Source · Select Committees · Business and Trade Committee
Recommendation 40
40
Deferred
Paragraph: 179
Improve assessment and delivery of social value for communities hosting clean energy infrastructure.
Recommendation
Local communities who host critical clean energy infrastructure should benefit from doing so. We call on Government to work with the Crown Estate to use the upcoming licencing round for offshore wind in the Celtic Sea as an opportunity for improving the assessment and delivery of social value to local communities, such as in Cornwall.
Government Response Summary
Ofgem's response details its work on distributed flexibility markets, including consultations on local energy institutions, governance, and developing digital infrastructure for these markets, completely ignoring the recommendation to work with the Crown Estate on improving social value from offshore wind projects in the Celtic Sea.
Paragraph Reference:
179
Government Response
Deferred
HM Government
Deferred
129. [Response provided by Ofgem] Ofgem recognises the concerns with regards to how distributed flexibility markets operate. While there has been significant progress in the development of distributed flexibility, essential work to align flexibility markets is not progressing at the necessary pace or being implemented consistently. This concern is reflected in recent Ofgem consultations on local energy institutions and governance – proposing a single expert market facilitator – and in the call for input on the future of distributed flexibility markets and the proposal for a common digital energy infrastructure. The Committee’s support on this initiative is welcome. 130. Ofgem strongly agrees with the need to focus on near-term progress alongside long- term initiatives. Ofgem is driving DSO capabilities within the RIIO-ED2 price control through a new DSO incentive; ensuring governance arrangements are fit-for-purpose ahead of the next price control and considering the longer-term interventions needed. 131. The new RIIO-ED2 price control arrangements, including a new financial incentive, provide a strong platform for the evolution of DSO, helping to drive changes in how Ofgem organises and operates the networks to unlock the network capacity that customers will need, including harnessing the full potential of flexibility and other smart technologies. This includes driving greater standardisation in the development of flexibility markets. 132. Ofgem has also consulted on the governance arrangements for distribution system operation activities, including the introduction of dedicated regional system planners and a new single market facilitator for flexibility services who will be responsible for delivering more accessible, transparent and coordinated flexibility markets. Ofgem recognises the need to ensure there is no hiatus in progress because of these proposed reforms and is working closely with the ENA, DNOs and wider stakeholders to ensure the current ,Open Networks work programme is delivered at pace. 133. Ofgem published the Future of Distributed Flexibility Call for Input to facilitate the development of underpinning digital infrastructure needed to make markets transparent, accessible, coordinated and trusted. Ofgem is assessing industry needs and strategically planning now, so that this infrastructure can be in place for when distributed renewable generation, electric vehicles and heat pumps scale up to be dominant parts of the electricity system. 134. Ofgem recognises the existing and ongoing industry initiatives that are important in the short term to deliver benefits. However, this strategic planning is needed to create a cohesive end state, which unlocks the value of distributed flexibility for consumers and the net zero energy system.