A group of energy and technology companies have urged Ofgem to show “leadership” and expedite market-wide half hourly settlement to unlock flexibility from small businesses, households and electric vehicles.
In a letter to CEO Jonathan Brearley, the Flexibility First forum suggested the right market framework and market-wide half hourly settlement would save hundreds of millions per year on balancing costs alone.
It also suggests National Grid ESO needs to move faster in opening up markets for smaller scale flexibility and says this summer’s extra £500m in balancing costs as a result of Covid-19 demand destruction will soon become the norm.
“If we want to ensure that the energy system of tomorrow can be more resilient we need regulatory leadership in creating the framework that incentivises the market to utilise flexibility,” states the letter from signatories including Centrica, Eon, Flexitricity, Octopus and Ovo.
Ofgem has committed to market-wide half hourly settlement. It has not put in place a firm deadline but anticipates it will take four years.
Meanwhile, the regulator has told distribution network operators to make faster progress on flexibility this year if they want Ofgem to recognise it in their allowed spending for the next five-year period. The DNO’s appear to have responded, with plans to buy up to 2GW of flex by the end of 2020.
They now say Ofgem must play its part in providing the market architecture and long-term signals to unlock gigawatts of flexibility.