Merlin Hyman sets out the key issues up for debate at a live session contributing to Ofgem and BEIS's call for evidence on smart and flexible energy systems.
"What we see going forward is nothing less than a revolution in the provision of our energy," so said Cordi O'Hara, Director of the UK System Operator, and now, the Department for Business, Energy & Industrial Strategy (BEIS) has issued a call for evidence on how the energy system should approach this radical period of change in order to create a smart, flexible energy system.
The call sets out a radically different vision of the way we might generate, distribute and use energy in the future. It's a vision which could threaten incumbent business models and unlock new opportunities to create value.
To explore the issues raised by BEIS and Ofgem in greater depth Regen is focusing our annual Renewable Futures conference on bringing together industry leaders and policy makers together to debate the pathway to a decentralised, flexible energy system.
At the heart of the event will be a session led by BEIS, directly contributing to its call for evidence. We will also hear from National Grid, Western Power Distribution, UK Power Networks and Wales and West Utilities as well as leading investors and developers.
So what are some of the key issues we expect to debate?
Enabling energy storage
When we published our paper on "Storage: Towards a Commercial Model" we concluded ‘The storage Rubik's Cube is not quite solved, but with greater re-alignment between energy storage technologies, regulatory framework, revenues and costs, the global and UK energy storage market is poised to achieve substantial market growth.'
The call for evidence has 12 pages on storage, over 100 mentions and some specific policy proposals. The focus on the detail should help give investors confidence that the UK government recognises the role of storage in the energy system and aims to ensure there is a policy and regulatory framework that helps to solve the storage Rubik's Cube. However, investors like certainty and this is still an early stage document with more questions than answers. We will be aiming to get a bit closer to some of those answers at Renewable Futures.
A key concern for investors is how providers of flexibility can access the value they create for the system. One of the critical issues will be the way ‘use of the network' is charged. Unfortunately, network charging is heading in the opposite direction of what is needed to encourage storage and flexibility generally. One could almost hear the sound of business models crumbling as people read Ofgem's Embedded Benefits review and recent changes to distribution charging. A holistic review of network charging is likely to be at the top of the agenda for many speakers and delegates at Renewable Futures.
Local balancing and DSO
The National Infrastructure Commission Smart Power report that kicked off the government focus in this area concluded that in a smart, decentralised system there would be a key role for balancing supply and demand at a more local level on the distribution network. What new revenue streams this will create is currently far from clear.
We expect market platforms to begin to emerge from DNOs that will enable storage to bid to provide services to the distribution grid in a particular location. A key challenge will be how to line up the DNO need for local balancing of supply and demand to address network constraints and the role of the National Grid to balance the system as a whole.
Above all we hope that Renewable Futures will provide delegates with insight, partnership opportunities and inspiration as we embrace the opportunities of a revolution in our energy system.