Smart Systems and Flexibility Plan

BEIS have today published their long awaited “Smart Systems and Flexibility Plan”. There is a summary available here and a more detailed document here.
 
Many of the actions in the plan are already being progressed and there is, therefore, little in it that comes as a surprise (see, for example, our predictions back in March).  However, a detailed government plan on smart energy from the Secretary of State, accompanied by new research money for storage, is a significant milestone in the energy transition.
 
Below we have picked out a few key topics from the three themes of the document: 

  • removing barriers to smart technologies
  • smart homes and businesses and
  • markets which work for flexibility.

Storage

Inevitably there is a strong focus on storage in the plan (with 229 mentions) including: 

  • A new definition in primary legislation of storage “as a distinct subset of generation”, to be introduced “when Parliamentary time allows”, and a modified generation licence for storage by Summer 2018.
  • Changes to the charging regime to avoid double charging of storage that Ofgem have previously announced (see our blog here).
  • A promise of new consultations from Ofgem on co-locating storage with Feed-in Tariff (FIT) and Renewables Obligation (RO) projects.
  • A strong statement that allowing Distribution Network Operators (DNOs) to own storage would ‘impede’ competitive markets and that Ofgem will act to stop this. The possibility that there will be some exceptions – which is the case DNOs have been arguing – is left to Ofgem to resolve. This is, therefore, a debate that looks set to run on for some time yet.
  • Ofgem demanding an update from all network operators on progress they have made to improve the process for connecting storage by the end of this year.

It is notable that on the same day BEIS Energy Security Team released a consultation on changes to the Capacity Market that proposes “de-rating” storage on the basis that storage projects, “may not be able to generate for the full duration of longer stress events”. This will impact on storage business models and, coming after cuts to embedded benefits, will cause concern in the market about whether BEIS and Ofgem are wholly unified on policy support for storage.

Flexibility markets

Enabling flexibility providers to provide services to the electricity network, in a simple way, is a key part of BEIS’s plan.
 
Details for how the electricity network will become more flexible and more open to third party service providers are left to National Grid and DNOs to figure out through the Energy Networks Association Open Networks project (Regen sits on the steering group). BEIS and Ofgem appear to have largely ducked the question as to where the power will lie between the overall System Operator and Distribution System Operators (DSOs) – we can expect plenty of industry debate on this in the months ahead.

National Grid’s recent System Needs and Product Strategy has already set out a much clearer picture of how the national market for flexibility services will operate. Although, as we highlighted in a blog last month, this still leaves many questions as to the scale of the market and the rules as to how it operates.
 
On the role of local flexibility platforms – a topic Regen and BEIS ran a session on at our Renewable Futures conference last year and which was a focus of our event with the University of Bath this month - BEIS have clearly decided this is in the ‘too hard’ category at the moment and put up £0.6 million for a Flexibility Markets Feasibility Studies Competition.

Small scale renewables

With the FIT currently ending in 2019, BEIS has been considering the future of support for small scale renewables. Regen has been arguing that the key decisions for small scale renewables will be around how access to the network is charged. For example Ofgem’s clear hints in its Targeted Charging Review about charging ‘behind the meter’ projects for use of the network and the potential for new models such as peer-to-peer trading. The plan gives a signal as to how thinking is evolving with suggestion that the FIT export tariff could be replaced by a “time-of-export” tariff, once smart meters are rolled out.

Electric Vehicles

In an important intervention in the market that recognises that electric vehicles could have significant (positive or negative) impacts on energy infrastructure, the government is seeking powers in the Automated and Electric Vehicles Bill to set standards for charge points that ensure they can be used for Demand Side Response (DSR) and vehicle-to-grid technologies.
 
We will be digesting the document in more detail in the coming days in order both to share our thoughts with you and to feed into our projects, including a white paper on co-location of storage and generation; work with local authorities on local energy supply models and our Renewable Futures conference on 28 November in Bath. 

Author: Merlin Hyman 

Contact: mhyman@regensw.co.uk

                            Word cloud showing the most prolific words in the document