As we head into the parliamentary recess on 22 July there’s been a flurry of new announcements emerged from government. We have summarised the key points of each of them below.
Future Systems Operator
Citing potential conflict of interest issues, BEIS and Ofgem are consulting on proposals for a Future System Operator (FSO) fully independent from National Grid. The proposals follow on from the regulator’s Review of GB Energy System Operation which was published in January this year and concluded that there is a strong case for a fully independent system operator.
In the consultation, published on 20 July, BEIS says the gas and electricity operator roles are currently part of National Grid plc, which itself has significant commercial interests in the energy system. BEIS also stresses that there is no evidence that this potential conflict of interest has been acted on but says it can make it “challenging to effectively discharge existing roles and functions, as well as challenging the need to discharge the kind of potential new roles and functions needed to fulfil net zero”. This consultation closes on 28 September.
Energy digitalisation strategy
Digitising our energy system for net zero: strategy and action plan 2021 was released on the same day. The Energy Digitalisation Strategy, developed by government, Ofgem and Innovate UK in coordination with the energy sector, sets out a vision and suite of policies to digitalise the energy system.
In the mid-2020s, BEIS envisages that there will be standards and regulatory frameworks in place that ensure energy data collection and applications meet best practice and that data assets are treated as open and accessible by default while privacy and security is protected. It sees a significant step-up in the visibility of assets across the system. BEIS plans to review some of the most valuable energy datasets and data management processes to comply with Energy Data Best Practice, with a first phase complete by the end of 2021.
Smart systems and flexibility plan sets out £10bn cheaper system by 2050
Transitioning to a net zero energy system: smart systems and flexibility plan 2021 sets out a vision, analysis and suite of policies to drive a net zero energy system. The plan has four key areas of focus: support flexibility from consumers; remove barriers to flexibility on the grid; reform markets to reward flexibility; and to monitor flexibility across the system.
BEIS says that a smarter and more flexible energy system will reduce costs by up to £10bn a year by 2050. Actions the government will take include aiming to consult in 2022 on an appropriate regulatory approach for flexibility service providers and other organisations controlling load. The government will also take powers to regulate energy smart appliances “when parliamentary time allows”, to set requirements underpinned by the principles of interoperability, data privacy, grid stability and cyber security.
ECO4 proposed to bring in minimum delivery requirements
BEIS is also consulting on the next period of the Energy Company Obligation (ECO4), which will run from 2022-26, proposing a minimum delivery requirement of improving band F or G homes to reach at least band D, and band D or E homes to at least a band C.
BEIS is of the view that this approach will increase the number of and savings from the measures installed per home and reduce the need for future upgrades to those properties. BEIS is also proposing a minimum number of band E, F and G homes to be upgraded, so that the least efficient homes are not left behind. Additionally, to help identify households not on benefits but in fuel poverty, BEIS plans to expand and reform local authority flexibility so that suppliers can deliver up to 50% of their obligation via that route. BEIS proposes to bring in new rules and incentives to maximise the number of fuel poor homes targeted. This consultation closes on 31 August.
New code governance framework
The government and Ofgem are proposing a new institutional governance framework for codes, which would introduce a strategic function to set a clear direction for code reform and a code management function to implement it. The proposals are in response to the current code governance framework, which BEIS said “is complex, fragmented, and lacks incentives to innovate, despite our urgent need for a more unified, flexible, and dynamic approach”. BEIS said this new framework will allow the codes to facilitate the significant changes required to transition to a cleaner energy system, such as code consolidation and simplification. The consultation closes on 28 September.
The role of vehicle-to-X technologies
BEIS launched a call for evidence to investigate the role of vehicle-to-X (V2X) technologies in a net zero energy system, and possible barriers to their widespread use. The government has invited views and evidence on the role of V2X technologies in the energy system; barriers that might be preventing this, alongside the role of government. The call for evidence closes on 12 October.
Barriers to large-scale electricity storage
BEIS opened a call for evidence on regarding barriers to the deployment of large-scale and long-duration electricity storage, and on different approaches for supporting the deployment of these technologies. The call for evidence seeks information to help the government understand in more detail the barriers within the current market; how these might be addressed and the risks that may be associated with potential interventions to support the deployment of large-scale and long-duration electricity storage. The call for evidence closes on 28 September.
We will be covering this in our next issue of Energy Spectrum and in our weekly webinar on Tuesday 27 July at 9am. Contact Robert Buckley at firstname.lastname@example.org for a free trial to Energy Spectrum and to join the webinar.