the impacts of embedded benefits reforms

Case studies


Ofgem commissioned LCP to provide modelling support in their analysis of modifications CMP264/265 relating to so-called ‘embedded benefits’.

Our solution

Working in partnership with Frontier Economics, we used our Envision model to analyse the impacts on the wider system of the proposed changes, including the consumer and system cost impacts. The analysis focused on the “triad chasing” behaviour of distribution-connected generation, which, without the modifications, is incentivised to run during peak periods to reduce suppliers’ exposure to the TNUoS demand residual. By varying the level of this incentive we analysed the impacts on:

  • GB capacity mix, including changes to capacity mechanism clearing prices and capital expenditure
  • Total system and consumer costs
  • Peak and baseload wholesale prices
  • Load factor, captured price and overall profitability for a range of archetypal units
  • Carbon emissions intensity

To quantify the effect of assumptions made, we considered a range of sensitivities in key uncertainties, including:

  • Projects reneging on existing capacity mechanism contracts
  • Varying efficiency of distributed generation technologies
  • Varied capital costs assumptions for key technologies

The results

Our analysis formed part of the evidence for Ofgem’s impact assessment and was published alongside Ofgem’s final decision papers. Click here to access.

We can help our clients with a wide range of issues from whole system modelling to individual power plant and policy impact analysis.

Strategic advice aimed at maximising the benefits and minimising the risks associated with the Capacity Market and Contracts for Difference.

We advise on the optimal dispatch of assets within the wholesale market, forward planning of maintenance activities and valuation of commercial upgrades to plant.

We provide detailed forecasts of the GB and Irish power markets, using our EnVision modelling framework. This can provide both short-term and long-term forecasts of all key system metrics, from system wide to individual assets.

We work extensively in the Irish market, providing market modelling and analysis to investors, generation owners and governments.

Our understanding of market dynamics and modelling experience allow us to offer evidence-based recommendations on complex policy and regulatory issues that allow fully informed decision-making.

We combine bottom-up unit-level modelling with market and policy insights to quantify the value and understand the risk associated with any generation asset. 

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