Smart energy appliances to be regulated

The government has pledged to introduce regulation for smart energy appliances “when Parliamentary time allows”.

The commitment is included in the smart systems and flexibility strategy, which was published today (20 July) by the Department for Business, Energy and Industrial Strategy (BEIS) and Ofgem alongside a flurry of energy policy updates. Other publications included consultations on the future energy system operator and reforming energy code governance.

The smart systems and flexibility strategy looks at four key areas including supporting consumer flexibility, removing barriers to flexibility on the grid, reforming markets and monitoring flexibility across the system.

Among the proposals are plans to regulate what it refers to as “energy smart” appliances, described as those which can take advantage of cheaper electricity, automatically operating when prices are lower, providing balancing services to the grid and generating revenue for consumers.

This would set requirements based on the principles of interoperability, data privacy, grid stability and cyber security, the document says.

BEIS says it will support industry uptake of standards by the British Standards Institution (PAS 1878 and 1879) which set a technical framework for small-scale demand side response (DSR), guided by the principles of interoperability, data privacy, grid stability and cyber security, and which is compatible with the smart metering system.

This, it says, is to “encourage development and deployment” of DSR-capable devices.

BEIS acknowledges smart meters will be a key enabler of smart energy technology and referenced its decision to introduce a new four-year framework, commencing on 1 January 2022, with fixed minimum annual installation targets for energy suppliers.

It also references plans to mandate minimum device-level requirements for private electric vehicle (EV) chargepoints, including smart functionality.

“For both energy smart appliances and chargepoints, we recognise that these actions are a first step in a nascent market. It is important that our approach is adaptable, supporting the growth of the market and allowing room for new, innovative solutions,” it said.

The government will consult next year on an appropriate regulatory approach for flexibility service providers and other organisations performing a load controlling role.

Additionally, the paper makes clear that plans to implement market-wide half hourly settlement by Autumn 2025 will be pivotal to enabling consumer flexibility. Ofgem will look at barriers to elective half-hourly settlement and what could be done to address them.

Consumer protections

Elsewhere the report focuses on consumer protections, specifically helping people to participate who may otherwise struggle to do so, while ensuring those who cannot participate are not “unduly penalised”.

The sector is expected to develop guidance and tools to provide appropriate advice to consumers on smart tariffs and BEIS will collaborate with the industry and consumer groups to develop consistent messaging across key areas of engagement such as the smart meter installation process.

BEIS will work closely with the sector to assess how its recently published smart tariff comparison tool is deployed and to identify and address barriers which could prevent consumers from making informed choices in switching to a smart tariff.

It also proposes a consultation on whether protections and clear options for redress are necessary for consumers engaging with third-party intermediaries, to be set out in its forthcoming retail strategy.

Furthermore, smart technologies will be incorporated across relevant fuel poverty policies such as the energy company obligation (ECO).

Electric vehicles

Another area of interest is in electric vehicles (EVs), with take-up expected to rise dramatically over the next decade, increasing demand.

As such Ofgem will deliver a regulatory EV strategy by the end of the year, undertaking a “systematic review” of the elements needed to deliver the vision for maximising the opportunities that EVs create.

This includes ensuring network/system operators are prepared for EV uptake, ensuring network investment where and when needed, removing barriers for smart charging, and ensuring products and services are available to deliver benefits to all consumers.

The government and Ofgem will also publish a joint policy statement on maximising the opportunity for flexibility from EVs, while protecting the grid and consumers, this year.

Reaction

Responding to the report Dhara Vyas, head of future energy services at Citizens Advice, said: “Widespread adoption of smart energy offers, products and services is an essential step on the path to net zero. But many people will struggle to use them – particularly if they are complicated or expensive.

“We’re pleased to see the government commit to providing support for those who need it most. It’s important that consumer protections are fit for the future, right now there are too many gaps. Government needs to put forward proposals that will help to make the transition to net zero fair and inclusive.”

Caroline Bragg, head of policy at the Association for Decentralised Energy, said: “The vision set out in the government’s Smart Systems and Flexibility Plan underlines the crucial role that flexibility will play in supporting the electricity system, consumers, businesses and green jobs on the path to net zero, while also recognising that much work is needed both to remove barriers and ensure this vision can be realised, and to bring about regulation within the sector.

“We look forward to continuing our work with the government and industry in realising this vision, and welcome the government’s continued support of the Flex Assure code of conduct.”