Using data to understand and navigate the new power market

A joint REA and ElectraLink initiative

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Executive Summary

To meet the UK’s new ambitious target of Net Zero greenhouse gas emissions by 2050, significant amounts of renewable power will need to be deployed in the coming years to not only replace existing capacity but to cover new demands from the electrification of heat and transport.

Renewable forms of power generation have already made a significant contribution to power sector decarbonisation to date, and represent some of the lowest-cost forms of new generation in the country today. As much of this is variable in nature, greater power system flexibility will be needed to balance trends in supply and demand. As renewables are often more distributed, with smaller generation capacities compared to their fossil equivalents, much has been connected at the lower-voltage distribution network level, rather than the high-voltage transmission network. Given the imperative of delivering Net Zero, and the low-cost nature of many renewable technologies, the trend towards distribution network-connected generation is likely to continue. Several landmark documents have emerged which chart a pathway to deliver the greater flexibility on the networks required to accommodate this shift. This includes the National Infrastructure Commission’s Smart Power report and the joint Government and Ofgem Smart Systems and Flexibility Plan. Additionally, in 2017 and 2018 the REA and members Eaton commissioned Bloomberg New Energy Finance to identify both the basis of, and solutions to, the flexibility gap in Great Britain (GB). Several distribution networks (DNOs) have also started on the journey to transform into Distribution System Operators, and released market products to procure

However, in order to fully prepare for a more flexible system market information is needed for stakeholders (including policy-makers, project developers, and investors) to better understand what has happened at the distribution-level to date, how different consumers are engaging with this system, and to develop a common language for understanding flexibility customer types.

To deliver this insight, the REA and ElectraLink have partnered to produce the Flexible Futures report. Using data from ElectraLink who manage the UK Energy Market Data Hub that includes the Data Transfer Service, and analysis from the REA, this report seeks to broaden the UK power sector’s understanding of the electricity sector to date and going forward.

The report uses data from ElectraLink to highlight how consumers are becoming more engaged with the electricity sector through switching. It highlights exactly how much distribution-connected generation and export there is in Great Britain, which was previously not publicly known. It additionally proposes a new classification system for the increasingly-engaged customer base, with the aim of encouraging people and businesses to adopt flexible energy technologies such as energy storage.