Flex uptake needs tougher targets, warns Energy UK

Progress on unleashing the potential of network flexibility has been "slow and patchy" and the UK risks failing to make the most of the opportunity, warns a new report published this week by Energy UK.

28th February 2020 by Networks

Flex uptake needs tougher targets, warns Energy UK

It also expresses concern that widespread consensus on the importance of flexibility has not been matched by progress on integrating it into the energy system, and calls for clear target setting to focus uptake.

Delivering on the Potential of Flexibility: A smart flexible energy system in the transition to a net-zero economy was produced in partnership with The Association for Decentralised Energy (ADE) and BEAMA.

The report discusses how energy storage and demand side response (DSR) will play a crucial role in reaching the net-zero target and dealing with peaks and troughs in energy demand.

Flexibility will ensure security of supply, and reduce the amount that has to be spent on generation capacity and grid reinforcement.

“Behind the meter” in customers’ homes, there is also the possibility of reducing bills for using energy at certain times of the day, or storing energy in home storage batteries or electric vehicle batteries.

The products, technology and finance are all there but the opportunities and incentives aren’t – meaning business cases for investment aren’t stacking up

Charles Wood, head of new energy services, Energy UK

Research by Carbon Connect and Imperial College London in 2016 estimated that achieving the full potential of flexibility could deliver savings of £8 bn a year by the end of the decade, even reaching £40 bn a year by 2050.

The report calls on the government and Ofgem to work with the industry to develop a new version of the Smart Systems and Flexibility Plan, first published in 2017, to accurately measure progress, set specific targets and timeframes and collaborate on delivery.

It says: “The initial confidence sparked by the plan has faltered, leaving the UK at considerable risk of realising a pathway aligned with a ‘slow start’ scenario and the accompanying £9bn cost to consumers.”

The Smart Systems and Flexibility Plan was rightly acknowledged as a significant step forward when it was published – but progress since then has been too slow and too patchy

Caroline Bragg, head of policy, ADE

It also says there is a need to amend market mechanisms and regulation that were designed for the traditional, centralised, one-way energy system.

To avoid the costs of a “slow start scenario”, the report calls for “appropriate, clear, and stable market mechanisms … to enable the investment case to develop”.

The report suggests that distribution network operators should also be barred from participating in markets for ancillary services, as they risk hampering the development of the market by contracting such services from themselves.

Charles Wood, Energy UK’s head of new energy services and heat, said: “A flexible energy system is essential if we are to get anywhere near net-zero. What’s more, there’s no question of the huge savings and benefits it can bring to us all.

“The products, technology and finance are all there but the opportunities and incentives aren’t – meaning business cases for investment aren’t stacking up. Overall demand for power has been falling for some time but the electrification of heating and transport will greatly increase demand at peak times and flexibility will be absolutely essential to cope with this.

“We need to be ready for when that happens which means taking action now – otherwise we risk missing out on the benefits. We’re ready to work with the Government to deliver on all this potential but we need them to give it the priority it warrants.”

Caroline Bragg, head of policy at the ADE said: “The companies supplying this flexibility stand ready to deliver but while elements of the jigsaw are in place, there are still missing pieces.

“The Smart Systems and Flexibility Plan was rightly acknowledged as a significant step forward when it was published – but progress since then has been too slow and too patchy.

“We now need to go further. Industry is ready to continue working with government on this and, given the right policy framework, to invest in the development and delivery of the solutions consumers want.”

Jeremy Yapp, BEAMA’s head of flexible energy systems, said: “There is a risk that the confidence the Smart Systems and Flexibility Plan created will be lost. Our members need clear, decisive action to justify investment into the UK supply chain for the low carbon energy sector.

The flexibility market will work best if it provides clear revenue streams for all participants. We are calling on government to work with industry on this. If we want consumers to adopt low carbon solutions alongside new devices and services that let them become providers of flexibility back to the grid then we need a market that rewards consumers for providing that flexibility and supports the necessary industry investment.”