Government is paving the way for all businesses and households to pay more for using electricity at peak times – and less when there is plenty to go around.
That message is contained within a raft of potential proposals in a call for evidence published by the Department of Business, Energy and Industrial Strategy (BEIS) and regulator Ofgem.
The document asks how policy and regulation might be rewritten in order to create a digitised power system in which factories, offices, batteries, cars and dishwashers, help balance demand and supply.
A smart power system requires both infrastructure and price signals. Government indicated it will decide whether to mandate all businesses and households are metered and settled half hourly by 2018.
If it does, all power users will be exposed to peak and off peak pricing, although the consultation notes “the most vulnerable customers [will be] afforded suitable protections to ensure they are not made worse off by a more flexible electricity system”.
A UK smart grid also requires new energy storage rules and a level playing field between generation and demand-side so that the power system no longer favours power stations. To that end, BEIS and Ofgem outline options to create a more balanced regulatory framework, suggesting a flexible whole system approach could save the UK £17bn-£40bn cumulative to 2050 while meeting carbon targets.
Views are sought upon: how energy storage should be treated from a regulatory perspective; how demand-side response aggregators might participate in the wholesale market and balancing mechanism (currently they need a supply licence to do so); how to implement time of use tariffs for all; how smart network charges should be structured; and how government might improve policy levers including the capacity mechanism and renewables subsidies to better deliver a flexible whole-system approach.
The call for evidence also floats the idea of procuring 5GW of demand-side response (DSR) by 2020 and asks how to engage businesses not providing DSR, plus how and when to engage households. Suggestions on standards for interoperability for smart appliances are invited.
Meanwhile, the report says distribution network operators (DNOs) should waste no time transitioning to distribution system operators, effectively becoming regional system operators.
See the full call for evidence here.
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