Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, if he will make an assessment of the potential merits of removing transmission charges as an element in applications for the fourth contracts for difference auction.
National Grid Electricity System Operator collects transmission charges to recover the cost of installing and maintaining the transmission system in Great Britain and the offshore electricity network infrastructure. These include a locational element to reflect network use as part of the requirement for cost reflective network charges.
Individual Contracts for Difference bidders will determine their bid prices based on their own assessment of expected costs and revenues. The price paid to each successful bid is based on the clearing price of a competitive auction.
However, the Department does set the maximum strike price each technology can receive (the Administrative Strike Price), which takes into account a broad range of factors. This incorporates our latest view of transmission charges, estimated for pipeline projects where possible using tariffs and network charging assumptions for each location (provided by National Grid).