As consumers we have ever-increasing choice over how we live our lives. Technology in particular opens up a huge range of choices by allowing us to purchase goods and services from companies across the world. It also opens up exciting new possibilities in how we use energy at home.
As our homes become more connected new business models offer us ways to better manage our energy use. We can save money by taking up the next generation of ‘time of use’ tariffs. Through these offers we can save on bills if we change our energy use patterns, so that we use more energy outside times of peak demand when it is more expensive to generate.
Behind connected customers and the new choices to flex energy consumption, lies a spectrum of operational arrangements and rules that need to evolve to fully enable new products and services. ELEXON, which manages the Balancing and Settlement Code (BSC), is helping to update and evolve the rules that govern Britain’s electricity market.
There are numerous longer-term and shorter-terms initiatives underway to enable the transition to a smarter, more flexible energy system. Longer-term initiatives include, for example, the review by the Department for Business, Energy and Industrial Strategy and Ofgem into Future supply market arrangements. Other initiatives are unlocking the benefits of the new service propositions more quickly.
Multiple Suppliers and ‘bundled services’
Currently customers can only be served by one supplier at a time through their meter. We want to change this as it could restrict the growth of new products and services. We developed the ground-breaking thinking on how BSC rules could be changed to allow customers to purchase energy from parties other than their retail supplier. It will also enable the development of new ‘bundled services’ for consumers.
We are now working on the solution (BSC modification P379 ‘Multiple Suppliers through Meter Splitting’) which could bring in the necessary changes. For example, an EV (Electric Vehicle) manufacturer will be able to bundle an EV together with the electricity it uses in an ‘EV+energy’ deal. Consumers could also purchase ‘device as a service’ technology, allowing them to lease an appliance with power included. At the same time, the customer can still contract with a conventional supplier for any remaining household electricity demand.
Smart Meters and Half-Hourly Settlement
The State of the Connected Home report suggests that smart meters enable consumers to better manage their energy consumption. To fully realise the benefits of smart meters we need to introduce Market Wide Half-Hourly Settlement (MHHS) so that actual (rather than estimated) consumption is recorded every half hour. We are developing an operating model on behalf of Ofgem to support these changes. MHHS will help suppliers and innovators to design new offers such as more advanced bundled services and new more granular ‘time-of-use’ tariffs. The more consumers take up ‘time of use tariffs’ the better it will be for the energy system overall.
By ‘flexing’ their energy usage consumers help to ease the constraints on the system when demand is high. They are also helping to reduce the carbon footprint of electricity generation (as fewer large power stations will be needed at times of peak demand).
In conclusion, if we are to have a smarter more flexible energy system, we need to overhaul some of the rules so that they don’t stand in the way of new products, technology and services which benefit consumers. ELEXON wants to play a major role in these changes. We are developing the thinking behind what reforms are needed and then engaging with industry stakeholders and innovators to help get the right reforms in place.