Guest blog: What is Elexon doing to facilitate Net Zero?
Introduction
Climate change is arguably the most pressing existential threat facing the planet, and failure to intervene and tackle it will result in irreversible and devastating consequences. The rising number of natural disasters around the world serves as a stark reminder of the impacts of climate change. Prior to COP26, the UK Prime Minister pledged to source 100% of the UK’s electricity from clean energy sources by 2035. If we are to achieve our legally binding target of achieving Net Zero by 2050, companies and stakeholders across the energy sector will need to collaborate to a greater degree and more quickly than ever before.
Much innovation and change is needed in the energy industry to achieve such ambitious goals. At Elexon, we are focusing on enabling this change, so much so that our core purpose is ‘serving at the heart of the energy industry, building a path to Net Zero’. Elexon manages the Balancing and Settlement Code (BSC) one of 11 industry codes, and we play a key role in wholesale electricity market arrangements.
BSC Modifications that are enabling Net Zero
We are working with industry to progress several BSC Modifications and initiatives that facilitate Net Zero in the short, medium and long term. We would like to highlight some of the major changes that have been (or will be made to the BSC) to support Net Zero. If you would like to find further information on how Elexon supports Net Zero initiatives see this page on our corporate site.
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P362 ‘Electricity Market Sandbox’
Modification P362 will enable companies to test innovative products and business models in live BSC environments, without having to go through the process of acceding to the BSC first. Innovation can facilitate faster deployment of low carbon technologies and new business models that will help deliver a carbon neutral fuel mix. In May 2021, Ofgem approved the first proposal to use the BSC Sandbox.
P398 ‘Increasing access to BSC data’
Modification P398, which was implemented in June 2021, has increased access to BSC data and assumed that all BSC data is open unless there is reason otherwise. Open Data allows for faster, more precise decision-making for generation, trading and consumption, and can provide valuable insight for new business models to emerge. The provision of open data was one of the recommendations made by the Energy Data Taskforce in 2019. Elexon’s work on Modification P398 was highlighted in the Department for Business, Energy and Industrial Strategy (BEIS) recent ‘Digitalising our energy system for net zero: strategy and action plan 2021’.
Market-wide Half Hourly Settlement (MHHS)
MHHS is one of the biggest changes to the energy retail market since privatisation. It is a key reform which can set the sector on course for meeting Net Zero. MHHS will enable the collection of data (meter readings) every half-hour, which is not currently possible as most domestic and small non-domestic households/businesses do not have smart meters that can record half-hourly consumption. MHHS will send accurate signals to Suppliers about their customers’ electricity usage in real time and facilitate a smart and flexible electricity grid. Through MHHS and use of smart meters, consumers could also earn money by trading surplus electricity from household solar panels or other renewables with energy companies. They could also reduce their bills by offering demand-side response where they are compensated for using less electricity at times of peak demand. There is a huge potential for new business models to be developed in the years to come, including vehicle to gird and peer to peer trading technologies and MHHS will be an enabler for this.
Elexon was appointed by Ofgem in April 2021 to manage the industry-led programme to deliver MHHS by October 2025. This work is led by the MHHS Programme, which has been separated from Elexon’s other BSC activities. We are pleased to be working alongside the industry to deliver MHHS, you can find more information about the Programme on this new website.
Elexon Kinnect
Elexon Kinnect is our new digital platform, which we will use to provide enhanced services to our customers and quicker support for innovators. Elexon Kinnect is a cloud technology platform split out into three parts, the Customer Solution, the Insights Solution and the Settlement Solution. The new scalable platform will keep pace with the rapid rate of change that will be needed especially in code modifications to support Net Zero, as well as provide valuable new data services to the energy market. It will also ensure that we can increase the provision of detailed, open data on electricity market, which will be vital to supporting development of new products and services. You can read more about Kinnect on our website.
Conclusion
At Elexon, we prioritise enabling innovation, and facilitating the changes needed in the energy industry to achieve Net Zero. If you would like to further understand how these BSC Modifications are enabling Net Zero, please feel free to contact [email protected].
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