By Elexon Chief Executive Peter Stanley
By 2035, National Energy System Operator (NESO) estimates that there could be around 20 million electric vehicles on the road and ten million heat pumps connected to distribution networks in Great Britain.
These assets, together with other smart technology, are a key enabler of the transition to net zero, and will rapidly scale up the amount of flexible capacity that network companies can call on to resolve supply and demand constraints.
To enable flexibility markets to operate effectively, there needs to be a common registration system across Distribution System Operator (DSO) and NESO markets, which market participants can all use as the ‘single source of the truth’ for recording details of registered flexibility assets.
Ofgem refers to this new solution as the Flexibility Market Asset Register (FMAR). It is part of the digital backbone for a smarter system capable of meeting the new Government’s Clean Power 2030 target.
DSOs and NESO already have asset registration systems for their respective markets.
However, given each company’s system is different, this requires that asset owners register the same data multiple times to access different flexibility markets.
This can act as a barrier to market entry because it is time-consuming and off-putting for asset owners, making it one of the issues that is holding back growth of flexibility markets.
Ofgem proposes that through the FMAR, flexibility service providers would only need to register their asset once.
The FMAR would hold static data including rated export and import capacity, the minimum and maximum amount of time that an asset can operate for, as well as ramp up and ramp down times.
The development of the FMAR is a first step towards having flexibility digital infrastructure (FDI) in place.
The FDI will support trading and it would connect with existing trading platforms.
Both the FMAR and the FDI will need to be integrated with the data sharing infrastructure (DSI) – which is currently the subject of a separate consultation by Ofgem.
The DSI, previously known as the ‘digital spine’, is a concept first put forward by the Energy Digitalisation Taskforce in 2021.
Ofgem envisages the DSI as enabling seamless sharing of datasets between companies across the sector, and it has proposed that NESO develops a ‘minimum viable product’ (MVP) for it.
The DSI will have many different future data use cases including a specific role to provide the sharing mechanism for FMAR data.
In July 2024, Ofgem appointed Elexon as the market facilitator for distributed flexibility, and it is also proposing that we lead the enabling and design work for the FMAR.
Elexon strongly supports this view, and we will look to leverage our unique combination of governance, digital and data expertise to continue to support the evolving energy sector.
Ofgem is proposing that the FMAR is deployed between 2025 and 2028. We recognise the interdependencies between the FMAR, the DSI, and the development of the consumer data sharing consent solution, which Ofgem is also consulting on.
It is essential for any development of the FMAR to be adaptable so that it incorporates the outcomes of these other complex and multiple work streams as they progress.
There will be some important choices to be made in the design phase for the FMAR. Ofgem believes that it should capture assets of less than 1MW – the point at which the assets require aggregation to access ESO markets. This is a good starting point, however, a wider scope will be needed to accommodate assets that are larger than 1MW. Alongside consideration of this, decisions will need to be made on how flexibility providers should be treated if they have grouped together portfolios of assets.
Within its current scope, the FMAR includes assets in the local DSO-run flexibility markets, and also those that participate in NESO markets including Ancillary Services and the Balancing Mechanism.
From November 2024, the wholesale market opens up to independent aggregators (known as Virtual Lead Parties – VLPs) that often represent a range of smaller asset owners.
We believe that the assets managed by VLPs should be included in the scope of the FMAR.
This will support market coordination, given that these assets will use the same registration process for participating in wholesale markets as they do for the Balancing Mechanism.
A key for success is for Ofgem and Elexon as the market facilitator to take a whole system view and ensure that any prevailing asset registration process is in line with other developments.
This includes the Energy Systems Catapult and software company Greensync’s initiative to produce an automatic asset register (AAR) for assets smaller than 1MW and a central asset register (CAR) for storing associated data.
These systems are being trialled under DESNZ’s Net Zero innovation scheme.
There is uncertainty about whether the AAR can be scaled up to a national level.
However, from Elexon’s perspective, building on existing technology solutions that work is preferable to creating something new, particularly if that can be an accelerator to deliver value to the sector sooner.
Before flexibility markets can play a bigger role in managing supply and demand, as a sector, we need to move on from the current situation where network operators are ‘flying blind’ by not having the visibility of how these assets can support efficient system balancing.
At a minimum, market participants need the FMAR to be a universal register that all participants in these markets can use, and trust.
It will be an essential building block showing the availability and capability of flexibility assets, and Elexon is uniquely placed as the market facilitator to align these complex market interactions along with the expertise needed to design and deliver it.
Copyright © 2024 Energy Live News LtdELN