Open Networks Project: The Flexibility Market Journey

Transcript

1. Energy Networks Association Open Networks Project: The Flexibility Market Journey Randolph Brazier, Head of Innovation May 2020
2. 2 Introduction to ENA • 29 million electricity customers • 21.5 million gas customers • 180,000 miles of gas network • 519,304 miles of electricity network
3. 3 Electricity Networks – The Challenge • The Electricity Networks are facing unprecedented change as a result of decarbonisation, digitisation and decentralisation
4. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 4 4 Flexibility Market Journey - UK Energy Trilemma & Climate Change Policy Innovation Trials Rollout to BaU Interaction with ESO & Other Markets Focus on Standardisation & Consistency Regulatory & Code Updates Regulation
5. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 5 5 Flexibility Market Journey - Reality Energy Trilemma & Climate Change Policy Innovation Trials Rollout to BaU Interaction with ESO & Other Markets Focus on Standardisation & Consistency Regulatory & Code Updates Regulation
6. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 6 6 Flexibility Market Journey - Policy Energy Trilemma & Climate Change Policy Innovation Trials Rollout to BaU Interaction with ESO & Other Markets Focus on Standardisation & Consistency Regulatory & Code Updates Regulation • Continued policy support for Distributed Energy Resources (DER) and Flexibility is critical
7. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 7 7 Flexibility Market Journey - Innovation Energy Trilemma & Climate Change Policy Innovation Trials Rollout to BaU Interaction with ESO & Other Markets Focus on Standardisation & Consistency Regulatory & Code Updates Regulation
8. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 8 8 Network Innovation Funding • Innovation • We take a ‘learn by doing’ approach • We do this using innovation • Innovation is critical to understanding and solving new challenges • Network Innovation Allowance (NIA) • To fund smaller innovation Projects that will deliver benefits to customers • Network Innovation Competition (NIC) • An annual competition to fund selected flagship innovative projects that deliver low carbon benefits to Customers Ø 2009-2015 Ø Estimated net benefits of these projects is around £1 billion, which is three times the cost of the scheme Ø The benefits could be between £4.8 billion and £8.1 billion if the innovation is successfully adopted GB-wide
9. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 9 9 Learn-By-Doing: Flexibility Projects • The UK Energy Networks take a learn-by-doing approach • www.smarternetworks.org
10. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 10 10 Flexibility Market Journey - Rollout & Co-ordination Energy Trilemma & Climate Change Policy Innovation Trials Rollout to BaU Interaction with ESO & Other Markets Focus on Standardisation & Consistency Regulatory & Code Updates Regulation
11. 11 Open Networks – Delivering a Smart Grid ENA’s Open Networks Project is a major energy industry initiative that will transform the way that both local Distribution Networks and national Transmission Networks will operate and work for customers. This is being driven by the 3Ds; digitisation, decentralisation and decarbonisation The Open Networks Project will help customers connect and realise value; as well as reducing cost for consumers through more cost effective planning The Open Networks Project is a key initiative to deliver Government policy set out in the Ofgem and BEIS Smart Systems and Flexibility Plan, the Government’s Industrial Strategy and the Clean Growth Plan Short Animation that can be found at: https://www.youtube.com/watch?v=te_d34zldJ8&feature=youtu.be We are taking a ‘learn-by-doing’ approach; we are using innovation funding to trial and test aspects of the various future electricity system options
12. 12 • DNOs have made the commitment to openly test the market to compare relevant grid reinforcement and market flexibility solutions for all new projects of significant value • Our Six Steps for Delivering Flexibility Services outlines how Electricity Networks are committing to making these emerging flexibility markets work in practice 1. Champion a level playing field 2. Visibility and accessibility 3. Conduct procurement in an open and transparent manner 4. Provide clarity on the dispatch of services 5. Provide regular, consistent and transparent reporting 6. Work together towards whole systems outcomes Flexibility Commitment
13. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 13 13 DSO Services Process for Standardisation & Improvement Reporting
14. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 14 14 Flexibility in GB - Information Source • http://www.energynetworks.org/electricity/futures/flexibility- in-great-britain.html • Single entry-point for providing Flexibility Services in GB. Includes: • Flexibility Commitments • Flexibility Figures o Includes DNOs and TSO Flexibility • Flexibility Timeline & Links • Flexible Connections figures and contacts
15. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 15 15 Flexibility in GB - Information Source Real Power Products: • Sustain: Scheduled Constraint Management • Secure: Pre-Fault Constraint Management • Dynamic: Post-Fault Constraint Management • Restore: Restoration
16. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 16 16 More Liquidity? Constraints are geographical but…….. • Common products • Better visibility and ease of access • Standardised contractual terms • Non exclusivity • Consistent reporting and monitoring • Lower barriers to entry (eg: size) • Co-ordination with TSO and wider energy markets • Open Data • ……. • More stakeholder engagement & market co-ordination critical!
17. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 17 17 Flexibility Market Journey - Regulation Energy Trilemma & Climate Change Policy Innovation Trials Rollout to BaU Interaction with ESO & Other Markets Focus on Standardisation & Consistency Regulatory & Code Updates Regulation
18. Copyright © Baringa Partners LLP 2018. All rights reserved. This document is subject to contract and contains confidential and proprietary information. 18 18 Network Regulation • Ofgem is the Regulator for Gas & Electricity Markets in GB • We are heading towards our next regulatory period (RIIO2) starting in 2023 for Distribution (will include stronger T-D focus) • However, regulatory support is critical throughout the entire journey • Gas and Electricity Networks are governed by the ‘RIIO’ model: Revenue = Incentives + Innovation + Outputs • Performance-based framework that includes a ‘TOTEX’ model • RIIO has broadly been seen to be successful; driving down costs for customers while incentivising innovation • Establishing an agile regulatory framework that encourages smart grid development and flexibility markets is essential
19. 19 Get Involved Should you want further information about the Open Networks project, please don’t hesitate to get in touch with us at opennetworks@energynetworks.org Or visit our webpage http://www.energynetworks.org/electricity/futures/open-networks-project/open- networks-project-overview/ Thank you! randolph.brazier@energynetworks.org