Background
LCP has worked with clients such as Energy UK to analyse the impacts of different gas network charging options on the GB gas network.
Our solution
Modelling GB’s gas supply presents different challenges to the electricity market due to the different underlying drivers of market behaviour. As opposed to the dispatch algorithms used in modelling the electricity market, LCP’s forecasting in this area has instead focused on creating price sensitivity curves for gas supply points.
This approach has been employed to examine the potential impacts of Ofgem’s proposed changes to gas transmission charging which have included:
- The replacement of the current Long Range Marginal Cost (LRMC) methodology with a Capacity Weighted Distance (CWD) approach
- The update or removal of the NTS Optional Capacity Charge (“Shorthaul” tariff)
The results
Our analysis has considered the likely impacts in key areas such as wholesale prices, consumer costs, changes in flows at individual entry points and storage behaviour. We have also assessed the risks to the availability and utilisation of interruptible exit capacity for specified exit points.
Additionally, our gas network modelling can be used in conjunction with our power-market model (EnVision) to understand the implications on the power market as a result of changes in the marginal running costs for gas-fired power stations.
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