On Monday BEIS and Ofgem jointly launched their Upgrading our Energy System report, which represents their joint Smart Systems and Flexibility Plan, following last year’s call for evidence. It outlines a vision to give homes and businesses more control over their energy use and support disruptive, innovative new technologies in the sector. More immediately, it is an important part of the Government’s Industrial Strategy, the forthcoming Clean Growth Plan and the wider work to enable the energy system transition.
The promised benefits of this vision are substantial, with a headline-grabbing figure of £40bn of saved energy costs over decades to come. The document details 29 actions the government, Ofgem and industry will take to remove barriers to smart technologies such as storage and demand-side response (DSR), enable smart homes and businesses and improve access to energy markets for new technologies and business models.
What then are the headline actions being pursued to transition the sector from the current analogue world to the bright future offered by smart and flexible energy? Many of the measures have been called for by the industry, including:
- A legal definition for storage in primary legislation (when Parliamentary time allows)
- Double charging of network levies to be addressed through a Targeted Charging Review by energy regulator Ofgem
- Confirmation that network operators will not directly operate storage
- A new licence for storage as a subset of generation
- Clarification of how storage will affect accreditation for CfDs, the RO and FiTs, and
- A move towards giving government to set standards for smart appliances, so they can interact.
However, while these measures are to be welcomed, there is a sense here that this the start of a plan rather than a comprehensive route map, with some key areas still to be addressed. Beyond a reference to an Ofgem study, Time of Use tariffs are entirely absent here, despite being the other half of the flexibility equation, and Citizens Advice is right to place emphasis on this topic recently with some well-timed research. Half hourly settlement is also a key enabler, but the timetable for implementation is also now falling behind schedule. While battery storage is given much focus – deservedly so in light of EFR and Capacity Market auction successes – it is also somewhat overlooked that there are also a wide range of other storage technologies that could contribute.
Figure 1: Achieving a Smart Electricity System
Stakeholder groups, while welcoming the direction of thinking, also express reservations. The ADE notes that much rests on the outcome of the Targeted Charging Review, while the REA notes that the effective block on new onshore wind and solar is contrary to the fundamental nature of how the success of batteries, renewables and smart technologies are all interlinked. The Solar Trade Association has also expressed mixed support, identifying a number of barriers to realisation of the plan.
That the move to a smarter and more flexible future is now welcomed so widely across the sector is to be celebrated. However the devil will be in the detail and with many promises in the BEIS/Ofgem plan to study, research or come forward with proposals in coming months and years momentum must be maintained to realise the full potential of a smarter more flexible energy system.
We will be returning to the holistic, systemic changes needed to achieve this in future analysis (see Figure 1).
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