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Why should communities care about flexibility?

In this series of three blogs I’ll share insight and key themes that have emerged from countless conversations with communities who look at flexibility in our energy system very differently from the industry, network operators, the regulator and policy makers. Starting this week with the first blog on carbon reduction, and the need for community engagement.

I’ve spent the last two years talking to hundreds of community and local energy organisations across the UK about flexibility in our energy system, working on detailed projects exploring demand side response (DSR), and exploring the potential opportunities and value that flexibility markets could bring to new local energy business models. At Regen we have been pioneering this capacity, building through events and projects that help upskill communities to start engaging in the conversation. We do this because we believe a smart decarbonised energy system needs everyone to be involved, and if communities participate from the outset, they will be able to influence the design of emerging flexibility markets and benefit fairly from the value they offer. We have focussed on local flexibility markets which have lower entry thresholds and are still being developed by Distribution Network Operators (DNOs), but suppliers and the National Grid Electricity System Operator (ESO) also buy flexibility, and the full value of using energy in a flexible way is not yet fully realised.

1. Flexibility and carbon reduction

All the community energy organisations I talk to want to take action on climate change by helping their communities save energy and connect more renewables. A truly smart and flexible energy system should support more efficient home energy use, and enable more low carbon generation to connect to the network by balancing out peaks and troughs in demand. Flexibility also provides the capability to turn up demand or using storage to accommodate the clean electricity generated when it’s windy, sunny and rainy.

Unfortunately we’ve yet to see a tangible link, beyond innovation trials, where local flexibility services are procured to enable more renewables to connect. Currently we are seeing most DNOs procuring demand turn down or generation turn up services at typical peak times, for example, Mondays to Fridays 5-7pm, so unless you already happen to have a battery connected to your wind or solar farm, you couldn’t reliably provide the services being procured. On top of this, Ofgem’s ‘technology agnostic’ mandate appears to directly contradict our government’s net zero commitment, as in reality, anyone with a back-up generator, gas peaking plant, or a battery is going to be best placed to consistently deliver this type of flexibility.

Perhaps the biggest elephant in the room is that we are going to need to reinforce our electricity networks anyway as demand increases with the electrification of heat and transport, and to quadruple low-carbon supply by 2050 as the Committee on Climate Change recommends. Their Net Zero – The UK’s contribution to stopping global warming report also states:

“Many networks will need to be upgraded in a timely manner and future-proofed to limit costs and enable rapid uptake of electric vehicles and heat pumps… A relatively large expansion in capacity is likely to have low regrets, ‘future-proofing’ the network to enable greater electrification if necessary and/or enabling demand to respond more readily to variations in low-carbon electricity supply… These infrastructure developments will not occur without government leadership.”

The community energy customer segment are clearly and repeatedly asking for support with energy efficiency to reduce demand, for low carbon sources of flexibility to be prioritised, and for flexibility to be used to enable more renewables to connect to the electricity network, but are Ofgem and the government listening?

Ofgem’s number one priority is to minimise cost for the consumer today, followed by fairness for consumers, with carbon reduction at number three on their list. Ofgem chair, Martin Cave said in a recent speech that “Ofgem’s role in assessing the trade-off between current and future consumers’ interests – between cheaper prices now and more sustainability – will come into greater prominence.” Perhaps he doesn’t realise that the lifetime cost of renewable energy is cheaper than any other form of generation (BEIS Electricity Generation Costs November 2016 report). We can forgive him for this given how murky the world of tax breaks are for fossil fuel generation, and the varied and interesting way the government ‘subsidises’ different forms of energy generation. On top of this already skewed market, the decision to effectively ban the cheapest form of energy generation, onshore wind, in England in 2015, makes the playing field anything but level.

In our Power to Participate publication we make several recommendations for system operators to encourage participation in flexibility markets. Unless Ofgem and the government provide some leadership and direction on flexibility to specifically enable more low carbon generation, it’s going to be difficult to engage the 82% of people in this country who support renewables (BEIS 2019 Public Attitudes Tracker), the people marching on the street demanding action on climate change, and the community energy organisations who have been working tirelessly on this issue for many years. Ofgem need explicit direction from government to including decarbonisation as a specific priority of the regulator, and it would be entirely consistent with our zero carbon by 2050 target to prioritise low carbon sources of flexibility.

Tune in next week for instalment two on ‘The Money’, and the week after when I’ll be offering insight into the future potential of flexibility for real people at home. If you’d like to find out more have a look at our Power to Participate publication and any of the content from over 20 events on flexibility we’ve delivered for communities in the past couple of years, or better still become a member of Regen and start engaging more in this debate.