Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/710271
18 | 5th - 11th August 2016 | utILItY WEEK Operations & Assets Analysis T he Future Power System Architecture project has provided the evidence, sus- pected for some time, that the structure of the energy system is not fit for the future. Commissioned by the now axed Depart- ment for Energy and Climate Change, the Future Power Systems Architecture (FPSA) project demanded its contributors perform an elaborate dance across eggshells to come to its carefully worded conclusions. Given the job of considering the capabili- ties that the UK power system will need by 2030 to ensure sustainable, affordable and secure power supplies, the project was none- theless forbidden to consider market or gov- ernance issues. Yet it is those issues rather than the technical challenges that many industry leaders have identified as the real barrier to significant change in the makeup and management of energy infrastructure. "Keep to the physics," policy wonks told the FPSA project group, led by the Institution of Engineering and Technology and the Energy Systems Catapult. At the launch of the project report in July, Philip Wolfe, former director general of the Renewable Energy Association and now chair of Community Energy England, said the limitation should have been rejected outright by the project team. But Simon Harrison, chair of the FPSA project delivery board, observed that rejecting Decc's terms, however frustrating they were, would have been to cut off the project's nose to spite its face. Instead, the report has stayed within its constraints but conspicuously positioned market, societal and governance concerns as the elephants in the room. In six fulsome project documents, the FPSA team has identified and explained the need for 35 new or significantly extended power system functions required by 2030. A function matrix and sequencing spread- sheet suggest timeframes for implementation and identify tell-tale signs that some system requirements are about to become urgent. The FPSA project documents provide a useful foundation for understanding the sequencing of new functionality. However, the ability to recommend an implementa- tion route map is cut short time and again by the need for clarity on the commercial frameworks and market structures to sup- port them. Speaking to Utility Week, a key FPSA pro- ject contributor said: "Government doesn't like being told how to do its job. It needed an evidence base that proved current mar- ket structures are not fit for purpose [for the future]. Now it's got that." Which raises the question: what is going to be done about it? The answer is prob- ably nothing in the immediate term. With a departmental shakeup to deal with, those in Decc who commissioned the FPSA report will have an office move and their other new working arrangements at the Department for Business, Energy and Industrial Strategy to contend with over the next few months. There are also fears that Decc's best and brightest will now be swamped by Brexit issues and the need to hammer out new energy trading arrangements with Europe. Another brake on progressing the pro- ject's findings is that Ofgem and government are in the midst of their own investigation into the needs of smart systems, including the potential requirement for an independ- ent system operator. It's unlikely that any clear indication of government's intentions to support fundamental system reform will be made until this consultation is complete. If the government's own information gathering points in the same direction as the FPSA project, a great deal more analysis will be required to understand the interdepend- encies between current and future market mechanisms so that a plan for unravelling and replacing them can be sketched out. Crucially, an almighty decision will have to be taken about which body to make responsible for reforming and managing sys- tem architecture. This challenge was implicit in the work of the FPSA project and ruffled feathers among system incumbents at its out- set. There was fear it was leading towards a central command and control solution – the rather sinister-sounding "architect" figure. The FPSA team carefully avoided this con- tentious phrase in their report. Instead, they talked about the need for a fresh approach to system "stewardship". But semantics aside, no existing market player has the skills or accountability to deliver the massive scale and complexity of reform to the energy sys- tem architecture that has been identified as necessary. It will need to be allocated. The FPSA project may have taken only a small step forward in addressing the momentous decarbonisation challenge and increasing the flexibility of our energy sys- tem. But it is an important one and it does express urgency about the need for a whole system plan. Harrison warned that fail- ure to respond to its findings will lead to uninformed transmission and distribution price controls, network congestion, under- utilisation of smart metering and stranded infrastructure assets, to name just a few undesirable scenarios. FPSA delivers system warning Government now has the evidence in its hands that making future power supplies sustainable, affordable and secure is a commercial issue rather than a technical challenge. Jane Gray reports. Future Power System Architecture project findings To meet the 2030 power system objectives, 35 new or significantly extended functions are required, according to the FPSA. They are the product of drivers that will be broadly familiar to Utility Week readers. The FPSA's report recommendations include: 1. Act now to align system architecture development with major policy commitments – such as the fih carbon budget. 2. Ensure there is an implementation frame- work to deliver the required functionality. 3. Deepen and extend functional analysis – incorporate governance perspectives and recognise cross-vector dependencies. 4. Develop a transition route map of 'least regret' actions. 5. Extend the analysis and identification of R&D and innovation needs to deliver the required functionality – align an innovation programme with the transition route map. 6. Maintain the momentum created by the FPSA project by formalising cross-sector and inter-agency working. Develop allocation of accountability for the transition.