REA: ‘flexibility’ crucial for Net Zero but regulator pushing ahead with damaging reforms

·         The role of ‘distribution’ electricity networks in the spotlight as new industry report urges deployment of flexible energy technologies

·         New data shows electricity generated and ‘exported’ to the GB distribution network doubled between 2012 and 2018, reaching 45TWh

·         Renewable technologies amongst cheapest means of new power generation, but many are connected to grid differently than conventional large fossil stations

·         Distribution network flexibility needed but energy regulator Ofgem ignoring industry concerns and pushing ahead with reforms 

New industry data showing that electricity exported to the distribution networks doubled between 2012 and 2018, with growth largely coming from ‘variable’ sources, is sparking calls for the regulator Ofgem to prioritise flexibility and ditch damaging ‘Targeted Charging Review’ reforms.

The data, part of the joint REA and ElectraLink Flexible Futures report, reveals that exports to the distribution networks in Great Britain (GB) reached over 45TWh in 2018. Whilst most of the growth in exports since 2012 is from renewable sources, the Government policy cuts in 2017 and 2018 have greatly slowed the growth in exports. Meanwhile, exports from fossil sources have grown since 2016. 

As part of this shifting mix, more than 60% of the power exported now comes from ‘variable sources’ such as wind and solar. 

The report outlines that in order to meet net-zero decarbonisation targets, significantly more variable generation from wind and solar will be required. Unlike large-scale fossil generation, it is largely being connected at the low-voltage distribution network. Managing this historic technological shift will require more ‘flexibility’ from technologies such as batteries and demand response.  

The report is urging the energy regulator Ofgem to scrap the reforms in the Targeted Charging Review to schemes that support the deployment of flexible energy technologies such as energy storage. These reforms relate to how different stakeholders pay for and access the grid. 

Daniel Brown, report author at the REA said: 

“To meet Net Zero we will need more power generation than we have today, but as nuclear and coal come offline there is a lack of policy that will fill the gap.  

“Industry models forecast that electricity from technologies such as wind and solar will be crucial for delivering Net Zero. For the first time the Flexible Futures data gives us an indication of the extent to which they are being deployed at the more local distribution networks, rather than at the transmission level. 

“The data shows that exports have doubled since 2012 and given the pace of innovation in the renewable energy sector we can expect fresh growth in the 2020s. To accommodate this, flexible energy technologies need to sit at the heart of future planning and network upgrades.” 

Dr Nina Skorupska CBE FEI, Chief Executive of the REA said:

“Ofgem’s proposed Targeted Charging Review reforms will undermine the deployment of flexible energy technologies and require urgent review. 

“To meet our net zero targets Ofgem must have decarbonisation as part of its mandate.” 

Paul Linnane, Head of Energy Market Insight at ElectraLink said:

“We are pleased to provide data to the REA as part of the Flexible Futures initiative and as they continue to advocate for a more flexible, decarbonised energy system. Our dataset, derived from management of the Data Transfer Service, is an invaluable resource for the renewable energy and flexible power sectors and we look forward to working further with the sector in the future.”

Richard Molloy, Business Development Manager for Energy Storage at Eaton said:

“This ground-breaking study examines previously unavailable data sets to help understand what is really going on at the distribution system level. 

“It is encouraging to see the growing contribution of variable renewables and flexible dispatchable generation exports to the distribution network but it is also clear that more is needed to encourage the development of a truly open and transparent market to spur private investment in the flexibility technologies that will be required to ease the transition to a high-renewable energy future. 

“Recent and proposed policy changes run counter to this ambition and must be urgently addressed to ensure Great Britain decarbonises in line with Net Zero commitments.”

Other report conclusions include:

·         Three million people are now customers of energy companies that exclusively offer 100% renewable electricity supplies 

·         39.8TWh of the total 45TWh exported to the GB distribution networks in 2018 is from renewable sources, ranging from wind to waste-to- energy

·         For the Commercial and Industrial (C&I) sector, adoption of a ‘100% renewable electricity’ supply tariff may be a leading indicator of future low-carbon and flexibility technology adoption

·         Battery developers are targeting those already with solar photovoltaics (PV) technology, and those with solar PV are more interested in taking up a flexibility technology such as a battery

—ENDS—

Notes to editors 

·         The full report can be found here: https://www.r-e-a.net/resources/flexible-futures-report/

·         The Government’s Digest of UK Energy Statistics reports that overall generation in the UK was 333TWh in 2018: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/840015/DUKES_2019_MASTER_COPY.pdf

·         Ofgem’s Targeted Charging Review proposals can be found here: https://www.ofgem.gov.uk/electricity/transmission-networks/charging/targeted-charging-review-significant-code-review

·         The dataset, derived from the Data Transfer Service (DTS) managed by ElectraLink, runs between 2012 and 2019

·         ElectraLink was created in 1998 by the energy industry to provide an independent, secure and low-cost service to transfer data between the participants in the deregulated GB electricity market. This resulted in the formation of the DTS. For more information, visit https://www.electralink.co.uk/

·         The DTS is a regulated service owned by the energy industry, for the benefit of the energy industry. It is used to share essential business process data on a 24/7/365 basis by over 270 electricity and gas parties across Great Britain. The DTS underpins the competitive UK energy market, enabling participants to work together to exchange information about customers. This information interchange facilitates a wide range of business-critical processes including how energy is paid for by suppliers (settlement), change of supplier and metering.

·         In 2012, ElectraLink was granted permission to access the data that is transferred across the DTS under the governance of the Data Transfer Services Agreement (DTSA) to monitor and identify trends in the energy market, improve transparency and provide insight into the challenges and opportunities faced by the industry.

·         The data ElectraLink holds is based on billions of messages flowing across the DTS that require significant data processing in order to organise the data and leverage its value for the industry. Industry processes are mapped and refined into datasets by ElectraLink to provide clear analysis on industry process activities at a meter point (associated with an address) level. These processes include (but are not limited to) switching supplier, registering energy consumption (including Supplier Volume Allocation (SVA) registered generation) and managing site activities such as meter installations and site visits. ElectraLink is the only central source that has access to the data flows that underpin these processes. 

·         Data relating to exports in the report excludes that which is self-consumed onsite. 

Definitions:

·         Exports – The amount of generation from a site supplied onto the grid network, either at Transmission or Distribution level. This report covers exports to the Distribution network.

·         Dispatchable generation – electricity generation from sources that are more dispatchable, such as fuelled technologies that are easier to ramp up or down in terms of exports. 

·         Variable generation – electricity generation from sources that are influenced by weather patterns, such as those from the wind or sun.

·         Distribution network – medium and low-voltage electricity network infrastructure, managed by six regulated monopoly Distribution Network Operators in GB.

·         Ofgem – the Office of Gas and Electricity Markets (Ofgem) is the independent regulator for the electricity and downstream natural gas markets in Great Britain.