A Day in the Life of an EMR Strategy & Policy Manager

Our colleagues are at the heart of the ESO, working hard to operate a safe and reliable electricity system, whilst supporting the transition to a greener, and more efficient system for future generations.

Stefan Preuss gives us an insight into his time at the ESO and tells us what a EMR Strategy & Policy Manager does.

Can you tell us about your background before your EMR role?

I joined National Grid 10 years ago. I’ve been in various roles including electricity transmission, asset management and capital delivery.

My background was town planning, so my skills fed well into infrastructure planning. In both roles you have to think about planning requirements and working with stakeholders and local communities.

I came into the ESO three years ago working first on our Future Energy Scenarios (FES) before joining the Electricity Market Reform (EMR) team 18 months ago.

What does the EMR team do?

EMR is a government programme which started in 2010. It’s two big mechanisms – the Capacity Market and Contracts for Difference (CfD) – aim to support security of electricity supply and low carbon generation to the lowest possible cost to consumers.

Capacity Market:

This market is worth £1bn a year. We look four years ahead and hold annual auctions where generators, interconnectors and demand side response providers can bid.

Our modelling team calculates what peak demand in the winter four years ahead may be and market participants can bid to provide that capacity. Each participant will offer a certain amount of capacity for a set price chosen by them.

We then run auctions on behalf of government and decide which offers to accept based on price, because we want the lowest possible cost for consumers.

Low carbon comes into it too. BEIS have set strict carbon emission limits which have to be met by generators to allow them to enter the auction.

Our aim is to have sufficient supply at the most competitive price.

Contracts for Difference:

Within the EMR team, we also do a lot of work promoting low carbon generation through the CfD mechanism.

CFD auctions are currently held every two year, which incentivises investment in low carbon projects.

They do this by providing developers of projects with high upfront costs and long lifetimes with protection from volatile wholesale prices, whilst protecting consumers from paying increased support costs when electricity prices are high.

At the last CFD auction in 2019m 5.7GW of capacity were awarded, and 5.4GW of that was offshore wind. Following the government’s 10-point plan, we expect a lot of wind to be in the next and subsequent auctions to meet the government’s aim of 40GW offshore wind by 2030.

Can you tell us about your role as Strategy & Policy Manager within the EMR team?

I see my role as helping to shape the rule for the Capacity Market and CfD regime. My team works closely with BEIS and Ofgem to support their policy objectives and help adapt the rules to developments in markets and technologies. No single year is therefore the same and we also seek to support government and our customers when something unexpected happens.

For example, following a legal challenge, we assisted BEIS and customers during the standstill period and subsequent reinstatement of the Capacity Market.

We speak to BEIS and Ofgem on a daily basis. I lead a team of capacity market experts and when BEIS or Ofgem think about policy or rule changes, we advise them on the practical implementation and potential implications for our processes and customers.

It’s important we translate what can be complex rules into the right language for our customers and stakeholders. I see my team also as being key to working with government, regulators and our markets team to shape the longer-term future of EMR.

How has the COVID-19 pandemic impacted you?

It’s been a challenging time for us all, but one positive is that my wife and I had a child in January 2020, so with us working from home, I’ve been able to spend lots of time with them.

My family is in Germany and my wife is half Bulgarian and half Cuban, so unfortunately our relatives have not been able to see the little one.

It’s been amazing how well my team have adapted to homeworking, and I’m proud of them. Some have children and I know it’s not been easy. They continue to deliver despite the challenges and uncertainties.

We have daily calls which help. These don’t quite replace chatting and bumping into each other in the office, but it’s important to speak to each other, and not just about work.

EMR is based in our Warwick office, but we have a separate room due to the confidential information we work with. When we meet with people outside of the team, we have to move out of our area. We already felt hidden away even before the pandemic hit!

It’s not only my personal situation which has been changed by the pandemic. Our work has been altered substantially over the past ten months.

During the Coronavirus pandemic, my team has worked with BEIS and Ofgem to put in place temporary rule easements. For example, certain requirements have been waived or pushed back to help capacity market participants deal with the challenges caused by the pandemic.