No more BSUOS income for embedded generators
If you generate electricity (renewable or fossil fuel based) and export it to the grid via your regional Distribution Network Operator (DNO) you will not be paid the BSUOS embedded benefit from 01 April 2021. This is currently worth c. £3/MWh (0.3p/kWh). It might not sound like that much but for a 1MW generator running 8,000 hours p.a. it adds up to £24,000 p.a.
What is BSUOS?
It stands for Balancing Services Use of System. It comes about because National Grid ESO have to keep the supply of electricity matched to demand every second of the day and night. To do this they have a range of contracts with generators and larger users of electricity whereby they pay them to turn up / down as necessary to balance the grid. The total cost of this is divided by the amount of electricity transmitted across the UK resulting in a £/MWh figure.
Why is it paid to embedded generators?
Currently, energy suppliers pay for it according to the net consumption of their customers i.e. electricity imported by customers minus the electricity exported by their customers. So if you export electricity you save your energy supplier some money. If you know how this works or have a good energy consultant advising you this saving is added to the p/kWh you are paid.
Why is it stopping?
After much deliberation OFGEM have concluded that this isn’t fair because larger generators pay towards BSUOS costs and it also means that the cost of BSUOS is spread over fewer kWh so electricity consumers pay more.
So, from 01 April 2021 embedded generators lose a bit more income alongside the loss of TRIAD income. This was an earlier outcome of the same review that has delivered the loss of BSUOS, memorably called the Targeted Charging Review (TCR) Significant Code Review.
A disappointing side effect of this is that a lot of embedded generators produce renewable electricity. Not a good way to encourage more of it!
Any good news?
The cost of balancing the grid won’t change, but it will be spread across more kWh so the p/kWh paid on electricity imported from the grid will go down. We don’t know by how much but with embedded generation being a fairly small proportion of total electricity generated it won’t be much.
What should you do?
Make sure your PPA pays you the going rate for the electricity itself plus all the extras of which BSUOS is only one. Or contact me on tim@nowthenenrgy.co.uk or 07971111053 and I can do it for you by negotiating a good deal for your Power Purchase Agreement (PPA).
If you are interested, this is the official communication from OFGEM
https://www.ofgem.gov.uk/system/files/docs/2020/12/cmp333_final_version_031220.pdf
