Elexon has outlined its priorities for 2021/22 in its draft business plan for the year, with its new platform Kinnect at the forefront of its activities.
The cloud-based platform is designed to reduce the risk of performance of Elexon’s current systems deteriorating and being unable to meet future challenges, as well as paving the way for future market changes such as Market-wide Half Hourly Settlement (MHH Settlement). This is leading to a £12.5 million increase in the Projects and Investments part of its budget for 2021/22, it said.
Kinnect will be a flexible, scalable platform, with the modular technology it uses to enable Elexon to implement Balancing and Settlement Code (BSC) rule changes more quickly, which will provide quicker support for innovation by existing companies and new entrants.
This plays into Elexon’s other priorities, such as enabling innovative consumer-facing solutions and providing its existing services to industry leading standards, which it will achieve by delivering value for money and transparency in its operations, engaging with its stakeholders and delivering a truly customer-centric service and retaining, attracting and developing its colleagues to support stakeholders.
Elexon also pointed to its need to meet its commitments to support reforms such as the Targeted Charging Review and Project MARI (Manually Activated Reserve Initiative).
This will occur alongside its work on progressing Kinnect, having experienced delays in implementing the platform in 2020 due to a variety of reasons including having to divert resources to support Project TERRE (Trans-European Replacement Reserves Exchange) and the changes to its timeline.
Project TERRE has been subject to numerous delays, having initially been set to launch in December 2019. However, French transmission system operator RTE requested a 12 month derogation, pushing the launch date back to June 2020. National Grid ESO was later given until 27 October, with the project considered to be low priority during the initial COVID-19 lockdown. In November 2020, it outlined how it was aiming for a January 2021 launch date.
Speaking during a presentation on the business plan, Peter Stanley, director of digital operations at Elexon, explained that Elexon did manage to deliver “a significant portion” of the underlying Kinnect platform at the same time as Project TERRE, with the first phase of the Customer Solution built as part of this.
However, Elexon was unable to push further with Kinnect as its consumer project team was held up with Project TERRE “longer than anticipated” as a result of the pushback in launch dates.
“It’s not that we didn’t make progress, we just didn’t make the sort of progress we had hoped to achieve,” he said.
Elexon is planning on launching the first outward facing component of Kinnect – the Customer Solution – this month. This element will digitalise market entry processes and make processes simpler. During 2021, Elexon will further develop the Settlement Solution calculations engine as well as designing a new Insights Solution that will replace the Balancing Mechanism Reporting Service (BMRS).
This is due to it becoming “increasingly difficult” to make changes to the BMRS software platform at the pace needed, as well as difficulties in supporting customer needs for new data or functionality, Elexon said. Work to migrate BMRS to Kinnect will being in 2021/22 and is expected to be completed, with the new platform running in parallel to the existing BMRS service by the end of March 2022.
Earlier this month, Ofgem approved the BMRS as the reporting service for Great Britain following Brexit, stating it already fulfilled the data publication requirements, with Transmission System Operators required to receive and publish transparency data as part of the Transparency Regulation.
In its business plan, Elexon also outlined how it expects Ofgem to make a final decision on how and when to implement MHH Settlement this year. MHH Settlement will be an enabler of innovations such as peer-to-peer energy trading, vehicle-to-grid, time-of-use tariffs and demand side response, Elexon said, and will result in faster and more accurate Settlement.
To support Ofgem in this, Elexon is consulting on code changes to support MHH Settlement and detailed aspects of the Target Operating Model on behalf of the Code Change and Development Group, with next steps to be announced in Q2 2021.
Elexon also believes it is best placed to take on the role of Settlement programme manager, which Ofgem has previously consulted on the need for and which would oversee implementation of MHH Settlement.
It said that it would be best placed due to its expertise in Settlement and track record of delivering industry change programmes, and is to continue to make its case to Ofgem for taking on this role.
The business plan also details Elexon’s budget for 2021/22, coming in at a total of £69.1 million, an increase of £13.3 million compared to the current budget. This is split into £40.3 million for BSC regular activity and £28.8 million for projects and investments.
Also speaking during the presentation, Nigel Smith, chief financial officer of Elexon, said that 2021/22 is to be a year of “significant delivery” of components of Kinnect and that Elexon believes the budget “sets our costs at a level that is both challenging and appropriate for the year ahead”.
