Source · Select Committees · Business and Trade Committee
Recommendation 54
54
Accepted
Paragraph: 218
Mandate Ofgem to pressure the ENA and DNOs for faster Open Networks Programme implementation.
Recommendation
At present, flexibility markets are disjointed and difficult to navigate, impeding the participation of small assetsand reducing the value of distributed flexibility. While Ofgem should be commended for its proposals for a single digital flexibility platform, this should not distract from near-term actions that are required to drive immediate progress. While Ofgem should be commended for its proposals for a single digital flexibility platform, this should not distract from near-term actions that are required to drive immediate progress. We recommend that Ofgem puts pressure on the Energy Network Association and Distribution Network Operators to ensure faster and more consistent implementation of the Open Networks Programme.
Government Response Summary
Ofgem strongly agrees with the need for faster progress, stating it is driving DSO capabilities through incentives and working closely with the ENA and DNOs to ensure the Open Networks programme is delivered at pace.
Paragraph Reference:
218
Government Response
Accepted
HM Government
Accepted
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.