Ofgem is laying the ground for a major change to the electricity market. It will mean that everyone is billed in half hourly blocks, matching the way the system is balanced.
A precise timetable is not yet defined, but Ofgem is aiming for the middle of this decade, when there will be much more offshore wind on the system, and when the smart meter rollout should be complete.
While large and some medium sized businesses are already settled on a half hourly basis, market-wide settlement will bring SMEs and households into play.
The shift will open the door to widespread time of use tariffs and will likely make demand-side response and other forms of flexibility more attractive, as price signals become much sharper and people are exposed to peaks and troughs of generation.
In other words, people will have to change how they consume energy in a few year’s time if they do not want to pay more.
That could mean people are more receptive to new business models, smart controls and automation so that they can save money and avoid having to think about the cost implications of routine actions.
But the regulatory challenge to deliver the change is huge, requiring a system-wide overhaul.
Ofgem’s consultation sets out some of the key considerations around operating models, data collection and sharing, governance and the proposed timetable and transition period.
See the document here.