Upgrading our Energy System

A smarter plan for the Electricity System

On 24th July Secretary of State for Business, Energy and Industrial Strategy Greg Clark published a major new plan Upgrading our Energy System setting out the Government’s approach to the development of a smarter more flexible electricity system with the potential to help people save up to £40bn off their energy bills in the coming decades.

The plan itself is the outcome of a joint call for evidence with Ofgem published last year and can be interpreted as an effort to organise, distil and set out the strategic backdrop for a range of initiatives underway between government and industry across the power sector. Alongside further funding for demonstration projects and the creation of a Battery Institute, Clark has set out a range of “upgrades’’ to existing regulation which are designed to remove barriers and encourage innovation.

The following extract provides a neat summary of where opportunities may lie:

“the policy ambition is for providers of flexible solutions to be able to realise the true value of their flexibility. In the current context, this means maximising access to the existing range of markets (capacity, wholesale, balancing and ancillary services), alongside new markets or revenue streams (e.g. for services at distribution network level, or for new services) and being able to stack value across them wherever appropriate. In the future, it could mean more fundamental changes to market structures or signals, to make it simpler for providers to combine value streams.’’

For the future operation of the energy system, BEIS have confirmed they support the development of local flexibility services to manage local network constraints. This will mean the continued evolution of distribution network operators (DNOs) to become more active in managing their networks as a system. This mode of operation, which many DNOs are already moving, to will see the DNOs operating as distribution system operators (DSOs).

DSOs will be required to consider if storage, demand-side response (DSR), energy efficiency, use of heat networks, or other actions can deliver better value to consumers than traditional reinforcement. This could be a good opportunity for a host of sustainable energy propositions if a viable policy framework can be developed.

The full Ecuity Briefing can be found here.

For more information on this briefing please contact:

James Higgins, Partner

James.higgins@ecuity.com

0121 709 5587