Flexibility services must make ‘material contribution’ to net zero

Flexibility services must be designed and implemented in a way that ensure they make a “material contribution” to achieving net zero emissions, Renewable UK has argued.

The trade association made the recommendation in a new paper on how to build a more flexible and modern energy system which maximises the benefits of renewables for consumers.

The document, Net zero will only be possible if we realise the full potential of flexibility, said flexible technologies are vital in meeting government targets such as integrating 40GW of offshore wind, 5GW hydrogen and 18GW of interconnector capacity into the electricity system by 2030.

Renewable UK welcomed steps taken the Ofgem, National Grid Electricity System Operator (ESO) and the Department for Business, Energy and Industrial Strategy to enable new entrants, many of them renewable, to access and participate in flexibility markets.

The paper said the design and implementation of these markets should have “a benchmark of making a material contribution to achieving the net zero target.” It said this should be at the forefront of the next price control for electricity distribution and underpinned by greater coordination between distribution network operators and the ESO.

“Carbon signals have a key role to play to incentivise investment in low-carbon flexibility,” it explained. “A universal approach to carbon pricing would drive the transition from fossil-fuel dominated balancing markets to much more coordinated low-carbon flexibility services.”

Renewable UK said the sector welcomes the ESO’s commitment to make the power grid ready for zero-carbon operation by 2025 but said: “Markets should be able to evolve in order to facilitate that objective rather than sustain existing fossil-fuel providers. These services should provide the long-term investment signals in advance which are necessary to fund non-fossil fuel new build flexibility solutions.

“A good step forward would be if convertor grid forming capabilities are incentivised by NGESO through market signals to tackle stability and restoration service provision. The new system restoration standard, which is being developed by BEIS and Ofgem, will need to ensure it does not implicitly prolong fossil fuel plant lifespans and can be delivered by a net zero energy system.”

The paper also warned that the ability to harness Britain’s renewable energy potential is “reaching a limit” due to the design of the electricity transmission network. It said the current arrangements for network access and charging were designed in world dominated by centralised dispatchable fossil-fuel generation, with predictable unidirectional flows.

It said transmission charges penalise generators for being connected in remote locations: “This is based on the fact that those further out utilise more of the transmission network, which is built from one centralised location. These locational charges for transmission access block the commercial viability of renewable energy projects, creating uncertainty for efficient system network planning.”

In particular, the paper said renewable energy project in the north of Britain face greater barriers to compete and more uncertainty than those in the south.

Renewable UK noted the reforms being undertaken by Ofgem through two significant code reviews – the first looking at residual charges, for which proposals have already been finalised, and the second looking at forward-looking charges and access arrangements, which is still ongoing.

“These reforms have the potential to support the transition to a smarter, low carbon energy system. The industry would welcome greater assurance from Ofgem that the new charging arrangements will not negatively impact provision of zero/low carbon flexibility or discourage flexibility deployment in certain parts of UK.

“Locational charging signals have to provide a more stable long-term environment which supports growth in the provision of flexibility in areas of network congestion as well in areas of high demand.”

The paper additionally called for catapult funding for long-duration storage technologies – particularly those that can be deployed quickly in high constraint areas in UK.

Yonna Vitanova, RenewableUK’s senior policy analyst and author of the paper, said: “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.

“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.

“The industry strongly supports the electricity system operator’s commitment to being able to operate the national grid at net zero by 2025. This paper sets out some of the key principles to achieve this.”