Source · Select Committees · Environmental Audit Committee
Recommendation 5
5
Accepted
Paragraph: 44
Long-term low carbon energy storage development faces significant market and policy barriers.
Conclusion
While short-term energy storage has some market drivers, the development of long-term, inter-seasonal storage at the scale expected to be required faces market, policy and regulatory barriers. The UK economy will require a significant level of low carbon energy storage of this type in order to achieve the Government’s net zero energy goals while maintaining energy security and avoiding energy shortfalls.
Government Response Summary
The government notes the importance of Market-wide Half-Hourly Settlement (MHHS) for demand-side response and provides a detailed update on its implementation. Ofgem has approved a delay to MHHS completion until July-December 2027, outlining actions to mitigate further risks.
Paragraph Reference:
44
Government Response
Accepted
HM Government
Accepted
The Government notes the importance of Market-wide Half-Hourly Settlement (MHHS) implementation as an enabler of the increase in demand side response capacity required to meet the 2030 clean power mission. 2 https://www.gov.uk/government/publications/uk-electric-vehicle-infrastructure-strategy 3 https://www.neso.energy/publications/future-energy-scenarios-fes/fes-documents 4 ‘Profile 1: Drives 7,400 miles a year with typical household electricity use’ from https:// assets.publishing.service.gov.uk/media/66019a0065ca2fa78e7da7dc/future-default- tariffs-for-households-call-for-evidence.pdf MHHS will incentivise suppliers to reward consumers for shifting demand out of peak periods, resulting in better use of renewable energy, reduced system costs and savings for consumers. The Government expects Ofgem to work closely with Elexon and put in place the right processes and incentives to ensure the timely delivery of MHHS implementation. Ofgem welcomes the opportunity to provide the Committee with a progress report on the implementation of electricity retail MHHS. This progress report sets out: • the strategic context for Ofgem’s April 2021 decision to introduce MHHS; • the April 2021 timetable for industry to implement MHHS and the revisions made to that timetable in June 2023, along with the reasons for those changes; and • the current state of progress and prospects, including risks to timely delivery. Ofgem has now approved a proposal from the MHHS Implementation Manager, Elexon, to delay the completion of MHHS by 6.5 months to July 2027 at the earliest and December 2027 at the latest. This report outlines the actions that Ofgem will take to mitigate the risks of further delay during the implementation of MHHS. The progress report can be found at Annex A. Developing an electricity grid ready for Net Zero Connections