Utility Week

UTILITY WEEK | 10TH - 16TH JANUARY 2020 | 9 Utility of the Future: Regulation The increasing prevalence of technologies like smart meters, battery storage, EVs, solar PV and electric heat- ing o ers an opportunity to manage and operate the grid more e ciently and level out demand, rather than having to build out new capacity. This transformation will require a big shi• in the way electricity markets function, underpinned by the princi- ple of • exibility and giving people more control in how they use electricity and opportunities to compete to sell their power into new • exibility service markets. The recently adopted European Clean Energy Legisla- tive Package lays out new rules for network operators to procure • exibility resources for electricity system opera- tion, it says that distribution system operators (DSOs) should buy these services where these are cheaper than grid expansion. Platforms that demonstrate the bene… ts of a • exibil- ity services market are being rolled out in Norway, the Netherlands, Germany, Australia and elsewhere. Norway's NODES is an open and independent mar- ketplace, jointly owned by the power market Nord Pool and energy company Agder Energi. It enables DSOs and TSOs (transmission system operators) to buy local • ex- ibility to help manage local bottlenecks and operate the grid more cost e ciently. A fully automated version of the platform, built on Microso• technology, is live in south Norway where, during a pilot, Agder Energi was able to defer a grid investment of €4.5 million (£3.8 millioin) by buying local • exibility. Britain is a world leader in o shore wind, prices for the third round of contracts for dif- ference (CfD) auctions, held in September, fell by as much as 66 per cent compared with the … rst round held in 2015. But that success story has not been rep- licated in the rollout of other low-carbon electricity technologies, such as solar PV, onshore wind or nuclear. Je Hardy, sen- ior research fellow at the Grantham Insti- tute – Climate Change and the Environment at Imperial College London, comments: "Nuclear hasn't gone through the same transparent competitive process, we have a moratorium in England on onshore wind deployments and there isn't really an incen- tive for solar, which is one of the cheapest technologies available." Procurement lessons could be learnt from Mexico, where a series of technology-neutral The Utility of the Future is also the theme of Utility Week Live taking place at the NEC in Birmingham on 19-20 May. Visit www.utilityweeklive.co.uk for more information. Lessons from Norway: How do we create a more fl exible energy market? The GOPACS platform, launched earlier this year in Holland, enables the TSO, TenneT, and all DSOs to mitigate grid congestion by buying • exibility on the intraday market. It matches a reduction in production in one area of the grid with an increase in another area, creating an intraday congestion spread. The price di erence is paid for by grid operators via the intraday market platform Energy Trading Platform Amsterdam. Randolph Brazier, head of innovation and development at the Energy Networks Association, tells Utility Week: "GOPACS enables • exibility providers to trade between themselves and provide services to both transmission and distribution networks. That level of co-ordination between di erent market players is traditionally extremely di cult, it can help prevent oscillating mar- ket signals and optimise system operation to create a very e cient grid. It allows renewable energy provid- ers and other distributed energy resources to provide services to di erent markets and stack revenue streams, which is not normally possible." A successful move into this nascent space will require new regulatory measures. According to SmartEn, the association for digital and decentral- ised energy solutions, system operators will need to be incentivised to invest in digital solutions and so• ware rather than physical infrastructure alone to resolve grid congestion problems. To avoid a concentration of market power by the system operator, it says • exibility markets should be directly open and accessible to decentralised resources and consistent with electricity wholesale markets and the transmission level. money while entering into a low-cost con- tract with the government for the power." The delays and massive cost overruns at Hinkley Point C are symptomatic of a global problem with complex and bespoke nuclear designs. Projects can take 20 years to mature and are becoming less attractive to power companies that now have cheaper, renew- able means of producing electricity. South Korea has managed to buck the nuclear trend and build reactors in less than … ve years through the adoption of stand- ardised designs, constructed sequentially, on a limited number of sites using a stable supply¦chain. "South Korea has had the most success in the past 20 years in terms of reducing the cost of nuclear," says Guy Newey, strategy and performance director at Energy Systems Catapult. "It's down to the • eet approach, using the same reactor design and the same people, who move around the country con- structing reactors and building their learning into subsequent projects." Lessons from Mexico: How can we roll out low-carbon energy projects more effi ciently? continued overleaf ☛ mitigate grid congestion by buying • exibility and development at the Energy Networks Association, tells themselves and provide services to both transmission between di erent market players is traditionally extremely di cult, it can help prevent oscillating mar- ket signals and optimise system operation to create a very e cient grid. It allows renewable energy provid- services to di erent markets and stack revenue SmartEn, the association for digital and decentral- ised energy solutions, system operators will need to be incentivised to invest in digital solutions and so• ware rather than physical infrastructure alone to resolve grid congestion problems. be directly open and accessible to decentralised resources and consistent with electricity wholesale power auctions have attracted global atten- tion: the most recent in 2017 recorded the world's cheapest solar bid of US$20.57 per megawatt-hour. The auctions were the result of sweep- ing reforms to the regulatory framework, designed to open up the market to pri- vate sector … rms and enable the country to achieve 35 per cent green generation by 2024. Around half the pledged investment in the 2017 auction went into new solar, with the remainder going to wind and natural gas. Hardy comments: "Power prices for solar PV in Mexico have been really low, which is good for customers, gives certainty to developers and allows the government to get things built. Auctions tend to drive really good cost reductions because good develop- ers are able to work out where to save money in the development process and can make

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