The UK Government and Ofgem have set out new plans to give householders and businesses more control over their energy use.
They will encourage consumers to generate, store and use their own energy by removing barriers to battery storage technologies and help reduce bills.
For example, batteries store surplus electricity generated during the day so it can be used in the evening. Ofgem says this makes it cheaper to meet peak demand which will help cut bills.
The new rules, expected to come into effect over the next year, will cut costs for someone who sets their washing machine to run at a time when it’s the cheapest through a smartphone app.
Currently, those who have solar panels and battery storage are charged tariffs when they import electricity into their homes or export it to the grid. The government and Ofgem aim to make it easier for new technologies and services to be used on lower costs and ensure they face fair charges for using the grid.
Consumers will be able to sign up to “special tariffs” and schemes which reward them for changing how and when they use electricity.
The changes, along with new smart technologies like smart meters and appliances that can be controlled via smart phones and other improvements to manage the energy system, are expected to save consumers up to £40 billion on energy costs by 2050.
These benefits come from avoided or deferred network reinforcements, avoided generation build, avoided restriction of low carbon generation and better operation of the system.
The first phase of a £246 million investment into battery storage technology has been launched today.
Ofgem will be consulting on the structure of a modified generation licence for storage, expected to be introduced by Summer 2018.
Holders of either a generation licence or the new storage licence will not be liable to pay environmental levies on power consumed, including the costs of Renewables Obligation (RO), Contracts for Difference (CfD), Feed in Tariffs (FiTs) and Capacity Market auctions.
A domestic demand side response (DSR) competition is planned for launch in Autumn this year. The government and Ofgem also aim to increase participation of large non-domestic consumers in DSR, with the goal of achieving 30% – 50% of balancing capacity by 2020.
In addition, they will consult on seeking powers to set standards for smart appliances to ensure interoperability of appliances, maintain data privacy and provide cybersecurity.
The regulator said it will assess any regulatory, network and tariff implications that electric vehicles (EVs) represent so risks can be mitigated and the benefits of EVs to the energy system can be optimised.
In an effort to create a flexible energy system, the government is allocating £600,000 for local flexibility trading, with plans to launch a competition for a feasibility study.
Business and Energy Secretary Greg Clark said: “Upgrading our energy system to make sure it is fit for the future is a key part of our Industrial Strategy to deliver a smarter, more flexible energy system. A smarter energy system will create new businesses and high-skilled jobs, while making sure our infrastructure is able to cope with demand.
“We are determined through our Industrial Strategy to address the challenges we face and ensure our energy is reliable, affordable and clean.”