Utility Week

24 | 5TH - 11TH OCTOBER 2018 | UTILITY WEEK Operations & Assets underpin an impact assessment of the dif- ferent options, which will be passed on to Ofgem and the Department for Business, Energy and Industrial Strategy (BEIS). "In terms of the impact assessment, the internal report is due by the end of the year – by Christmas basically," says ENA head of innovation and development Ran- dolph Brazier. "We'll probably do a consultation in Q1 next year and then we'll hand it over to Ofgem and essentially provide them with an evidence base that they can use to make a choice, or give us some direction on what the future will look like. "Because ultimately it won't be networks that decide what we go for… It will be a deci- sion that Ofgem will need to make in consul- tation with BEIS." Brazier says the impact assessment will focus on the relative differences between the models rather than attempting to make any firm predictions about what the future energy system will look like in each instance. "We know there's some underlying uncer- tainty that's very difficult to cater for," he adds. "By making sure we compare between the models, we can determine which one works best in this uncertain future. "We will obviously be doing some level of sensitivity analysis along the way, includ- ing applying different case scenarios to make sure that we do draw out some of those uncertainties." One of these uncertainties is over the future of network charging arrangements. Ofgem is currently conducting two sig- nificant code reviews – one looking at the residual charges designed to recoup the sunk costs of the existing infrastructure and another examining connection arrangements and the forward-looking charges intended to pay for upgrades. Brazier says the regulator's plans for net- work charging will be built into the models once they are known. He believes they should have an idea of the direction of travel before the impact assessments are completed. And Turvey says there will be no halt in progress while they wait for a decision on which world to pursue: "What we are look- ing at across these worlds is what aspects and activities are common; what sort of things are needed no matter which world is delivered. "You come up with things like whole- system planning; data requirements; forms of contracts for flexibility… we're already working on a number of those areas." Figure 2.4: World D – ESO Coordinate(s): Flexibility market arrangements Transmission Distribution Flexibility resources TO Information exchange TO -owned/operated flexibility resources Procurement Activation Procurement Activation Procurement Activation Activation Activation DNO-owned/operated flexibility resources Aggregation Distributed energy resources Aggregator Procurement Activation Local energy systems Customer Energy supplier DNO DSO ESO Legend Information link Contractural link Figure 2.5: World E - Flexibility Coordinator(s): Flexibility market arrangements Flexibility resources TO TO-owned/operated flexibility resources Procurement Activation Procurement Activation Activation Distributed energy resources Aggregator Local energy systems Customer Energy supplier Transmission Distribution Activation DNO-owned/operated flexibility resources Aggregation ESO DNO DSO Procurement Activation Procurement Activation Information exchange Flexibility co-ordinator(s) Procurement Activation Legend Information link Contractural link A new type of party called a flexibility co- ordinator acts as an independent, neutral facilitator for all local flexibility markets. There could be single national body or a number of standardised regional entities. The flexibility co-ordinator procures and dispatches distributed energy resources on behalf of the ESO and DSOs. It is also respon- sible for the settlement process and recovering its own operational costs. The flexibility co-ordinator uses a com- mon platform to collect offers from flexibility providers and select the best bundle based on requirements submitted by the ESO and DSOs. It is up to the flexibility co-ordinator to manage any conflicts that arise, although the ESO retains overall responsibility for the procure- ment of national and regional services. The ESO is responsible for the procurement and dispatch of all flexibility services, or per- haps down to a minimum size threshold. DSOs submit their requirements to the ESO, which then presents these needs to service providers alongside its own and decides on the best course of action. The ESO is also responsible for settlement. Connection arrangements at the distribution level could take the form of tripartite agree- ments between customers, DSOs and the ESO. Alternatively, they could be similar to the current arrangements for customers connect- ing at the transmission level, with the ESO being the first point of contact and also holding the agreement. World D: DSO co-ordinate(s) – flexibility market arrangements World E: Flexibility co-ordinator(s) – Flexibility market arrangements continued from previous page Source: ENA Source: ENA Innovation will feature strongly at this year's Utility Week Congress on 9 and 10 October. For more details go to event.utilityweek.co.uk/congress/

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