Networks urged to streamline storage connection process

Ofgem and government have called on the energy networks to “streamline the process” by which storage connects to the grid.

Ofgem and the Department for Business, Energy and Industrial Strategy (BEIS) have published a call for evidence on the future of smart energy systems.

They said there is significant demand to develop electricity storage projects, with more than 19GW of applications having been made to connect electricity storage in recent months.

However, the report laid out several barriers to storage, including how it connects to the network, how it is charged for using the network, the absence of a definition, and how final consumption levies are charged.

Although network operators are well-versed in connecting traditional demand and generation customers to their networks, storage connections are uncommon in the UK and, therefore, present more of a challenge.

Ofgem and BEIS suggested the roles of network companies are changing. They will need to be smarter and work closely with National Grid to work out the best solutions for managing a system with increasing amounts of low-carbon generation.

The report also considered the role of demand aggregators, and what can be done to make it easier for businesses to provide voluntary demand-side response, where they turn down electricity use at peak times in exchange for payments.

Ofgem chief executive Dermot Nolan said: “Having a smarter system will revolutionise how we all interact with the energy market. A smarter system also makes it far easier for new businesses to enter the market and offer new services. To get there we must make sure the regulatory regime is fit for the energy system of tomorrow and remove any barriers.”

Business and energy secretary Greg Clark said: “I am excited to see new ideas and technologies coming forward to help keep household bills down, boost our energy security and meet our climate change commitments. Giving people access to a smarter energy system that is affordable, secure and puts them in control of their energy costs is an important part of our work to build an economy that works for all.”

Ofgem and BEIS are seeking the views of energy industry players, including new entrants, and consumer groups. The consultation will close on 12 January 2017.

Here is some of the initial reaction from the industry

David Smith, chief executive, Energy Networks Association

“A flexible energy system will enable a reliable and affordable low carbon economy. Networks are vital facilitators of flexibility and have worked effectively with Ofgem, Government and stakeholders to begin a transition to a smart energy future which has already started benefitting customers through network innovation.

“This call for evidence will help define the way we approach some fundamental issues facing the industry; including the move towards more active Distribution System Operators and the role of storage and demand side response. Networks will make an important contribution to this consultation to ensure that we make the most of the opportunities available for customers.”

Tim Rotheray, director, Association for Decentralised Energy

“Currently demand response providers do not receive fair market value for their services, and we are very pleased BEIS and Ofgem have agreed with our recommendations on better and fairer access for DSR providers to the Balancing Market, the ancillary service market, and the Capacity Market. We also welcome the call for evidence’s recognition of the important role the ADE’s new DSR Code of Conduct can play in building confidence in this growing marketplace. 

“Both BEIS and Ofgem now need build on this excellent work to ensure DSR providers and existing generators can access the same contracts as new diesel generators. The report also shows how important it is that proposals to increase network charges for distributed generators and storage providers are approached in a holistic, joined up and cautious way to ensure they do not stifle the Government’s smart energy ambitions and harm industrial manufacturers in the process.”

Jill Cainey, director, Electricity Storage Network

“It has been wonderful to have people specifically focussing on storage at both BEIS and Ofgem since early 2015 and they have an excellent grasp of the many complex issues that need to be resolved to ensure rapid deployment and the robust development of the UK electricity storage industry.

“We particularly welcome the commitment to look at the legal definition of electricity storage which, without costing any money to the Exchequer or the taxpayer, could remove a major barrier to deployment. It is essential that Government makes parliamentary time to see this through.”