Ofgem: Energy storage shouldn’t be owned by network operators

Energy storage has a “big future” but shouldn’t be owned and operated by network operators. That’s according to Andy Burgess, Associate Partner, Energy Systems at Ofgem who alongside National Grid was answering […]

Register now!

By Jacqueline Echevarria

Energy storage has a “big future” but shouldn’t be owned and operated by network operators.

That’s according to Andy Burgess, Associate Partner, Energy Systems at Ofgem who alongside National Grid was answering questions of the Energy and Climate Change Committee about low carbon network infrastructure.

Asked about a recommendation from the National Infrastructure Commission to let network operators own and operate energy storage, he said: “Our principal is that we want to see competitive markets develop. Generally competitive markets in flexibility and storage is part of that… I think procuring storage is fine and using storage is fine but owning and operating storage immediately raises some issues about whether you can develop a natural competitive market for storage.

“So our principal is that the network companies shouldn’t own or operate storage. We recognise there might be some exceptions to that based on particular circumstances or particular needs or the way you define storage… We think if you want a competitive market to be developed it is important to keep the regulated monopolies out of them.”

Mr Burgess insisted one of the “five priorities for Ofgem” is to make energy storage competitive in the market.

He added: “We look at how storage is treated and make sure it can compete on a level playing field with other forms of flexibility.

“It’s a question of making sure that storage is a viable option in all relevant markets, making sure that people understand where it fits in, looking at how it’s charged to make sure there’s no double charge in storage, looking at environmental levies to make sure storage doesn’t pay those twice. The priority is to make sure storage can compete in relevant markets, we think it has quite a big future.”

When asked about DECC possibly creating a new independent system operator, Maxine Frerk, Acting Senior Partner, Network at Ofgem said it should be independent from government and the national grid and they would like to regulate it “the same way we regulate National Grid.”

Ms Frerk and the rest of the witnesses agreed the current energy market is ready for low carbon innovations like demand side response, district heating network and distribution system operators.

Charlotte Ramsay, Head of Strategy, Markets and Regulation, European Business Development at National Grid told MPs interconnectors are a win-win energy infrastructure.

She believes the power links provide lower prices, better security of supply and access to low carbon.

She said: “It’s a win-win, being interconnected to other markets brings only benefits… It is a really important part of solving the energy trilemma.”

Ms Ramsay added National Grid owns two interconnectors to France and the Netherlands and there are four others under development to Europe and the Scandinavian region.

Asked about the possibility of building an interconnector to Iceland, she said they are still investigating if the country’s market has value to the UK and waiting for an agreement as “governments are talking”.

She believes there could be some disruptions between interconnectors with Europe if Brexit happens but added the country will need to work hard to re-engage with the European market.