The way the energy market is regulated must help accelerate the transition to a smart flexible, low carbon energy system.
This is a key recommendation for trade association RenewableUK’s new Net zero will only be possible if we realise the full potential of flexibility report. A key benchmark must be set to ensure that all flexibility markets and services contribute to reaching net zero.
To incentivise further investment in low-carbon technologies, there should be increasing carbon signals in flexibility markets, and a common approach to carbon pricing across all markets to drive transition in the fossil-fuel dominated balancing markets.
Additionally, the paper calls for a fair approach to network charging for electricity generators and providers of zero or low carbon flexibility. RenewableUK notes that at the moment there are stark anomalies across the market in terms of the charges imposed by Ofgem on generators.
This is particularly evident in Scotland, where transmission charges penalise generators in remote locations despite the wealth of wind resource in these areas. The Scottish Affairs Committee called for changes to these charges to strengthen the renewables sector in September.
Greater flexibility will allow the UK to decarbonise further and faster argued RenewableUK, but the industry needs greater assurances from Ofgem that network charging reform is coming, to create a more stable long-term environment that supports the growth of flexibility in both areas of network congestion and high demand.
“Flexibility is about more than simply making the transition to clean energy faster – it also makes it cheaper and more reliable. That’s good news for consumers who have been hit hard by the massive increase in gas prices,” said RenewableUK’s senior policy analyst Yonna Vitanova, the author of the report.
“To maximise the benefits of flexible technologies and to reach net zero emissions as quickly as possible, Government policy, regulation and markets need to provide a stable and transparent platform for us to generate clean power in the most efficient way.”
Net zero will only be possible if we realise the full potential of flexibility explores how energy storage technologies can provide a high level of flexibility, especially as capacity is scaling up quickly with a pipeline of 16GW currently.
Green hydrogen – produced using excess offshore wind – will offer a further source of flexibility that can be used in a wide range of sectors including heating and transport.
There has been increasing focus on the green hydrogen sector following the government’s Hydrogen Strategy in August. Already we’ve seen a number of projects announced including from Octopus Hydrogen and Macquarie’s GIG.
Consumers should be able to participate in the growing flexibility market, with the growth in electric vehicles and interest in vehicle-to-grid technologies offering further sources of flexibility. Local energy markets are also starting to get underway, and microgrids are offering ways to manage local production and consumption better, alleviating constraints of the national grid.
Additionally renewables can provide services such as frequency response, and work is underway between the industry and National Grid to ensure more generators can enter these markets.