The impact of small embedded generation within the UK electricity market

Worldwide, the electricity industry is undergoing a period of sustained change. Pressures introduced by market reform and environmental imperatives have moved investment from large fossil fuel and nuclear plants to smaller distributed embedded systems. The UK market has reflected these changes by the introduction of the New Electricity Trading Arrangements (NETA) and by the publication of the Government´s recent energy policy that places heavy emphasis on renewable energy sources. The scale of renewable energy plant is smaller than that of traditional generation technologies. Its inherent flexibility offers commercial benefits for load matching within the balancing and settlement code by reconciliation of actual and predicted demand or generation positions. From the perspective of the generators and system (SO) and distribution network operators (DNO) new problems are introduced. Variable power flows can lead to increased system losses and voltage management issues. This paper outlines the economic and technical issues involved in the trading, generation, and distribution of electricity produced by such generators.