Kaluza calls for roadmap to half-hourly settlement

A senior figure at Kaluza has urged Ofgem to publish a roadmap for the transition towards half-hourly for settlement for households, saying a lack of progress is hindering efforts to unlock the value of domestic flexibility.

Marzia Zafar, head of customer policy and strategy at the energy tech firm, said the government and industry also need to accelerate the rollout of smart meters and do a better of job of explaining their importance to customers.

Zafar was speaking to Utility Week after the Flexibility First Forum, which includes both Kaluza and its parent company Ovo, wrote to Ofgem chief executive Jonathan Brearley to highlight the potential for flexibility to limit rising energy costs.

The letter notes that National Grid Electricity System Operator expects balancing costs to jump by £500 million this year as a result of the coronavirus lockdown.

“As representatives of the energy flexibility services supply chain and cleantech community, we recognise the exceptional challenges that National Grid has faced in tackling record low energy demand and high renewable generation,” it adds.

“We appreciate the speed at which it has had to introduce new tools and services to keep the lights on during this critical period. We note that though the lockdown has prompted this measure on this occasion, such incidents will become more frequent as the energy transition progresses.”

The letter says realising the potential of flexibility could bring huge savings on balancing costs but the necessary market arrangements are “not yet in place”, in particular, market-wide half-hourly settlement.

“It’s not that Ofgem is moving slowly,” said Zafar. “Ofgem seems to fully understand the need to create a framework that incentivises flexibility, especially domestic flexibility, and there’s various consultations that are in the progress to hear from all the stakeholders.

“I guess I would say that the process is not moving fast enough. We are encouraged by Ofgem’s willingness. I think the bigger issue is who is opposing or slowing down this process for mandatory market-wide half-hourly settlement.”

She continued: “What we’re specifically asking for is a timeline and a transition plan to get us there. That will give the market players enough time to adjust as well.”

Ofgem had been due to make a final decision on the plans for the implementation of market-wide half-hourly settlement in the third quarter of 2020, but recently revealed it was reviewing the timetable due to the effects of the coronavirus pandemic. The decision had already been delayed twice already, initially from the first half of 2018 to the second half of 2019.

Zafar said the rollout of smart meters, which are now fitted in around 30 per cent of UK homes, must also be a lot faster, especially as installations have been paused for months due to the lockdown: “We need to have an honest conversation about how to increase deployment and how to get energy suppliers and the government to talk about why smart meters are so necessary.

“Within the industry, everyone acknowledges that smart meters need to be in every homes, but we need customers to also understand their importance of this infrastructure change for the energy transition.”