Energy Shift Overview: Ofgem's assessment of network fee adjustments, Equinor boosting blue hydrogen output capabilities, and EDF planning to expand Zenobe's 100MW battery asset connected to the transmission grid.
News Article: Ofgem Proposes Revolutionary Changes to Electricity Network Charging
In a bid to create a more efficient, fair, and future-proof network charging framework, Ofgem has published a consultation on its minded-to position on network charging reforms. The proposed changes aim to make charges more cost-reflective, fairer, and aligned with future electricity system needs.
Transforming Transmission Charges
Ofgem plans to reform transmission charges to better incentivize generation, demand, and storage to connect and operate where network capacity is available. This move is expected to reduce congestion and constraint costs. The reforms will see charges incorporate the availability of spare grid capacity, rather than assuming zero spare capacity as is currently done.
Revamping Distribution Network Charges
The proposed changes to distribution network charges are extensive. Ofgem is exploring options such as replacing standing fixed charges with rising or falling block tariffs, or varying charges based on capacity. Introducing time-of-use pricing is also on the table, where charges vary depending on when electricity is used, encouraging lower network use during peak times. Regional pricing changes, means-based charging models, and potential moves towards more uniform national charges or retaining regional differences that reflect network costs are also under consideration.
Shaping Network Access Rights and Cost Allocation
The reforms emphasize charging signals that guide users—generators, consumers, and storage operators—to locate and operate according to planned network spare capacity and future system needs as defined in spatial plans. This seeks to align network access rights with long-term network investment plans and operational realities, reducing unnecessary network reinforcement and enabling better system integration of distributed energy resources.
Key Developments
- ev.energy, an electric vehicle (EV) software platform provider, has raised £6.3 million for global expansion. The VPP is a cloud-based platform that enhances the charging cycles of battery storage systems within the home, tapping into new revenue streams from grid and network operators.
- Zenobe's Director and co-founder, James Basden, stated that the Capenhurst site was commissioned in response to National Grid's Stability Pathfinder programs. Zenobe has chosen EDF to optimize its 100MW battery asset, currently under construction, using EDF's trading platform for various revenue streams.
- The 100MWh/100 MW battery asset, once completed, will be the biggest transmission-connected battery storage project in Europe.
- Equinor, a Norwegian state-owned oil company, has tripled its projected hydrogen production capacity in the UK to 1.8GW.
- The Charging Infrastructure Investment Fund (CIIF) has invested £6.4m into EV charging company char.gy. This is the third investment made by the CIIF, which has already exceeded its initial investment target of £400 million, with further investment expected later in 2021.
Subject to any responses to the consultation, Ofgem hopes to implement the changes to both distribution connection charges and access rights by 1 April 2023. The deadline for responses to the consultation is 25 August 2021.
The proposed reforms form part of a comprehensive review of electricity network charging. Ofgem also proposes to introduce new non-firm and time-profiled access options for customers connecting to distribution networks. The consultation looks at 'forward-looking charges' that will send signals to users about the effect of their behavior on the network.
In another significant development, Pure Planet has partnered with Lightsource Labs to release flexibility through a combination of their home energy management technology (Tribe) and Virtual Power Plant (VPP) platform. By connecting to a hardware hub, users of Tribe will have the ability to monitor, control, and schedule energy devices within their homes with a view to reducing energy costs by up to 20%. The Head of energy trading services at EDF, Stuart Fenner, commented that the partnership will provide essential flexibility to the energy system and reinforce EDF's commitment to helping Britain achieve net zero.
These changes, if implemented, are expected to create a more dynamic, efficient, and future-proof network charging framework that supports the transition to a low-carbon, flexible electricity system in Great Britain.
- The venture capital industry has shown interest in funding energy-related projects, as ev.energy, an electric vehicle (EV) software platform provider, recently raised £6.3 million for global expansion.
- Ofgem's proposed reforms include the introduction of new finance options, such as forward-looking charges, which send signals to users about the effect of their behavior on the network, and non-firm and time-profiled access options for customers connecting to distribution networks.
