The Energy Bulletin: Regulations round-up July 2017

Storage and Flexibility

BEIS published a series of announcements on 24/07/17 focusing on storage and flexibility to coincide with Greg Clark’s appearance in Birmingham to give his first major speech on Industrial Strategy since the General Election. The measures unveiled specific to battery storage include:

  • A £246m funding commitment to ensure the UK leads the world in the design, development, and manufacture of electric batteries
  • The creation of the ‘Faraday Challenge’, a four-year investment round focused on battery storage R&D projects through three streams:
    • Research: an open competition between universities has been launched to host a £45m ‘Battery Institute’
    • Innovation: The most promising research emerging from the Battery Institute will be moved closer to the market through collaboration with Innovate UK
    • Scale-up: an open competition has been launched to identify the best proposition for a new state-of-the-art open access National Battery Manufacturing Development facility

 

BEIS and Ofgem have also published a new ‘Smart Systems and Flexibility Plan’, which outlines a number of actions to support more flexibility on the grid. The actions in this plan relating to the role of storage in generation include:

  • A commitment to defining storage as a subset of generation within primary legislation (amending the Electricity Act 1989) once Parliament returns from recess
  • Introduction of a modified generation licence for storage in Summer 2018, subject to consultation
  • Electricity supplied to storage facilities will be exempt from policy costs
  • Further guidance to be published later this year for renewable generators looking to co-locate storage systems at their generating stations

 

Half Hourly Settlement

Ofgem has confirmed there will be a Significant Code Review (SCR) on mandatory half hour settlement for profile classes 1-4, with a decision on how to proceed due in summer 2019.

  • The SCR sets out how Ofgem intend to progress with implementing a process to enable mandatory HHS and the options they are considering to undertake and complete the process
  • Under their preferred option, Elexon will be instructed to lead a Design Working Group to develop a Target Operating Model (TOM) with consultations taking place at key stages throughout the duration of the TOM design.
  • Code modifications in progress may also be suspended until the SCR is complete, whilst any new code modifications raised on a similar subject manner may be subsumed into the SCR should they fall in scope.

 

Next steps:

  • Ofgem is planning to host an industry teleconference on Thursday 3rd August 2017 to discuss the SCR further
  • Ofgem is seeking feedback on their preferred SCR approach, governance, and design principles by 1st September 2017 with a decision to be published at a later date.
  • The TOM, together with a full business case, will support a final decision on if, when and how to implement mandatory HHS by the second half of 2019

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