The UK is lagging behind other European countries such as Finland, Norway and Sweden in making changes to increase the flexibility of the grid.
This is according to the Association for Renewable Energy and Clean Technology’s (REA) second Energy Transition Readiness Index, which was sponsored by Eaton.
It found “urgent action” is needed on flexibility in the UK , recommending actions to improve this such as the creation of a national flexibility market and coordination with suppliers to encourage uptake of time of use tariffs.
The report categorised twelve European countries from one to five, with five being the most ready for the transition. This was based on their progress against socio-political support for the energy transition, ability to exploit new technologies and business models and open market access for flexibility services.
The UK scored a three overall, giving it the same rank as France, Germany and Switzerland. Only Italy and Spain scored worse, with a two each. Finland, Norway and Sweden all came out on top with a five, while Denmark, Ireland and the Netherlands scored a four.
These higher ranking countries were deemed to have flexibility markets that better deliver fair, transparent and simple access for all participants, with investment by new flexibility providers encouraged. Additionally, these countries also had clear price signals and policies to enable flexible technologies.
The lower ranking countries, meanwhile, have flexibility markets and policies that present barriers to investment by being complex, slow to change and dominated by incumbents.
This is largely true for the UK, with the REA stating it was ranked as three because decisions are regularly delayed or changed and there is weak alignment across government, which means that policy goals are uncertain.
As such, the REA has issued six recommendations for government, including to move on from small-scale trials to a regular schedule of large-scale flexibility auctions where participants can buy flexibility. The REA said a flexibility market could spur on investment in areas such as storage and reduce costs, pointing to similar trends in renewable generation as a result of the Contracts for Difference auctions.
Additionally, the government should lay the regulations on smart charging as soon as possible. The REA noted that investors are still waiting for detail two years after the government first consulted on electric vehicle (EV) charging regulations to effectively integrate EVs into the energy system and support flexibility.
The government committed to laying out legislation later this year to ensure that private EV chargepoints meet smart charging standards in its Transport Decarbonisation Plan, with this following the 2019 EV smart charging consultation.
It should also allocate the £950 million earmarked for rapid charging infrastructure, as it is still unclear to the industry where and when this money will be spent. The delay is slowing progress to decarbonisation, the trade body said, as charging operators seek to avoid paying heavy upfront costs for grid upgrades on the strategic road network.
The government should also work with suppliers to raise awareness among billpayers of time of use tariffs while also ensuring they are simple to understand with adequate consumer protection in place.
It should simplify the regulations for energy storage so it is never double charged for using the grid. The REA said that while some rules to stop storage being charged twice have been changed, not all have.
On 2 October 2020, Ofgem announced it would be including a definition of storage in the electricity licence, meaning the same rules and regulations would apply to the technology as other forms of generation.
This followed the regulator consulting on the changes in July 2019, with many in the storage sector campaigning for a formal definition to be introduced for a number of years prior to help end double charging, where storage is charged as both a demand customer for its imports and as a generator for its exports.
Last of the REA's recommendations is that the government should ensure ongoing deployment of renewable electricity and heat by committing to more frequent, six monthly CfD auctions as well as a long-term replacement for the renewable heat incentive.
Nina Skorupska CBE, chief executive of the Association for Renewable Energy and Clean Technology, said that unless the grid keeps pace with decarbonisation and is "re-framed to become more responsive", the UK will miss out on its net zero targets and be left paying millions of pounds a year more to transition to renewables.
This REA referenced modelling from BloombergNEF in 2018 for this figure, which estimated that a scenario of high electricity penetration and low grid flexibility could cost the UK £2.5 billion more a year by 2040.
“This new analysis puts the spotlight on the consequences of not making small but vitally important adjustments to how the UK’s energy system, including its grid network, operates,” Skorupska added.