Ofgem and the Department for Business, Energy and Industrial Strategy (BEIS) have described flexibility as ‘crucial’ to the evolution of energy networks in an open letter to the Energy Networks Association (ENA).
The letter sets out recommendations to the ENA’s Open Networks Project. In the 2018 Progress update of the 2017 Smart Systems and Flexibility Plan, BEIS and Ofgem called for the project to open up the delivery of network requirements to the market and coordinate to enable whole system network requirements to be identified and acted on efficiently.
In January, the Open Networks Project announced that a new workstream had been introduced, focusing on a whole system approach.
Whilst Ofgem and BEIS are ‘pleased’ with the proactive actions of the project, they recommend that the project progresses with delivering tangible least regrets actions and identify the pathway for future development.
Ofgem and BEIS would like to see specific actions and deliverables on facilitating coordination between flexibility markets and national balancing/ancillary markets to enable stacking of flexibility products and services and the delivery of more efficient and transparent processes for curtailment at distribution. This includes coordination and clarity on the interaction between active network management and flexibility markets.The ENA should also identify where other organisations, including Ofgem and BEIS, need to take action.
Ofgem and BEIS also expect the ENA to:
- Set out a clear plan with ambitious timelines for identifying and delivering the least regrets actions needed across off Future Worlds.
- Identify where decisions need to be made before further actions can be delivering, including where current policy or regulation is a barrier, and discuss tangible recommendations with Ofgem or BEIS for their removal.
- Set out a process for ensuring appropriate information will be available to enable decision making and that action is taken once decisions are made.
Ofgem and BEIS also detailed their own roles, particularly in regulating network charging arrangements, including considering what actions could be taken to expose users to price signals that are more reflective of the costs they impose on the system and networks.
Whether there is scope to embed signals in electricity markets will be considered, which would encourage market participants to solve network constraints with a smaller need for intervention from the system operator.
Andy Wainwright, business lead for the Whole Electricity System at National Grid ESO, said the system operator is pleased the letter supports a whole system view, with the system operating having developed its own whole system strategy that it believes will deliver “tangible results for stakeholders and significant consumer value”.
“Nevertheless we recognise there is more that can be done and are reviewing the content of the letter, along with stakeholder feedback on our July business plan submission and our work with the Open Networks project, to inform our strategy and work on whole electricity system,” Wainwright added.