 and BEIS is currently consulting on how to achieve this). A further 8000 MW of nuclear plant appears likely to come to the end of its life in the 2020s.

Nothing would be more damaging to the transition to a low carbon economy than if we have problems with security of supply. Small-sized flexible generation can help provide that certainty. It can act as the transitional ‘parachute’ when other technologies fail - or then the wind doesn’t blow and/ or the sun doesn’t shine.

Peaking power plants provide key services to National Grid and they need plant that is extremely fast responding and flexible to be able to generate power within seconds if, for example, a plant elsewhere on the system ware to fail. It must also be highly reliable – as times of system stress it is critical that this kind of plant can be trusted to run. We are developing sites that can accommodate either gas, storage, diesel or even biodiesel generation.

Peaking power plants are impacting upstream/ generation in a comparable way to how small domestic energy suppliers have tried to break the stranglehold of vertically integrated companies/ large suppliers.


We strongly support the Government’s vision of a smarter and more flexible energy system.

Traditionally the vast majority of Britain’s electricity came from large coal, gas, oil and nuclear power stations connected to the national grid and operated by the “Big Six generators”. Current government policy is to replace this generation with low carbon generation, typically intermittent renewables like solar and wind, but also new base load nuclear generation like Hinkley Point C. These projects are generally underwritten with long term offtake agreements called CfDs. However, these projects may not be sufficient to meet Britain’s capacity needs and in 2014 the government introduced the Capacity Market where the government buys sufficient extra generation to ensure that there is enough capacity to meet peak demand and keep the lights on.

The Capacity Market is technology neutral and allows investors to maintain existing plant (via one-year rolling agreements) or develop new plant (given 15 year agreements) and is a highly competitive process. Peaking power plants compete to deliver the flexible services that the National Grid Company (the operator of the transmission system) needs, driving down the cost of these services to the benefit of customers.

The old model of large scale centralised power stations selling power to passive consumers, and being paid to be around for the tea time peak in demand, is outdated as consumers become more engaged in their energy usage. According to research by Imperial College and The Carbon Trust, there are significant savings to be had from operating a more flexible decentralised system (they suggest up to £40bn by 2050), and small-sized flexible generation assets provide "cheaper" and more "cost effective" solutions to ensure security of supply in the UK electricity market and provides an option value that will be necessary to cope with the increasing penetration of renewables.

We believe that this transition will need a range of technologies to meet the UK’s electricity demand and ensure security of supply - including demand side response, solar, storage and small-sized flexible generation. FGG member PeakGen is putting this into practice, for example, by developing storage options to complement our existing small sized flexible generators.

Our place in the UK Energy Market

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What we say


Statements from the Flexible Generation Group

What we say


Statements from the Flexible Generation Group

STATEMENT FROM THE FLEXIBLE GENERATION GROUP

20th June 2017

Response from The Flexible Generation Group further to Ofgem’s publication this morning of its final decision to change the electricity transmission charging arrangements for Embedded Generators.

Mark Draper, Chairman of the Flexible Generation Group said:

“We are disappointed that Ofgem has not listened to our fears and chosen to go ahead with their decision despite huge political uncertainty, presenting the new administration with a decision before assessing it against the broader policy background. 

“This decision poses a significant challenge to our growing industry and makes it even more difficult for new entrants into the energy market to compete with established players. Its impact will inevitably push up prices for consumers, stifle innovation and investment in the energy sector and put existing Capacity Market agreements at risk, threatening security of supply.

“We have repeatedly raised our concerns that Ofgem’s current governance structures give large energy firms undue influence over the reform process and changes in regulation. The decision makers on the Connection and Use of System Code (CUSC) panel overwhelmingly represent companies, including EdF, SSE, Scottish Power and Uniper, which will benefit from what is being proposed. It is their recommendations which Ofgem has endorsed in its ruling. Small generators and new entrants have no representation on this panel, despite requests to have their voices heard and interests represented.

“This decision - and its timing - reinforces in the minds of many that the large power generators wield excessive and undue influence within Ofgem’s regulatory processes.”

“We are now considering our options.”

www.flexgengroup.com

@FlexGenGroup

  

NOTES TO EDITORS

  • The Flexible Generation Group (FGG) represents the owners of and investors in small scale, flexible energy generation. At present, small embedded generators are delivering the lowest cost new generation capacity to Britain.
  • This new and innovative group of companies owns and operates approximately 800 MW of generation on the UK electricity system. Its members include Alkane Energy, Mercia Power Response, PeakGen Power, Prime Energy Ltd, and Welsh Power.
  • These generators can efficiently provide fast and flexible services to the grid that complement government’s policy of building intermittent renewables and base load nuclear. They have been – and will continue to be – part of the UK’s energy mix and its infrastructure, benefitting consumers and ensuring security of supply.

·FGG recognises that the current method of charging to use the National Grid is unsustainable and had hoped that Ofgem would respond to the evidence submitted and set charges to properly reflect costs. Instead, it is supporting a regime that, in 2020, is forecast to pay an annual £500 million subsidy to large generation. This will result in unnecessary construction of large power stations and power lines which customers will have to pay for.


Recent media coverage

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Big Six energy suppliers ‘gang up like the Mafia’ on smaller firms to ‘rig’ the market, campaigners claim

THE Big Six energy suppliers will be branded as “Mafioso” – for “ganging up” on smaller firms to rig the market in their favour – and increasing prices for customers.

The Flexible Generation Group – representing the smallest six electricity suppliers – believe they will be wiped out under rules that support the dominance of the major suppliers.

 
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Will government stop the Big Six stitch-up?

The Conservative Party has put energy at the heart of this general election campaign by pledging a price cap. The business secretary, Greg Clark, says he wants the market to treat people in a “fair and reasonable” manner.

This comes after the Competition and Markets Authority found people had overpaid by £1.4 billion a year for their energy and concluded that recent price hikes by companies showed there was a need for government to intervene.

 
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FGG's response to Ofgem's consultation

Ofgem’s consultation on its minded to decision to change the electricity transmission charging arrangements for Embedded Generators closed on 18 April 2017. This is FGG’s response to the consultation.

 
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Subsidy cut puts generators on standby (Times UK) 

Dozens of proposed gas and diesel-fired generators could be scrapped after Ofgem confirmed that it would almost wipe out the payments they receive for producing electricity at peak times.

The regulator argues that payments to plants producing less than 100 megawatts give them an unfair advantage against bigger rivals.

 
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Calls to relax code change appeals process (Utility Week)

Stakeholders should be allowed lodge appeals against any Ofgem decision on changes to the codes governing the use of the energy system, a former code panel member has told Utility Week.

The current arrangements, which prevent appeals being made in certain cases, mean the process fails to provide “an effective check and balance on such decisions”.

 

Calls to relax code change appeals process (Utility Week)

Stakeholders should be allowed lodge appeals against any Ofgem decision on changes to the codes governing the use of the energy system, a former code panel member has told Utility Week.

The current arrangements, which prevent appeals being made in certain cases, mean the process fails to provide “an effective check and balance on such decisions”.

 
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Developing a smarter power grid could save households up to £90 a year by 2030

The new report by leading think tank Policy Exchange, estimates that the savings associated with developing a smarter, more flexible power system could amount to up to £8 billion by 2030 – the equivalent of up to £90 per household.

The report says that in order to decarbonise the power system and accommodate the growth in wind and solar power, it is essential that we create a smarter, more flexible power system. Renewable generation capacity has increased ten fold since 2000 and now stands at 32 Gigawatts (GWs). Meanwhile, the amount of conventional generation capacity has reduced by 23GWs since 2010, and many more coal and nuclear power stations are due to close by 2025.

 
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Governing Power: Improving the administration of the energy industry in Great Britain

DECC could save hundreds of millions of pounds and promote more competition and innovation among energy companies by sweeping away swathes of energy quangos at the Spending Review.

A new report by leading think tank Policy Exchange highlights the complex network of organisations that govern energy policy, regulations and rules. The paper find there are over 30 bodies responsible for the delivery of energy policy, the management of industry codes of practice and the operation of the energy system. The cost of these organisations is estimated at over £600 million a year.

 
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Embedded Benefits review, Manufacturing energy cost concerns

In most cases, embedded benefits are not ‘benefits’, but a recognition that distribution connected generators and export from storage do not use the transmission network, and so should not pay for its use.

However, as transmission network costs have increased significantly over the last 10 years the level of benefits for not using the transmission network has risen concurrently, and some have raised concerns about whether the benefits reflect the avoided costs of distributed generation and storage.

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Membership


Membership


 

These organisations are members of the Flexible generation group

 
 
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Alkane Energy: Gas to Power

Alkane Energy is one of the UK’s fastest growing independent power generators.  The Company operates mid-sized 'gas to power' electricity plants providing both predictable and fast response capacity to the grid.  Alkane now has a total of 145MW of installed generating capacity and an electricity grid capacity of 160MW.

 

Eider Reserve Power

Eider Power Reserve (ERP) is a leading independent developer of smart, flexible power generation in the United Kingdom. In a market with growing volumes of intermittent generation, power projects are able to provide utility scale volumes of power, operating more efficiently than larger conventional generation for peaking generation.

 
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Oxford Capital

Oxford Capital back British companies with the potential to grow, create jobs and do great things. Their investments span early-stage technology businesses, small-scale energy generation projects, and the UK’s thriving creative sector.

 
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Peak GEN

PeakGen is an independent power producer with around 200 MW of operating plant (including battery storage) and an additional 200MW in the pipeline. It is one of the few players in the small-sized flexible generation space that has already delivered on 124 MW of new build capability agreements awarded in the 2014 auction and a further 20 MW from the 2015 auction.

 
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Prime Energy

Prime Energy Development Ltd is a company set up in 2014 to develop emergency standby electricity generation facilities to provide essential back up to the UK’s existing power supply network. The team at Prime Energy has extensive experience in the development of power stations and related energy infrastructure projects, in the UK and overseas.

 
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Welsh Power

Welsh Power is the leading developer and operator of gas fired reserve and peak power plant. With 250MWs of small scale generation in operation or under construction, they play an important role in balancing the UK electricity network which is increasingly reliant on renewable but intermittent energy sources.

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Enquiries


Enquiries


 

For media enquiries and further information, please contact Sarah RICHARDSON via this form 

 
 
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