Britain’s energy regulator has today set out fresh proposals aimed at building greater flexibility into the power grid, in a bid to better support the accelerating roll out of renewables, heat pumps, electric vehicles (EVs), and energy efficiency upgrades.
Ofgem today announced it has appointed Elexon as the market facilitator to enable greater energy flexibility across Britain’s local electricity networks, in addition to launching a fresh consultation over proposals to simplify market entry for providers of flexible energy services.
Ofgem views flexible grids as an “essential component” of efforts to meet increasing demand for electricity from EVs, heat pumps, and other clean technologies, while also managing intermittent renewable energy generation.
It has estimated flexible grid services whereby power demand and supply are dynamically matched could save between £30bn and £70bn in system costs between 2020 and 2050 by reducing the need to build additional energy generation and network infrastructure, which would result in lower energy bills for consumers.
“To successfully operate the developing low carbon energy system of the future we need more flexible tools to make the best use of our intermittent wind and solar potential along with network and consumer assets to meet demand,” said Ofgem director Eleanor Warburton.
“We are already starting to see real acceleration in small scale flexible energy use as consumers increasingly access cheaper energy through more flexible consumption.”
As such, the regulator has appointed non-profit market electricity specialist Elexon to act as a single, expert entity and work closely with the Ofgem, National Grid Electricity System Operator (ESO) – soon to become the National Electricity System Operator (NESO) – the Energy Networks Association (ENA) trade body, and local networks and flexibility service providers.
Elexon’s role will be to “drive alignment between local and national flexibility markets and remove any barriers”, the regulator explained.
Ofgem said it would now work with Elexon to further shape and refine the detail of its market facilitator role, with a view to having the firm fully up and running in the position by early 2026 “at the latest”.
In addition, Ofgem is seeking views on proposals for a common Flexibility Market Asset Registration system, which it said would aim to provide a single point of access for flexible consumer assets such as EV chargers, heat pumps, and home battery storage systems to make it easier for them to take part in all local and national flexibility markets.
Such markets can potentially enable consumers and businesses using technologies capable of storing or dispatching electricity to earn money by providing flexibility services to better match supply and demand on the grid.
The new registration system proposed by Ofgem would move away from the present system where flexibility service providers which aggregate assets on behalf of customers must sign up multiple times for each individual market, thereby helping to streamline and simplify the process of accessing the market, according to the regulator.
“As market facilitator Elexon will be able to coordinate and align local and national energy markets to unlock the full value of flexibility,” said Warburton. “Meanwhile asset registration will create a streamlined one-stop sign-up point, which will help maximise consumer participation in flexible consumption.”
The UK government has committed to delivering a clean power system by 2030, and since Labour’s landslide election win earlier this month it has pushed forward with a number of moves aimed at accelerating its push towards the ambitious goal.
The new government has lifted the de facto ban on new onshore wind farms in England, green lit three major new solar farms, launched a new publicly-owned clean power company dubbed Great British Energy, and set out plans for widespread planning reforms.
Electricity demand is expected to rise significantly over the coming years as growing numbers of EVs, heat pumps, and other digital technologies come online, underscoring the need for a more flexible grid to support the electrification of the economy. Modelling from the Climate Change Committee indicates UK electricity consumption could rise by 50 per cent by 2035.
Avi Aithal, head of open networks at the ENA, welcomed the decision to appoint Elexon. “We’ll work with them to ensure the momentum built up in the Open Networks programme continues during the transition,” he said.
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