Eleanor Warburton, Interim Director of Energy Systems Management and Security at Ofgem, has written an open letter to:
The CEOs of the Energy Networks Assocation, the Distribution Network Operators and National Grid ESO
Here are the first few paragraphs:
I am writing to you to emphasise the importance of the Open Networks Project and the flexibility-enabling activities it is driving forward, which remain a priority for Ofgem.
Flexibility at scale is essential for achieving net zero. We recognise there has been progress made in recent years in developing flexibility markets, but we are clear that further significant changes are needed to unlock the full value of flexibility.
In recent publications we proposed reforms to help unlock this value. We set out the need for fair and transparent rules and processes for procuring flexibility services, which are standardised to minimise friction. Flexibility service providers must be able to stack revenue and participate easily in open, transparent and coordinated markets.
There is strong support for the case for change and for our proposed direction of travel, however respondents raised concerns about a risk of hiatus in the growth of local flexibility markets.
We wish to emphasise that we see no reason for there to be any deceleration in progress and we strongly expect the Energy Networks Association (ENA) and Distribution Network Operators (DNOs) to continue to progress key flexibility enabling activities through the Open Networks Project. We are confident from our recent engagements that you, the ENA and DNOs, share this view too.
The importance of growing local flexibility markets and standardising rules and processes for procuring flexibility services is reflected in RIIO-ED2 arrangements and the Distribution System Operation (DSO) incentive. Any loss of momentum could impact DSO incentive performance, through both the stakeholder survey and the performance panel assessment.
The Open Networks Project has been pivotal to the growth of local flexibility markets in the UK and building on that to drive further, faster success is very much a priority for Ofgem. We look forward to seeing the progress it makes over the coming year.
I have not yet been able to locate an “open reply” from the ENA et al. to Ofgem’s point in the introduction to their “Call for Input: The Future of Distributed Flexibility” that:
We are not seeing the scale of distributed flexibility that we need due to market access and coordination issues. This is especially true for Consumer Energy Resources (CER) like electric vehicles and heat pumps. We need a flex-centric system which facilitates distributed flexibility, but it is not clear that this will emerge organically.