Shake-up of UK electricity supply industry

28 July 2017

The UK Business secretary Greg Clark has published a revised electricity supply policy designed to encourage consumer take up of renewables generation, demand side management, battery storage, virtual group trading and grid access.

According to the government and to energy regulator Ofgem, consumers in the UK could save billions of pounds thanks to major changes in the way electricity is made, used and stored now being announced. If the new measures work, consumers will save between £17bn and £40bn by 2050. An Ofgem source told BBC News that the current rules on trading energy are not fit for the digital age because they often discourage people using energy flexibly. The rules were made before the digital revolution and before the boom in variable renewable energy.
New rules due to come into effect over the next year will make it easier for people to generate their own power with solar panels, store it in batteries and sell it to the National Grid.
They will reduce costs for consumers that take part in demand side management schemes, for example by allowing large power using appliances such washing machines to be turned on by the internet to maximise the use of cheap solar and wind power when it is available, or who agree to have their freezers switched off for a few minutes to smooth demand at peak times. They will also benefit a business that allows its air-conditioning to be turned down briefly to help smooth demand.
The new rules have been designed to cash in on improvements in battery storage and renewables that are already allowing millions of people across the UK to generate and store electricity.

It will also be possible for small power savings to be aggregated into packages by traders, who will offer them to the National Grid.
Business Secretary Greg Clark is to outline further plans for UK industrial strategy, including details of a £246 million competition, the Faraday Challenge, for innovation in battery technology.
Nicola Shaw, the executive director of National Grid who had previously announced that she believed between 30% and 50% of fluctuations on the grid could be smoothed by households and businesses adjusting their demand at peak times, commented: “We are at a moment of real change in the energy industry. From an historic perspective, we created energy in big generating organisations that sent power to houses and their businesses. Now we are producing energy in those places – mostly with solar power.”
Some industry figures are urging a degree of caution amongst the enthusiasm: the more the energy industry embraces the digital age, the more vulnerable it will be to hacking. Recent reports suggest that Russian hackers may already have tried to compromise the system. Ofgem says the new rules will put measures in place to combat interference.



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