Utility Week

UTILITY WEEK | 13TH - 19TH APRIL 2018 | 19 Operations & Assets Brought to you in association with numerous opportunities for the flexible use of energy. As some developments, it was felt, had led to the wrong market incentives, changes – such as the review of network charges – were therefore inevitable. And while they may cause pain for some, it did not neces- sarily make them wrong, but a process the industry must go through to allow a market with the right signals to emerge. A further challenge was getting consum- ers to understand the value of power and to take responsibility for their own actions on consumption – something difficult for com- panies to do against the current negative backdrop surrounding energy pricing. Although millions of people may have embraced recycling and the need to cut down on plastic, up until now the energy industry had tended "to bottle it" over such usage messages, one participant claimed. The key to changing this would be engaging with the public, perhaps through a govern- ment energy awareness campaign. While really keen for Ofgem to move faster on flexibility in general, suppliers and traders feared it had insufficient resources to respond to the pace of change, while BEIS itself was inevitably distracted by Brexit. Nevertheless there was a lot of optimism around the table that change was coming and that perhaps the sector needed to be more patient. SH KEY POINTS TO THINK ABOUT 1. The market still lacks a proper frame- work to realise value. 2. A co-ordinated response is needed. 3. Data access is key. 4. Consumer aware- ness of flexibility and consumption is vital. 5. Extra resources are needed for regu- lator and policymak- ers to keep up to speed. 6. Showcasing suc- cesses would help drive interest in flexibility. KEY POINTS TO THINK ABOUT 1. Regulators are behind the curve because they work speculatively and so far in advance of the market. 2. Centralisation of the grid is not neces- sarily the answer to emergent barriers at its edge. 3. Why are power stations awarded 15- year contracts while demand response gets only one year? 4. Investors want to get behind tangible things, "things they can kick", and this poses its own set of problems. Views from the table: "We have to get flexibility markets operating at a local level where people can buy and sell their ability to flex their demand. We need to move on from pilots, imple- ment the lessons learned and make flexibility markets a reality." Fiona Navesey, director of wholesale electricity markets, Centrica "Currently, the array of market products available to prosumers do not fit together well and can be prone to high price volatil- ity and sudden regulatory change." Chris Harris, head of regulation, Npower Views from the table: "I can see a future where a billion devices all aggregate together on a small scale, and that's exciting." Neil Pennington, thought leader in innovation through decentralised technology "A vast amount of energy is wasted because consumers don't have adequate controls in place to properly manage it." Dr Alastair Martin, chief strategy officer, Flexitricity Aricle continues overleaf ➦ everyone to work within, they could let the industry advance and catch up with appro- priate measures as and when required. There are three institutions that have the potential to create frequent barriers to aggre- gator participation in a flexible energy sys- tem (and in some cases do): Ofgem, National Grid, and BEIS. Their conduct is crucial to achieving an industry working at its opti- mum capability. Those three aside, it was discussed that emerging barriers oen occur at the grid edge – but centralisation would be the wrong solution to this problem. Other issues identified included how demand-side response is awarded only one- year contracts in the capacity market, while new-build power stations can be granted 15-year agreements. There was, the group felt, no answer as to why this is the case. It was then discussed that investors like to put money into tangible things, or as it was put, "things that they can kick", and a sug- gestion that this was a drag on investment. The table was also keen to identify the changing, and increasingly important, role of energy efficiency. AC

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