The calculation methodology for the Distribution Use of System (DUoS) embedded benefit changed in April 2021.
Previously for intermittent generation technologies (such as wind, solar and hydro) the DUoS rate, which is set at different levels depending on location and grid connection voltage, was a fixed £ per MWh value, making the DUoS benefit extremely easy to calculate in your power purchase agreement (PPA).
For every MWh you exported you received a fixed amount of revenue – no matter what time of day.
From April 2021 this changed to a red/amber/green (RAG) pricing structure, essentially rewarding generators who are able to export during periods of high power demand during the week (the red band).
To show the difference between the financial years we have looked at GSP 18 (southern Scotland) below:
Red/amber/green pricing bands in southern Scotland (SP Energy Networks)
Comparison of DUoS rates each year in southern Scotland (£/MWh)
This change poses a number of questions for intermittent generators:
- Will I receive more or less revenue from DUoS payments than before?
- How can I predict what I’m going to receive?
- How can I validate and check what I’ve actually been paid in my PPA?
Will I receive more or less revenue from DUoS payments than before?
There are multiple factors that will impact the revenue you receive, such as region, connection voltage, technology and your export profile. As the DUoS rates are set independently by DNOs for each GSP, the RAG time zones are all different, so it will depend on how much you can generate and export during the red zones to maximise your revenue.
Of course, intermittent generators have little control over when they generate, so to help you understand these changes Renewable Exchange have calculated and analysed the DUoS benefit of a portfolio of 25 high voltage wind assets located across England, Wales and Scotland.
If an asset produced a completely baseload generation profile (consistent output across all half-hourly periods), then this would be equal to the DUoS rate before the methodology change. Simply put – we can benchmark what the asset earns with the new RAG pricing against what it would have earned with a flat DUoS rate.
Average DUoS prices – flat versus RAG methodology for 25 wind sites (£/MWh)
What we can take away from this is that on average wind assets benefited from the new methodology, receiving around £1.25 per MWh more than they would have if the flat rate remained in place.
We also compared the DUoS RAG output to the 2020-2021 flat average, and in 92% of cases the DUoS was higher this year than it would have been on the previous year’s rates.
Average DUoS benefit by country for 25 wind sites (£/MWh)
Further analysis looked at the DUoS benefit across the portfolio by country, which showed that the benefit received by generators in Wales and Scotland was higher than their English counterparts.
How can I predict what I’m going to receive?
Forecasting what you will receive in the future can be difficult, given the unpredictable nature of intermittent generation.
Using our PPA platform, you can either use default generation profiles which can be applied to the RAG matrix, or you can upload 3 years’ worth of HH data for each individual site to create a more detailed and bespoke forecast.
You can use this form to register for a free PPA platform account to start generating embedded benefit and PPA forecasts.
How can I validate and check what I’ve actually been paid in my PPA?
To accurately check what that you’ve received the correct DUoS amount from April 21 to March 22, you will have to do a volume weighted calculation of all 17,520 half-hourly settlement periods at the DUoS rate specified in your PPA, and compare this against the invoices from your offtaker.
Or, Renewable Exchange can validate this using our pricing engine in a heartbeat.
Be confident that you’re being paid the right amount and ensure you won’t be hit with any unexpected reconciliation bills down the line.
For more information contact [email protected].
