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How to use the power transformer regulatory relief tool

Published 1 July 2021

Overview

Many types of energy-related products are regulated to ensure they meet specific measures relating to their energy usage. This reduces their environmental impact, improves their energy efficiency, and cuts greenhouse gas emissions.

All products in scope must:

• have supporting technical documentation (often referred to as a technical file) to demonstrate compliance
• have a Declaration of Conformity
• display the appropriate conformity marking for the Great Britain and / or Northern Ireland markets as appropriate

In Great Britain and Northern Ireland, the Ecodesign for Energy-Related Products Regulations 2010 (as amended) are the underpinning legislation.

Tier 1 ecodesign requirements have been in place since 1 October 2019 for small, medium and large power transformers in the UK.

Tier 2 requirements regarding these small, medium and large power transformers came into force in the UK from 1 July 2021. The Tier 2 requirements have higher minimum energy performance standards (MEPS) than the former Tier 1 requirements.

All new power transformer installations must be compliant with the minimum requirements set out in Tier 2 from 1 July 2021. However if costs are found to be disproportionate for stakeholders, a Tier 1 (or lower) transformer can be installed.

We have devised a methodology to determine when regulatory relief would apply to installations of Tier 2 transformers when installation costs are found to be disproportionate.

The tool

The purpose of the tool is to help implement the disproportionate costs provision of the Ecodesign regulation. According to the regulation, “installation costs are disproportionate if the costs of the replacement of the complete substation housing the transformer and/or the acquisition or rental of additional floor space are higher than the net present value of the additional avoided electricity losses (tariffs, taxes and levies excluded) of Tier 2 compliant replacement transformer over its normally expected service life. The net present value shall be calculated based on capitalised loss values using widely accepted social discount rates”.

To determine whether any additional expenditure is justifiable, the tool compares:

• any additional building and civil costs needed to accommodate a new Tier 2 transformer
• the losses savings

The Ecodesign regulation also places the requirement to notify the market surveillance authority of regulatory relief by the manufacturer, importer, or authorised representative of the transformer by:

• providing details of the commissioner of the replacement transformer
• providing details on the station where the replacement transformer is to be installed, either by identifying location or specific installation type (technical description of pole for pole mount and station or cabin model for ground mount)

Follow the process here to use the tool to:

• check adherence with the regulations
• validate the applicability of regulatory relief
• determine what notifications need to be made

Extent of obligation

The manufacturer, authorised representative or importer that first places a regulated product on the Great Britain or Northern Ireland market, or puts it into service, is responsible for compliance of power transformers in Great Britain and Northern Ireland.

How to comply - applying for a regulatory relief

How to use the tool

Before starting this process please note:

• this tool is aimed at supporting stakeholders on the disproportionate cost and regulatory relief provisions that are set out in the ecodesign power transformer regulations. However only manufacturers, importers, or authorised representatives can submit a notification for regulatory relief
• if you are submitting a regulatory relief notification for both pole mounted and ground mounted transformers, please complete separate notifications
• the disproportionate cost calculation does not include any additional costs for procuring a Tier 2 equivalent transformer. As such, a more expensive Tier 2 transformer that is of similar size and weight as the Tier 1 equivalent would not be eligible for regulatory relief under this Ecodesign regulation
• this is a notification process and not an approval service. Once a regulatory relief has been identified via the tool please use the enquiry service to notify OPSS

The process

1. Open the regulatory relief tool.

2. Complete the ‘general info-scenarios tab’. If the installation aligns with any of the cabin-model scenarios please select the option and provide further details in the ‘additional information on chosen scenario’.

3. If it does align with any of the scenarios in the tool, regulatory relief is applicable. Save the spreadsheet for your own records and follow the next steps in the process outlined in Submission of notification to OPSS.

4. If the model does not align with any of the cabin-model scenarios, go to the ‘Losses derogation input’ tab to calculate whether regulatory relief is applicable. Instructions are available in the ‘Derogation calculation guidance’ tab.

5. Once you have determined whether you are eligible for a regulatory relief (either via the cabin-model scenarios or losses derogation input calculation), save the spreadsheet for your own records and follow the next steps in the process outlined in Submission of notification to OPSS.

Submission of notification to OPSS

Only submit a notification of regulatory relief if you are a:

• manufacturer
• importer
• authorised representative

of a power transformer.

Begin your enquiry here: OPSS enquiry service

From the dropdowns, select:

• Topic - Ecodesign of energy related product regulations
• Nature of the enquiry - Legislative/Regulation

In the enquiry box, submit the initial text ‘Notification power transformer’ followed by any details of the notification you wish to submit. Please only include:

• the outcome of this process, for example regulatory relief, via scenario - Limited space – cannot extend enclosure or acquire additional space (such as in an underground location, areas of natural beauty) or;
• regulatory relief has been identified as being applicable by using the losses derogation calculation outcome

Please keep relevant records for 10 years as OPSS may seek to retrospectively audit notifications.

Regulatory relief tool methodology

The tool calculates the net present value (NPV) of an investment, taking into consideration the expenses and losses savings associated with that investment. This tool assesses reinforcement options, and within that assessment, the model quantifies societal benefits (including losses). For the purposes of the disproportionate costs calculation, losses benefits (£) are calculated based on the reduced losses achieved by installing a more efficient Tier 2 transformer using the maximum permissible load and no-load losses allowed for each transformer Tier (that is losses benefit = Tier 1 losses – Tier 2 losses). These are then converted to £ using a set of fixed data (provided by Ofgem) such as the price of electricity (average wholesale price) and a greenhouse gas (GHG) conversion factor.

The regulatory relief tool itself has several additional tabs, the majority of which are hidden as they are not in use. The following tabs were added to the tool:

• General Info/Scenarios tab – general data gather for auditing purposes and cabin model scenarios where a regulatory relief can apply
• Derogation calculation guidance – guidance on how to use the tool
• Formulae – explains the formulae used to calculate losses
• Losses Derogation Inputs – input fields needed for calculation
• NPV Derogation results – shows the result of calculation
• Derogation Calculation – calculates NPV

Disproportionate cost modelling tool input fields

Field Name	Description
Weighted Average Cost of Capital (WACC)	Used to convert capital costs into annual costs using (DNO specific)
Capitalisation rate	Percentage of expense that is capitalised (DNO specific)
Load growth factor	A factor by which load increases annually (location specific)
Load loss factor (LLF)	A factor applied to the site of a substation to take account of the cyclic nature of the load (location and substation specific). It is used to calculate copper/variable losses (location specific)
Site demand	Demand expected on transformer
Reference year	Reference Calendar Year and Year of Installation inform the discounting calculations. If 2018/19 is inputted the NPVs the tool calculates will be discounted to 2019. It is advisable to choose the same discounting year as the price base year. Note that the price base for this tool should be 2018/19 as in the Guidance tab - the user should enter real 2018/19 costs or use the CPIH indices in the Fixed Inputs tab to convert all costs/benefits in 2018/19 prices (this is built into the tool)
Year of installation	The year the transformer is expected to be installed.
Transformer rating	Size of transformer in MVA
Copper losses	Also known as variable losses which occur due to the resistance of the transformer windings. These losses are load dependent and as such are calculated using an LLF.
Iron losses	Also known as fixed losses which occur by the alternating flux in the core of the transformer. These losses do not depend on load.
Building and civils cost	Cost incurred to install a transformer

For any further questions on the methodology of this regulatory relief tool please use the OPSS enquiry service.

The role of the Office for Product Safety and Standards (OPSS)

OPSS is the appointed Market Surveillance Authority for Ecodesign Regulations in Great Britain and Northern Ireland.