Elexon has thrown its weight behind a reorganisation of both the system operator (SO) roles and code arrangements to develop a ‘holistic’ system that can support net zero.
The code manager believes that both the gas and electricity SOs should be merged, and a new ‘market operator’ set up as a single independent body managing all of the energy codes.
In a new report from Elexon, it sets out three potential routes for reforming both the operator and the codes in tandem. Doing so could “achieve consolidation and simplification of the energy codes” it argued.
By reorganising the SOs as such, faster and more co-ordinated changes could be made to the energy code rules. Currently it can take years to make major changes, and having 11 disparate codes managed by six different organisations “does not lend itself to making fast, widespread, cross-fuel changes to support net zero,” the report says.
As the energy transition continues apace, the roles of the ESO, DSOs and other market participants are changing. The SOs in particular are playing an increasingly large role in balancing the grid, and as such working with the Balancing and Settlement Codes.
With a review from Ofgem and the Government into SO governance arrangements, and an ongoing review by Ofgem and BEIS of energy codes, there is currently a “golden opportunity” to holistically reform these arrangements so that they can mutually support the net zero challenge
The scale of change needed in the energy sector to reach net zero is “vast”, said Elexon’s chief executive, Mark Bygraves. “Elexon has been advocating consolidation of the energy code arrangements for a number of years and we believe there is now a golden opportunity for holistic reform of the code and system operation arrangements.”
Elexon has suggested that these are introduced as part of a ‘big bang’ approach, similar to the introduction of the New Electricity Trading Arrangements in 2001.
“We welcome the Government’s White Paper and we want to contribute to the reform process that follows it,” added Bygraves. “We believe that the options we have set out are an ambitious, but achievable, set of changes which the Government could consider as part of the next steps.”