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UTILITY WEEK | 4TH - 10TH AUGUST 2017 | 27 Operations & Assets the details are. We don't want to get into a debate with them. We absolutely want to discuss with them what they mean." ENA members will want to ask ques- tions around use of storage in emergency incidents, or in cases where the market has not responded. The association maintains that there are cases where it would be in the best interests of customers if networks were allowed to own and operate storage. "If that can be shown to be the case then clearly there should be some provision for that, and it shouldn't be something we're precluding at this stage. We'll be discussing with BEIS and Ofgem going forward." Storage industry participants, too, argue that networks should be allowed to own and operate storage. Although Ofgem's posi- tion on storage ownership did not come as a surprise to industry, by excluding system operators (SOs), DNOs, or distribution sys- tem operators (DSOs) from owning storage altogether, the regulator could be indirectly causing the consumer to suffer. Georgina Penfold, chief executive of the Electricity Storage Network, says procuring flexibility as a contracted service can work well for network companies, provided that the markets respond effectively and pro- vide good value to the end-user. However, there may be situations where the market is not providing best value: for example, in a monopolistic environment or if geographical price variations become overly distorted. "In these situations, it would be advantageous for the networks to have the option to deploy their own storage," she tells Utility Week. "The question really should be: do we want an infrastructure where everything is out- sourced to the lowest bidder?" "In the first instance, network operators should tender their requirements," says Pen- fold. "If economic proposals are not forth- coming there is the option for the SO, DNO or DSO to own or operate storage." Independent consultant John Scott, for- merly technical director at Ofgem, says he thinks the regulator is being "too purist" with regard to defending market arrange- ments, and suggests it "keep an open mind" about storage ownership. But if networks are going to be prevented from owning storage, as Ofgem seems set on, it is important that the right balance is struck The government and Ofgem's smart systems to-do list The smart systems and flexibility plan lists the specific tasks that need to be undertaken by the government and Ofgem: Ofgem Announce details of the scope of its targeted charging review – which is now going ahead – and its views on network charges for storage. Consult on a modified generation licence for storage, with the aim of it being introduced by summer 2018. Publish further guidance on both the feed-in tariff and Renewables Obligation schemes for participants that wish to co-locate storage systems at their generating stations. Use the "incentive on connections engage- ment" (an incentive developed under RIIO) to assess if distribution network operators are addressing the issue of storage connection. Clarify the regulatory position on ownership and operation of storage by network opera- tors, and outline steps to ensure the operation of storage is sufficiently unbundled from the network business. Include new reporting arrangements for distribution network operators that own stor- age and monitor this to see whether further unbundling is necessary. Decide on the case for mandatory half- hourly settlement for all consumers in line with its revised plan, to be outlined shortly along- side the launch of a significant code review. Assess any regulatory, network and tariff implications that electric vehicles represent so that risks can be mitigated and the benefits to the energy system optimised. Consult on a regulatory framework for the system operator, to be in place by April 2018. Consider what further evolution of parties' roles may be required in order to feed into its development of the next round of price control arrangements – RIIO2 – including regulatory arrangements for the system operator. Government Use primary legislation to amend the Elec- tricity Act 1989 and other relevant legislation to define electricity storage as a distinct subset of generation. Ensure the system and consumer benefits of storing electricity for self-consumption and export to the grid at peak time are realised. Work with industry to review, consolidate and update health and safety standards for storage. Ensure that every home and small business in the country is offered a smart meter by the end of 2020. Consult on seeking powers to set standards for smart appliances. Work with the automotive and energy industries to ensure electric vehicle owners are made aware of the benefits of smart tariffs, and able to take advantage of the current market offerings. Launch domestic demand-side response competition in Autumn 2017. Simplify metering requirements for those offering demand-side response, enable asset reallocation by these providers, and allow the stacking of revenues between the capacity market and ancillary services. Both Support and engage with the system opera- tor's power responsive campaign, to increase the participation in demand-side response of large non-domestic consumers. Consider the potential social impacts of smart tariffs, as some types of consumer may be less able to benefit from smart tariffs. Monitor and assess the development of a voluntary code of conduct for aggregators, and consider examining more formal protections should this approach be inadequate. Monitor how the market develops and, in time, assess the case for more proactive com- munications on smart energy. Establish a co-chaired stakeholder group – the smart systems forum – to replace the exist- ing smart grid forum and electricity networks strategy group. between making a transparent market for battery owners who want to connect to the network and dealing with the engineering and security of supply concerns of network companies. This is a challenge which Baringa partner Oliver Rix says will be tough. "[The balance] remains to be addressed," he tells Utility Week. "We don't want a hiatus in the contin- ued investment in a technology that is going to the system. There is a lot of work to do quickly to get to that point." Despite calls from industry, the govern- ment and Ofgem seem resolute in their deter- mination to keep storage ownership out of the hands of the networks. If they refuse to budge, the onus will be on them to ensure that the flexibility networks sorely need can be reliably contracted via transparent and accessible price signals. Scott says the "simple solution" BEIS and Ofgem have come up with "isn't really right for a complicated situation". Industry will be hoping that the regulator and BEIS keep the issue of storage under review, and give net- work companies a chance to prove they can be responsible owners of storage.