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Britain's Electricity Network Operators Commit to Creating New Energy Markets

A commitment made by electricity network companies on the running of Great Britain’s fast developing smart grid could help deliver £17bn back to the economy by 2050.

Electricity network companies operating across England, Scotland and Wales have announced a joint commitment to “create new markets to enable flexibility services that will compete alongside traditional investment.” Network operators in Northern Ireland and the Republic of Ireland are also providing an indication of broad intent to use the services in the future.

The move will help reduce the cost of running the network to customers and provide new opportunities for businesses and communities to offer flexibility services to local network operators. It is published in the “Opening Markets for Network Flexibility” report for the Open Networks Project.

The pan-industry Open Networks Project is a “key initiative” for addressing the changes that need to be made to energy networks to create a more flexible energy system, as recently set out in Ofgem and the Department for Business, Energy & Industrial Strategy’s Smart Systems and Flexibility Plan.

Flexibility services include businesses and consumers increasing electricity generation, or choosing to adjust their electricity consumption up or down to support balancing of supply and demand in real time in response to a financial incentive provided to them by an agreement with a network operator. They include:

  • Selling power generated by new technologies such as solar panels and wind turbines
  • Businesses adjusting their electricity use at the times of day when they least need it
  • Using new smart energy efficiency technology to adjust consumption remotely and buying electricity from battery storage.

Research conducted by Imperial College London and The Carbon Trust for the Smart Systems and Flexibility Plan shows that the UK could deliver £17-40bn of benefits across the energy system by 2050. A smarter, more flexible energy system, with the use of flexibility markets, will deliver these benefits.

The report also states that network companies will also “rapidly increase the use of competitive markets” over the next six years, under the current RIIO ED1 price control period.

The roles and responsibilities of network companies are changing as they respond to the deployment of new types of smart and renewable energy technology connected at a local rather than a national level. These changes mean that Distribution Network Operators are moving from their traditional role of simply distributing electricity to playing a more active role managing supply and demand locally.  At the same time the role of National Grid as System Operator is also changing to facilitate the transition to a more decentralized, low carbon system.  The Open Networks Project will describe the new roles and responsibilities required to support the transition to a smarter, more efficient electricity network.

“Our energy networks have a great track record of delivering for households, businesses and communities when it comes to network reliability, reducing costs to the bill payer and driving forward new investment in our infrastructure," said David Smith, CEO of Energy Networks Association. “Today’s announcement builds on that, as our energy market rapidly changes. It is about creating a system that creates a platform for a whole range of new energy technologies and services that not only allows network companies to manage the system more effectively but give other organisations the chance to benefit from that, whether that be directly or indirectly.”

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