The UK is experiencing a significant transformation of its energy system. We are on a long-term path to decarbonisation, with local generation becoming more prevalent and new innovative technologies being developed. A more flexible and dynamic system, as described through the BEIS Call for Evidence could help to support this transition, achieving key goals of secure, affordable and low carbon energy in the future.
CBI welcomed the opportunity to respond to this call for evidence on a smart, flexible system, where we highlighted that:
Business needs a long term plan, as well as clear measures of success. Addressing the energy trilemma is a priority for government and business, and moving towards a smart, flexible energy system could support in meeting that objective cost effectively. However forward planning will be key, especially as the UK moves to establish a robust Industrial Strategy, and as we strive to remain a competitive global leader in a post-Brexit economy. Additionally, establishing clear measures for success are crucial as it will allow investors to anticipate policy changes based on set parameters, and therefore invest with more confidence.
Consumers, both domestic and business, must be at the heart of this low carbon transition. Energy efficiency will be a key first step – to help manage bills, as well as reduce demand across the system. Enabling technologies, such as smart meters could give consumers the much needed access to low carbon, innovative technologies in the future, but it is important that vulnerable consumers are protected in this transition.
More must be done to make Demand Side Response accessible to a range of consumers. A smart, flexible system could better facilitate the uptake of the full range of Demand Side Response measures, but more must be done to make it more accessible to both domestic and business consumers. This could include a holistic review of network charging arrangements, and the ancillary services market (specialist services provided by the System Operator to ensure supply and demand of electricity are balanced and the system remains stable ) – but ultimately changes should focus on a market based framework in order to give a level playing field to all technologies.
Changing the roles and responsibilities of the Network Operators will require careful management. The call for evidence suggested a shift in the model of network operation, from Distribution Network Operators (DNOs), to Distribution System Operators (DSOs). This change could lead to some positive outcomes, but must be supported by smart active management and clarity on roles. Additionally, considered market arrangements will be key to ensure an effective transition. For example, DSOs should be incentivised to further consider demand side options as an alternative to investment on the network – leading to cost savings for the consumer.
Storage could play an important role in the success of a smart, flexible energy system. There is scope for a range of storage technologies to support in the development of a low carbon energy system – by facilitating a greater uptake of renewables, and overcoming some of the challenges associated with intermittency. It’s important that this call for evidence provides clarity on the role of storage, and that market arrangements facilitate the creation of a level playing for new technologies.