Utility Week

18 | 13TH - 19TH APRIL 2018 | UTILITY WEEK Operations & Assets Working party Unlocking the Value of a Flexible Power System 20 March, The Soho Hotel, London Reaction times A high-level working party met to discuss how the UK can create the flexible energy system we need. Suzanne Heneghan was there. A need for new sources of flexibility is arguably the most important chal- lenge facing the energy industry today. As the surge in renewable gen- eration and the fast-changing nature of consumer demand transform the UK's power sector, the old ways of managing power will become increasingly unfit for purpose. Utility Week and CGI have been working with industry on this vital issue for the past three years, and last month brought together a high-level working party to discuss the challenges. Under the banner "Unlocking the Value of a Flexible Power System", the event, chaired by Utility Week editor Ellen Bennett, sounded out three key segments of the energy market– suppliers and traders, aggregators and networks – on three main issues: • the current barriers to the transition to a flexible energy system; • the effectiveness of recent policy and regulatory attempts to remove them; • the maturity of enabling technologies, including factors that have helped them reach maturity, and what needs to happen next. Introducing the event, CGI UK's vice-president digital utilities, Rich Hamp- shire, recalled how as recently as three years ago "the 'f ' word, ie flexibility", was not widely used in the industry. Fast-forward to today and the landscape has changed considerably, with the landmark Smart Power paper published by the National Infrastructure Commission on the importance of flexibility, not to mention the Smart and Smart Systems and Flexibility Plan from Ofgem and the Department for Business, Energy and Industrial Strategy (BEIS). With so much political weight behind the drive for flexibility, there can be lit- tle doubt of its importance. However, as the event heard, there are still numer- ous barriers to the market reaching maturity – particularly the lack of a market framework to realise value from flexibility. Utility Week and CGI are now undertaking an exclusive piece of market research looking more deeply into the barriers to flexibility, informed by the working party's discussions. The resulting report, to be published this summer, will be the third in a series from Utility Week and CGI examining the transition to a flexible energy system. T op of the agenda on the suppliers' and traders' table was the lack of market structures to realise the value of flex- ibility. Despite some efforts by the govern- ment, such as BEIS and Ofgem's Smart Systems and Flexibility plan, the lack of an optimised framework continues to create knock-on issues, such as inefficient prod- ucts and conflicts in the market. It is also currently impossible for some transactions, such as peer-to-peer energy trading, to real- ise value. Meanwhile, market participants are le attempting to realise value via existing mar- ket frameworks, which are designed for price and capacity – not flexibility. Data was another key hurdle. While increasing amounts of data are being gener- ated – for example, by the rollout of smart meters – regulations mean it cannot always be used, or even accessed by some market participants. This lack of information blocks Stakeholder views: Aggregators at the ready R egulators are behind the curve when it comes to the emerging market for flex- ibility, according to the aggregators at the working party. They suggested regulators must predict all the possible outcomes of new, or as-yet-unconceived, ideas and safe- guard consumers and the industry against any extreme adverse effects: a near impos- sible position. As a result, regulation is oen based on assumption, not fact – and this is an issue. "We're in danger of creating imaginary regu- lations that bear no relevance to the market, because they were conceived theoretically and too far in advance," said Dr Alastair Martin, chief strategy officer of Flexitricity. Aggregators considered whether instead of regulators defining a market structure for Stakeholder views: What suppliers and traders thought

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