Utility Week

20 | 30TH NOVEMBER - 6TH DECEMBER 2018 | UTILITY WEEK Operations & Assets Market view T he rise of the energy "prosumer" pre- sents complex legal, regulatory and system challenges across a wide range of different spheres of law and regulation. At present, a significant part of the attrac- tion of being a prosumer is the ability to self- supply a portion of your energy and thereby reduce energy costs. However, a material part of these avoided costs – circa 25 per cent of the average GB domestic electricity bill, according to Ofgem – is associated with the build, maintenance and operation of Great Britain's centralised generation, transmission and distribution infrastructure. In the absence of regulatory change, there is a real risk that increases in prosumerism will see such costs being pushed onto a diminishing number of consumers. The UK government, Ofgem and the industry are alive to this challenge. Ofgem's ongoing Targeted Charging Review: Signifi- cant Code Review is looking closely at increased use of fixed charges for certain network costs. Smart metering and more sophisticated trading and settlement The (rather fraught) ongoing rollout of smart meters and associated communica- tion systems looks to deal with the physi- cal infrastructure side of this area. This is now beginning to be coupled with reform to implement half-hourly settlement of house- holds' electricity consumption. However, the more ambitious aim should be that such settlement systems allow for non-traditional approaches to energy supply, such as peer-to-peer trading. Moving towards such forms of energy trading would require major changes. Energy settlement and meter- ing systems – and the associated array of industry codes and regulation – would need to allow far more open access by consumers'/ intermediaries' systems. Ofgem's 'Future of supply market arrangements' project is partly concerned with tackling this issue, looking in particular at how the GB energy supplier "hub" model needs to evolve in the coming years. From a non-energy sector specific per- spective, there is also the issue of how con- sumer rights are appropriately protected in a world where goods and services are being purchased from potentially unregulated peers. The UK government's recent green paper on modernising consumer markets begins to look at this issue, and the strides made in the financial services sector provide some promising precedents. Data protection, privacy and security In some ways, this area is a subset of the regulatory issues created by the technology and remote communication channel devel- opments discussed in the previous section. However, the regulation of data usage, pri- vacy and security is such a significant sepa- rate canon of regulation that it warrants its own categorisation. Here we are seeing developments in sector-agnostic data pro- tection and cybersecurity regulation – in particular the EU's General Data Protection Regulation and the UK's Network and Infor- mation Systems Regulations 2018 – coupled with the growing recognition that the nature of (and likely explosion in) energy consump- tion associated data necessitates energy- specific consideration. Most recently, this has precipitated the launch of an Energy Data Taskforce, which focuses on realising opportunities and managing governance in respect of data in the GB energy sector, and a wider Smart Data Review. Regulating and incentivising underlying domestic generation and storage assets The upcoming closure of the small-scale feed-in tariffs (FIT) scheme marks the end not only of relatively simple subsidies for small-scale low-carbon electricity genera- tion, but also of the simple FIT export tariff mechanism for monetising the return of such installations' surplus electricity to the grid. Among other things, the UK government continues to consider and consult on: • whether a replacement "guaranteed route to market" for surplus electricity is required; • the extent to which intermittent renew- ables should be given access to the GB capacity market mechanism; • the extent to which small-scale genera- tion and storage assets should be given improved access to the GB Balancing Mechanism (and the revenue streams associated with this). Finally, electric vehicles (EVs), and the energy storage associated with these in the form of vehicle-to-grid (V2G), have their own discrete challenges. On this front, we have been told to expect regulation on standards for EV charg- ing points early in 2019, consultation on com- pulsory EV charging points for new homes, and modifications to the Smart Energy Code to allow DNOs to better control EV chargers associated with smart meter infrastructure. Matthew Brown, energy lawyer, LexisNexis; and Andy Compton, director, Compton Energy Associates Prosumers rule Matthew Brown and Andy Compton examine the system, legal and regulatory challenges arising from the shift to prosumerism – and look at what the government and Ofgem are doing to meet them. Energy storage associated with EVs brings its own challenges

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