Electricity networks told to start making ‘tangible changes’

The government and Ofgem have told electricity network operators to start making “tangible changes” as part of the move towards a smarter, more flexible power grid.

They issued the demand in a joint letter to the Energy Networks Association, which earlier today (17 July) revealed the responses to a consultation exploring its five proposed models for the future operation of the electricity system.

These models, dubbed “future worlds”, were developed for the ENA’s Open Networks project. Of the non-network respondents, 84 per cent selected as their preferred option World B, in which distribution network operators (DNOs) and the electricity system operator (ESO) work together to co-ordinate the dispatch of flexibility services, as the most promising option.

A majority also gave their backing to World C, in which network charging and access arrangements are reformed to provide strong cost-reflective price signals to market participants, thereby minimising the need for network operators to intervene to manage grid constraints. This model is entirely compatible with the other four.

You can read more about all five models here.

ENA chief executive David Smith said: “I am delighted with the interest we have had from so many organisations in the development of a smart network. I am also encouraged to see such strong agreement in the way we need to take this forward and deliver a low-carbon, low-cost network for the public.

He continued: “The Open Networks project is driving forward the changes to the networks that will bring about a dynamic smart grid, bringing wide reaching benefits for homes, businesses and communities. The proactive work of the networks in opening up emerging markets means the benefits of the future system are already being realised.”

In their open letter to Smith, Ofgem director for energy systems transition, Frances Warburton, and BEIS director for energy security, networks and markets, Dan Monzani, welcomed the progress being made through the Open Networks project.

They said the Future Worlds consultation had identified “critical capabilities and coordination mechanisms that network companies and system operators need to develop”. Meanwhile, the impact assessment commissioned from Baringa Partners, which helped inform the consultation, offered “insights on the trade-offs for how responsibilities for these capabilities could be allocated”.

But they said networks operators must now set out a “clear plan with ambitious timelines” for delivering the “tangible least regrets actions” that will be required across all five scenarios. This should include identifying instances where current policies or regulations could act as barrier to progress.

Coordination between flexibility and balancing markets should be enhanced to enable the stacking of services, and processes for curtailment at the distribution level should be made more transparent and efficient.

More specifically, they said network operators should:

• Consider flexibility services for all new network requirements – Network operators should roll out a “full range” of standardised flexibility products and establish whether further products will be needed in future. They should also develop “robust and transparent” processes for comparing the costs of flexibility services and network reinforcements.
• Address conflicts of interest – Networks operators should develop processes for evaluating flexibility tenders that deliver “transparent, predictable and justified” outcomes and implement measures, such as independent auditing, to provide confidence in the impartiality of their decisions.
• Support the development of flexibility platforms and markets – This should include standardising processes for the procurement of flexibility services.
• Integrate planning and forecasting across transmission and distribution.
• Improve access to data – Network operators should set out a roadmap for improving access to energy system data in timely manner, whilst taking account of the recommendations of the Energy Data Taskforce.
• Deliver key enablers for the operation of distribution networks – Network information should be made easily available in an interoperable format and monitoring and communications infrastructure should be upgraded.

Towards the end of last year, all six of the DNOs in Great Britain signed a pledge to consider flexibility services as an alternative to reinforcements when managing local network constraints, and last month, they agreed to uphold a list of six principles whilst rolling out new markets for flexibility.