26 October 2016

The shift to an energy system with flexible generation, use and supply is gathering pace. This ultimately means that we are moving towards a more decentralised, local approach to managing our energy needs. This is because most of the potential for storage and demand flexibility is on the local networks.

We are moving away from a system that is dominated by a small number of participants – the National Grid, large thermal power plants and ‘big six’ suppliers – to a system with a multitude of players, including; the Distribution Network Operators (DNOs), distributed generators, storage and smart technology providers, community energy groups and individual households, to name a few.

A decentralised energy system, in our view, needs positive engagement from local people and organisations. It is also an opportunity for this critical part of our infrastructure to be seen alongside transport and housing as key to local economic and social development.

Local authorities like Nottingham and Bristol have set up energy supply companies. Hundreds of thousands of households, landowners and businesses have installed solar generation technology. Community energy groups who have installed tens of millions of pounds of generation projects are starting to explore the potential to own and operate storage to help balance local networks and generate income. These initiatives could be just the start.

Greater engagement is essential for the future roll out of demand side response (DSR) through mechanisms such as time of use tariffs. Evidence suggests that individual energy consumers need more than just financial incentives to change their behaviour. Other motivations, such as following a trend, making life easier or wanting to mitigate climate change, are often required. Domestic DSR is, for this reason, more challenging than commercial and industrial DSR.

There is a lot of uncertainty about how the different commercial models and technologies will develop. Plus there are a number of regulatory barriers, including barriers to local generators supplying electricity directly to local people and lack of a clear definition of storage and how it should be treated with regards to network charging. We are all eagerly waiting for Ofgem and the Department for Business Energy and Industrial Strategy (BEIS) to publish their call for evidence; ‘Towards a smart, flexible energy system’.

To explore the role of local energy in a flexible energy system, Regen is working with BEIS to run a session on the role of local and community approaches to smart energy at Renewable Futures on 29 November, which will feed into the call for evidence. The session will hear from BEIS and discuss the opportunities to balance supply and demand at a local level.

Regen is also working with European partners, through the SET-UP project, to share learning and best practice on smart grid policies with a focus on addressing the three challenges of empowering consumers, developing economic models and securing funding sources. This project runs for the next four years, so keep an eye on the project website for the latest insights.

Author: Tamar Bourne

Contact: tbourne@regensw.co.uk

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