Ofgem and BEIS call on networks to realise £40bn flexible energy opportunity

Ofgem and the Department for Business, Energy and Industrial Strategy (BEIS) have penned a joint letter to the Energy Networks Association (ENA), calling on organisations to "evolve" to a more flexible system that could create a £40bn windfall for the UK economy.

In 2018, the UK generated 52% of its electricity from low-carbon sources

In 2018, the UK generated 52% of its electricity from low-carbon sources

BEIS’s director of energy security, networks and markets Dan Monzani and Ofgem’s director of energy systems transition Frances Warburton, praised the role of the Open Networks project, which helps households, businesses & networks take advantage of new energy technologies to lower costs and improve flexibility.

However, the letter notes that network operators will need to “evolve” in order to transform the UK grid to a low-carbon, flexible network that accounts for renewables, electric vehicles (EVs) and low-carbon heat. Doing so, the letter states, could generate between £17bn - £40bn by 2050 for the UK economy.

“To remain fit for purpose in this transforming system, energy networks will need to evolve too, the letter states. “Flexibility will be crucial, facilitating significant deployment of renewables, electrified transport and, potentially, electrified heat. A smarter and more flexible system could save the UK £17-40bn by 2050, and many of these benefits will be realised at the distribution level.”

In 2018, the UK generated 52% of its electricity from low-carbon sources, much of which was connected at the distribution network via various generation sites and projects.

Recommendations

To improve flexibility further, Ofgem and BEIS have called for: standardising flexibility procurement across network and system operators; demonstrating transparency in evaluating flexibility tenders; providing clear information on current and future system needs; setting out a clear roadmap for data transparency, taking into account recommendations from the Energy Data Taskforce and improving the availability of network information in an interoperable format

The Open Networks project is expected to expand out from electricity to the whole of the energy system including gas, heat and transport.

The UK's six local electricity network operators have jointly committed to set new requirements for all new network infrastructure to include "smart" flexibility services, as more renewable arrays come online nationwide.

Under the new requirements, the installation of services such as on-site generation, demand-side response and energy efficiency measures will become a pre-requisite for project investment.

Matt Mace



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