The UK Government in association with Ofgem have announced a plant to give homes and businesses more control over their energy use with the help of innovative new technologies.
Business and Energy Secretary Greg Clark announced the new plan yesterday (24th July 2017), the aim being to transform how homes and businesses store and use energy through the delivery of a smarter, more flexible energy system. This will primarily be achieved by the removal of barriers to smart and battery technology, reducing costs for consumers.
The Government report, ‘Upgrading our energy system’, describes how the UK energy system can deliver economic benefits, in association with renewable energy technology such as wind and solar that currently generates over a quarter of UK electricity. New technologies that help store and manage energy provide an opportunity to create new businesses and jobs while at the same time new smart technologies, such as smart meters and appliances that can be controlled from a mobile phone, will help the country save up to £40 billion on energy costs over decades to come.
“Upgrading our energy system to make sure it is fit for the future is a key part of our Industrial Strategy” said Mr Clark. “A smarter energy system will create opportunities to reduce energy costs, increase productivity and put UK businesses in a leading position to export smart energy technology and services to the rest of the world”.
Smart meters will help suppliers to offer lower tariffs and make it easier for froms to develop smart appliances and gadgets. The plan will also help consumers use energy when it is cheapest or get rewarded for returning it to the grid when it is needed. It recognises the role that energy storage can play in a smart energy grid and the opportunities presented by falling costs of battery technologies designed to store surplus energy. To this end, the Government and Ofgem have committed to removing barriers to the introduction of this technology into the UK power network.
“The way we are generating and using energy in Britain is changing rapidly” added Andrew Wright, Senior Partner, Energy Systems, Ofgem. “Today’s plan sets out how Ofgem, government and the industry will work together to modernise the energy system and make sure consumers get the benefits of the changes. We want to open the door to new technologies and services so that they can help to reduce bills for consumers in the long term. It is vital that we get the changes in place as there is potential for a smarter system to save consumers billions between now and 2050”.
According to research conducted for BEIS by Imperial College and the Carbon Trust, the full implementation of the plan could help save the country up to £40 billion over the coming decades.
Cyrille Brisson, VP at Power Management Company Eaton, said that the Government and Ofgem’s approach reflects a significant shift for the UK, in particular, with regard to the regulatory changes aimed at fostering the development of a vibrant battery storage market in the UK. These recommendations should help remove barriers to market and enable a more flexible and responsive energy system and therefore the direction of travel is the right one from a regulatory perspective, enabling the UK to acquire a strong position as a global leader in the development of battery storage technology. However, more detail and clarification about implementation is needed. The proposed licensing regime should provide this, opening the door for more responsive and adaptable regulation, while the removal of double charging will help to facilitate a significant expansion and take up of battery storage by UK businesses and customers.
The Solar Trade Association (STA) also welcomed the announcement, but described the steps outlined by the Government as only a modest advancement, since the majority of the points set out in the plan are simply a restatement of existing commitments.
The STA welcomed the Government’s pledge to legally define storage in primary legislation and the intent to unbundle storage from network operators in order to allow the development of competitive markets. Additionally, Ofgem should shortly begin to make progress on the creation of a level playing field for storage in the capacity markets.
However, more action is needed for domestic solar & storage, including the clearing up of confusion on VAT charging (currently potentially facing 20 percent charges) and the provision of clear and up-to-date consumer data to ensure accurate assessments of possible onsite consumption and storage. The STA also wants to see type testing for small-scale batteries and, for large-scale and business solar, fair business rate treatment for onsite storage, a faster change in the access to market rules so that the role of storage in network management is unlocked in markets, including in grid deferment, capacity markets and balancing and rapid resolution of the current double charging for storage. Planning issues for storage also need to be resolved.
“The solar industry in the UK is gearing up for the integration of PV panels and battery technology” said STA Policy Manager Chris Hewett. “Our research shows that a high penetration of batteries alongside solar power would reduce overall costs to the electricity system and allow the country to have cheap solar at the heart of its power system. As we have seen with solar panels, a favourable policy framework can drive down costs of technology very quickly and create markets. It is vital that the Government gets the charging, taxation and regulation of storage right from the start or innovations that will benefit the consumer risk being held back. Today’s announcements are a start but there is a lot to do and a clearer timetable is needed.”
Mr Hewett added that currently, as with any innovative and disruptive technology, the policy and legal system is not set up to accommodate it, which means there are currently few markets for storage. Therefore, if the UK wants to take advantage of the potential of solar and storage, the Government needs to get the rules right, and fast, before innovation is stifled. Policy changes are needed to enable storage to work with solar at all scales.
Image: The Rt Hon Greg Clark MP (now UK Business & Energy Secretary) at the CBI Climate Change Summit in 2008