The Energy Transition | OVO Energy launches flat-rate EV tariff, Ofgem calls for ESO separation, National Grid ESO unlocks revenue stacking in dynamic containment

Written on 29 Jan 2021

This week we look at the gas networks releasing a joint plan for hydrogen conversion, SSEN installing innovative monitors, Ofgem proposing a £100,000 fine to Symbio Energy and more.

Ofgem calls for full ESO separation

Ofgem has issued a recommendation for there to be a full separation of the Electricity System Operator (ESO) from the National Grid. Following a review of Great Britain's energy system, the regulator has concluded that the creation of an independent body will help lead the path to net zero at the lowest cost to consumers. The body would run the electricity system, helping to charge millions of electric vehicles (EVs) and enabling a huge increase in renewable power while maintaining secure energy supplies.

Despite the legal separation of National Grid Electricity Transmission and National Grid ESO in 2019, there are still concerns among industry experts that potential conflicts of interests could act as a barrier to electricity and gas system operators efficiently performing their roles in reaching net zero targets. These conflicts could result in "real or perceived bias" in the system operators' decision-making process. Ofgem has confirmed that, whilst there is "no evidence of National Grid acting in a way that deliberately exploits any potential conflicts of interest", the perception of bias is "damaging regardless of whether there is any explicit evidence".  

The Energy White Paper (which we reported on here) included a commitment to consult on system operation governance arrangements this year and Ofgem has confirmed that it will work closely with government in its review. Ofgem estimates that the new body's role could save the consumer between £0.4-4.8 billion on their energy bills between 2022 and 2050.

OVO Energy launches innovative flat-rate EV charging tariff

Energy supplier OVO Energy has partnered with intelligent energy platform Kaluza to launch a 'pioneering' flat-rate tariff for EV charging. OVO states that the new tariff has the ability to save consumers up to £200 per year, compared with average costs.

The OVO Drive Anytime tariff is a 'type of use' tariff that offers a flat rate of 6p/kWh for EV charging at any time of day. Kaluza will use live data on energy pricing, the weather and local network constraints to protect drivers from price spikes. Currently, most EV tariffs require charging at certain times of day to access cheaper off-peak rates.

The tariff is currently in its initial launch phase, with plans for it to be expanded to more customers later in 2021.

Gas networks release joint plan for hydrogen conversion

Speaking at a conference led by thinktank Onward, Kwasi Kwarteng, the Secretary of State for Business, Energy and Industrial Strategy, announced that the UK is on track to integrate hydrogen into the gas network by 2030. Kwarteng spoke of the importance of hydrogen for the UK's transition towards net zero and how the public must be reassured that hydrogen is safe. The announcement was made in the wake of five major British gas grid companies committing to the hydrogen transition and publishing 'Britain's Hydrogen Network Plan'. In partnership with the Energy Networks Association's Gas Goes Green programme, the plan sets out a roadmap that the gas network companies (Cadent, National Grid, Northern Gas Networks, SGN and Wales & West Utilities) will follow and deliver in four stages:

  1. 2020 - 2025: continuing the Iron Mains Risk Reduction Programme, trialling 100% hydrogen in homes and network modelling to ensure security of supply.
  2. 2025 – 30: carrying out solution pilots (including 100% hydrogen domestic pilots) and 20% blending in parts of the network.
  3. 2030s: scaling up, building new hydrogen pipelines and connecting storage facilities.
  4. 2040s: full transition with a national hydrogen network in place.

The four main tenets of the plan are security of supply, safety, customer focus and supply chain and these principles will govern the transition towards a national hydrogen network in the UK.

Elexon to oversee half hourly settlement

Ofgem has published a consultation on the programme implementation principles of Market Wide Half Hourly Settlement (MHHS), which includes its plans for Elexon to be appointed as Senior Responsible Owner (SRO) for the project. Previously, Ofgem had announced that it would take up the role of both programme sponsor and SRO. However, after concerns were raised about the lack of control afforded to industry stakeholders in the implementation of MHHS, Ofgem has suggested that Elexon take up the SRO role.

In one of the biggest energy market changes since the 1990s, MHHS is set to introduce half hourly measurement of electricity consumption across the whole of the energy market. Elexon's role will be to take on the "responsibility for establishing, operating, and managing appropriate programme structures and governance to ensure timely and effective implementation" of MHHS.

The consultation on the programme implementation principles of MHHS closes on 5 March 2021, and Ofgem is due to confirm when MHHS will be implemented in the spring.

National Grid ESO unlocks stacking of assets in Dynamic Containment and Balancing Mechanism

National Grid ESO has unlocked the ability for participants in its Dynamic Containment (DC) service to stack revenues with revenues earned from the Balancing Mechanism (BM).

DC is a post-fault frequency response service, the soft launch of which we reported on in October last year. Energy asset optimisation company Arenko and demand response aggregator Flexitricity are among the companies who have begun providing frequency response through DC. DC participants will now be able to tender for bids in both the BM and DC market during the same period.

The launch of stacking in DC went live at 10am on Wednesday 27 January. National Grid ESO stated as follows: “We anticipate this additional flexibility and revenue stacking will increase the efficiency of battery assets delivering the service, increase competition which would in turn reduce costs to the consumer.”

Ofgem proposes £100,000 fine for Symbio Energy over late renewables scheme payments

Ofgem has proposed a £100,000 fine for energy supplier Symbio Energy for failing to pay into renewables schemes on time .

The fine, which will be reduced to £85,000 if Symbio Energy chooses to settle, follows an investigation launched earlier this month after the supplier missed four Renewables Obligation and Feed-in Tariff payment deadlines in 2020. Symbio Energy has since made all outstanding payments, which totalled around £1.2 million.

Ofgem states that the proposed fine "sends a strong message that every supplier must pay into environmental schemes on time, or face tough action".

SSEN installs innovative monitoring tech as part of smart grid trial

Electricity provider Scottish and Southern Electricity Networks (SSEN) has installed 81 low-voltage monitors throughout Oxfordshire as part of Project Local Energy Oxfordshire (Project LEO).

Project LEO is a smart grid trial which aims to help prepare for a transition to a more flexible energy system. The monitors can alert SSEN to changes in supply and demand in real time, allowing it to target investment in grid upgrades that are needed to reach net zero.