Ofgem has today confirmed Elexon as market facilitator for local energy flexibility. It will serve as a single, expert group that will work with Ofgem, the Electricity System Operator (ESO), ENA, local networks and flexibility service providers to ensure local and national flexibility markets are aligned and to eliminate any obstacles.
Its mission is to spearhead and enable greater flexible energy use across GB’s local electricity distribution networks. It will act as a single, expert entity that will work closely with Ofgem, the ESO (Electricity System Operator), ENA (Energy Networks Association), local networks, and Flexibility Service Providers (FSPs) to drive alignment between local and national flexibility markets and remove any barriers. The appointment of Elexon follows an Ofgem consultation last year.
Ofgem has also launched a consultation on a proposed common Flexibility Market Asset Registration (FMAR) solution. This streamlined new system would provide a single point of registration for flexible consumer assets such as EV (Electric Vehicle) chargers, heat pumps and home battery storage systems to participate in all local and national flexibility markets. This would move away from the present system where Flexibility Service Providers (FSPs), who aggregate assets on behalf of consumers, must sign up multiple times for each individual market.
The shift to more flexible energy use is needed as Great Britain becomes increasingly dependent on intermittent low carbon generation such as wind and solar power. At the same time electricity demand is expected to rise by 50% by 2035, with increasing uptake of EVs and heat pumps anticipated.
In terms of how flexible domestic energy consumption can respond to these challenges, it can be as simple as consumers being able to take advantage of a lower tariff to charge their EV battery when wind is generating lots of electricity.
The steps outlined by Ofgem today could help achieve the Government’s goal of clean power by 2030 and could also contribute to an estimated £30-70 billion savings form flexibility by 2050, which would reduce bills for all consumers. These savings would be achieved through more efficient use of the energy system through flexibility, reducing the need to build new energy generation and new electricity network.
Ofgem Director Eleanor Warburton, said, “To successfully operate the developing low carbon energy system of the future we need more flexible tools to make the best use of our intermittent wind and solar potential along with network and consumer assets to meet demand.”
She added: “We are already starting to see real acceleration in small scale flexible energy use as consumers increasingly access cheaper energy through more flexible consumption.
“As market facilitator Elexon will be able to coordinate and align local and national energy markets to unlock the full value of flexibility. Meanwhile asset registration will create a streamlined one-stop sign-up point, which will help maximise consumer participation in flexible consumption.”
Avi Aithal, Head of Open Networks at Energy Networks Association, said, “We’re looking forward to working with Elexon in their new role as market facilitator for local energy flexibility. We’ll work with them to ensure the momentum built up in the Open Networks programme continues during the transition.”
