Electricity network operators commit to creating new energy markets to help deliver £17bn smart energy opportunity


  Posted by: electrical-poster      8th December 2017

A commitment made by electricity network companies on the running of Great Britain’s smart grid could help deliver £17bn back to the economy by 2050, the companies have said.

Electricity network companies operating across England, Scotland and Wales are announcing a joint commitment to “create new markets to enable flexibility services that will compete alongside traditional investment”. Network operators in Northern Ireland and the Republic of Ireland are also providing an indication of broad intent to use the services in the future.

The move will help reduce the cost of running the network to customers and provide new opportunities for businesses and communities to offer flexibility services to local network operators. It is published in the “Opening Markets for Network Flexibility” report for the Open Networks Project.

The pan-industry Open Networks Project is a “key initiative” for addressing the changes that need to be made to energy networks to create a more flexible energy system, as recently set out in Ofgem and the Department for Business, Energy & Industrial Strategy’s Smart Systems and Flexibility Plan.

Flexibility services include businesses and consumers increasing electricity generation, or choosing to adjust their electricity consumption up or down to support balancing of supply and demand in real time in response to a financial incentive provided to them by an agreement with a network operator. They include:

  • Selling power generated by new technologies such as solar panels and wind turbines.
  • Businesses adjusting their electricity use at the times of day when they least need it.
  • Using new smart energy efficiency technology to adjust consumption remotely and buying electricity from battery storage.

Research conducted by Imperial College London and The Carbon Trust for the Smart Systems and Flexibility Plan shows that the UK could deliver £17-40bn of benefits across the energy system by 2050. A smarter, more flexible energy system, with the use of flexibility markets, will deliver these benefits.

The report also states that network companies will also “rapidly increase the use of competitive markets” over the next 6 years, under the current RIIO ED1 price control period.

The roles and responsibilities of network companies are changing as they respond to the deployment of new types of smart and renewable energy technology connected at a local rather than a national level. These changes mean that Distribution Network Operators are moving from their traditional role of simply distributing electricity to playing a more active role managing supply and demand locally.

At the same time the role of National Grid as System Operator is also changing to facilitate the transition to a more decentralised, low carbon system. The Open Networks Project will describe the new roles and responsibilities required to support the transition to a smarter, more efficient electricity network.

David Smith, CEO of Energy Networks Association, comments: “Our energy networks have a great track record of delivering for households, businesses and communities when it comes to network reliability, reducing costs to the bill payer and driving forward new investment in our infrastructure.

“Today’s announcement builds on that, as our energy market rapidly changes. It is about creating a system that creates a platform for a whole range of new energy technologies and services that not only allows network companies to manage the system more effectively but give other organisations the chance to benefit from that, whether that be directly or indirectly.”

Richard Harrington MP, Minister for Energy & Industry, said: “Upgrading our energy system to make sure it is fit for the future is a key part of our Industrial Strategy and the Smart Systems Plan published in July sets out what we will do to make that happen.

“A smarter, more flexible energy system will create opportunities to reduce energy costs, increase productivity and put UK businesses in a leading position to export smart energy technology and services to the rest of the world.”

Dermot Nolan, Chief Executive of Ofgem, said: “We welcome today’s commitment by network companies to create new markets for flexibility services following the joint publication of the Smart Systems and Flexibility Plan by Ofgem and the Government in July.

“Flexibility is key to the transition to a smarter energy system which saves consumers money on their energy bills. We will work with the energy industry, Government and consumer groups to make sure that these new services are delivered in whatever way works best for consumers.”

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