Electricity network operators commit to creating new energy markets to help deliver £17bn smart energy opportunity

Wednesday 6th December 2017

A commitment made by electricity network companies on the running of Great Britain’s fast developing smart grid could help deliver £17bn back to the economy by 2050, the companies will say today.

Electricity network companies operating across England, Scotland and Wales are announcing a joint commitment to “create new markets to enable flexibility services that will compete alongside traditional investment”. Network operators in Northern Ireland and the Republic of Ireland are also providing an indication of broad intent to use the services in the future.

The move will help reduce the cost of running the network to customers and provide new opportunities for businesses and communities to offer flexibility services to local network operators. It is published in the “Opening Markets for Network Flexibility” report for the Open Networks Project.

The pan-industry Open Networks Project is a “key initiative” for addressing the changes that need to be made to energy networks to create a more flexible energy system, as recently set out in Ofgem and the Department for Business, Energy & Industrial Strategy’s Smart Systems and Flexibility Plan.

Flexibility services include businesses and consumers increasing electricity generation, or choosing to adjust their electricity consumption up or down to support balancing of supply and demand in real time in response to a financial incentive provided to them by an agreement with a network operator. They include:

  • Selling power generated by new technologies such as solar panels and wind turbines
  • Businesses adjusting their electricity use at the times of day when they least need it
  • Using new smart energy efficiency technology to adjust consumption remotely and buying electricity from battery storage.

Research conducted by Imperial College London and The Carbon Trust for the Smart Systems and Flexibility Plan shows that the UK could deliver £17-40bn of benefits across the energy system by 2050. A smarter, more flexible energy system, with the use of flexibility markets, will deliver these benefits.

The report also states that network companies will also “rapidly increase the use of competitive markets” over the next 6 years, under the current RIIO ED1 price control period.

The roles and responsibilities of network companies are changing as they respond to the deployment of new types of smart and renewable energy technology connected at a local rather than a national level. These changes mean that Distribution Network Operators are moving from their traditional role of simply distributing electricity to playing a more active role managing supply and demand locally.  At the same time the role of National Grid as System Operator is also changing to facilitate the transition to a more decentralised, low carbon system.  The Open Networks Project will describe the new roles and responsibilities required to support the transition to a smarter, more efficient electricity network.

David Smith, CEO of Energy Networks Association, comments:

“Our energy networks have a great track record of delivering for households, businesses and communities when it comes to network reliability, reducing costs to the bill payer and driving forward new investment in our infrastructure.

“Today’s announcement builds on that, as our energy market rapidly changes. It is about creating a system that creates a platform for a whole range of new energy technologies and services that not only allows network companies to manage the system more effectively but give other organisations the chance to benefit from that, whether that be directly or indirectly.”

Richard Harrington MP, Minister for Energy & Industry, said:

“Upgrading our energy system to make sure it is fit for the future is a key part of our Industrial Strategy and the Smart Systems Plan published in July sets out what we will do to make that happen.

“A smarter, more flexible 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.”

Dermot Nolan, Chief Executive of Ofgem, said:

"We welcome today's commitment by network companies to create new markets for flexibility services following the joint publication of the Smart Systems and Flexibility Plan by Ofgem and the Government in July.

“Flexibility is key to the transition to a smarter energy system which saves consumers money on their energy bills. We will work with the energy industry, Government and consumer groups to make sure that these new services are delivered in whatever way works best for consumers."

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Notes to editors

  • “Opening Markets for Network Flexibility” can be found online here.
  • “An analysis of electricity system flexibility for Great Britain”, produced by Imperial College London and The Carbon Trust for the Smart Systems and Flexibility Plan shows that the UK could save £17-40bn across the electricity system by 2050 by deploying flexibility technologies. The paper was originally published in November 2016 and can be found online here.
  • The Department of Business, Energy & Industrial Strategy and Ofgem published their report “Upgrading Our Energy System: Smart Systems and Flexibility Plan” in July 2017 and states that “The Energy Network Association has set up an Open Networks project which will be a key initiative to drive progress” of changes to the network and system management necessary to deliver this benefit. The Plan can be found online here.
  • The ENA Open Networks Project brings together all 9 of the UK and Ireland’s electricity grid operators, respected academics, NGOs, the Department for Business, Energy & Industrial Strategy and the energy regulator Ofgem
  • Examples of projects by energy network companies include:
    • Electricity North-West’s CLASS project, which has successfully demonstrated that demand for electricity can be reduced without customers noticing a difference to their supply. The project could reduce the need for up to 3.3GW of back-up electricity generation.
    • Northern Powergrid & Northern Gas Network’s InTEGRel project, which researches how gas and electricity networks can work together to deliver breakthroughs in the decarbonisation of heat, energy storage and transport.
    • Scottish & South Electricity Networks’ Constraint Managed Zone (CMZ) services, geographic regions served by existing networks where security of supply is met through the use of flexibility services.
    • SP Energy Networks Active Network Management, whereby SP Energy Networks use Active Network Management (i.e. varying voltage, power, phase balance, reactive power and frequency) and flexible customer arrangements across Dumfries and Galloway to manage distributed generation that’s impacted by transmission restraints.
    • Western Power Distribution’s Electric Nation project, which develops methods to identify which parts of the network are likely to be affected by electric vehicle and vehicle to grid (V2G) uptake
    • UK Power Networks’ Smarter Network Storage project, the first grid‐scale battery storage project in the UK. The immediate benefits of installing the system is deferring the need of around £6m of investment into the network.
  • ENA's LCNI Conference in Telford will run from the 5-7th December 2017, which will include the opportunity for stakeholders to discuss the progress of the Open Networks Project in 2017. You can purchase tickets online here.
  • For press inquiries please contact:

Ed Gill

UK & European Head of Press and Public Affairs

Energy Networks Association

E: [email protected]

T: +44 (0) 20 7706 5157

M: +44 (0) 7725 372 758