A new report published today urges the Government to step up progress with unleashing the potential of flexibility to deliver benefits for customers and the entire energy system.
The report produced by Energy UK, in partnership with The Association for Decentralised Energy (ADE) and BEAMA, will be launched at a Breakfast Briefing this morning featuring speakers from Ofgem, BEIS and Imperial College, as well as the authors.
The report highlights the crucial role flexibility services, like energy storage and demand side response (DSR), will play in reaching the Net Zero target and dealing with peaks and troughs in energy demand.
In a low carbon energy system, which will increasingly feature intermittent sources like wind and solar as part of a far more diverse and localised generation mix, flexibility will be key to making the most efficient use of these resources.
Flexibility will ensure security of supply and cut the amount that has to be spent on generation capacity and grid reinforcement, as well as give customers the chance to save money – or even be paid – for using energy at certain times of the day and enable them to use electric vehicles to store energy and then supply it for their own uses or sell back to the grid.
Research has estimated that achieving the full potential of flexibility could deliver savings of £8 billion a year by the end of the decade - and even reach £40 billion a year by 2050.
However, the report also expresses concern that despite widespread consensus on the importance of flexibility and its potential, progress with integrating it into the energy system has been slow and patchy, and the UK risks failing to make the most of the opportunity.
In particular, it states the Government and Ofgem should work with the industry to develop a new version of the Smart Systems and Flexibility Plan (first published by the Government and Ofgem in 2017) to accurately measure progress, set specific targets and timeframes and collaborate to ensure delivery of these.
The report also calls for action to amend market mechanisms and regulation designed for the traditional, centralised, one-way energy system and which do not provide the right opportunities to enable investment. Network operators should also be barred from participating in markets for ancillary services as they risk hampering development of the flexibility market by contracting such services from themselves.
Charles Wood, Energy UK’s Head of New Energy Services and Heat, said:
A flexible energy system is essential if we are to get anywhere near Net Zero. What’s more, there’s no question of the huge savings and benefits it can bring to us all.
The products, technology and finance are all there but the opportunities and incentives aren’t - meaning business cases for investment aren’t stacking up. Overall demand for power has been falling for some time but the electrification of heating and transport will greatly increase demand at peak times and flexibility will be absolutely essential to cope with this.
We need to be ready for when that happens which means taking action now – otherwise we risk missing out on the benefits. We’re ready to work with the Government to deliver on all this potential but we need them to give it the priority it warrants.
Caroline Bragg, Head of Policy at the ADE said:
The companies supplying this flexibility stand ready to deliver but while elements of the jigsaw are in place, there are still missing pieces.
The Smart Systems and Flexibility Plan was rightly acknowledged as a significant step forward when it was published - but progress since then has been too slow and too patchy.
We now need to go further. Industry is ready to continue working with government on this and, given the right policy framework, to invest in the development and delivery of the solutions consumers want.
Jeremy Yapp, BEAMA’s Head of Flexible Energy Systems, said:
There is a risk that the confidence the Smart Systems and Flexibility Plan created will be lost. Our members need clear, decisive action to justify investment into the UK supply chain for the low carbon energy sector.
The flexibility market will work best if it provides clear revenue streams for all participants. We are calling on Government to work with Industry on this. If we want consumers to adopt low carbon solutions alongside new devices and services that let them become providers of flexibility back to the grid then we need a market that rewards consumers for providing that flexibility and supports the necessary industry investment.
Notes to editors:
- Energy UK is the trade association for the GB energy industry, with a membership of over 100 suppliers, generators and stakeholders with a business interest in the production and supply of electricity and gas for domestic and business consumers. Our membership covers over 90% of both UK power generation and the energy supply market for UK homes. We represent the diverse nature of the UK’s energy industry – from established FTSE 100 companies right through to new, growing suppliers and generators, which now make up over half of our membership.
- The Association for Decentralised Energy is setting the vision of a local, efficient, low carbon energy system which enables energy users to make the choices which work for them. We are the leading trade association for decentralised energy, representing more than 160 interested parties from across the industrial, commercial and public sectors.
- BEAMA is the UK trade association for manufacturers and providers of energy infrastructure technologies and systems. We represent more than 200 companies, from start-ups and SMEs to large multinationals. Our members provide generation, transmission and distribution equipment, heating and ventilation products, EV infrastructure, electrical systems, and flexibility assets in networks and the built environment. We promote regulation, markets and products that support a safe, smart and secure low-carbon energy system.
The report has also been supported by the REA and Renewable UK.