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Ongoing Changes to Market Arrangements

Ongoing Changes to Market Arrangements. June 2019. Angela Love, Director of Strategy and Communications. Public. Smarter Energy Insights Forum Utiligroup. 1. 2. 3. 4. What is driving the energy system of the future?. The energy system of the future.

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Ongoing Changes to Market Arrangements

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  1. Ongoing Changes to Market Arrangements • June 2019 • Angela Love, • Director of Strategy and Communications • Public • Smarter Energy Insights Forum • Utiligroup

  2. 1 2 3 4 What is driving the energy system of the future? The energy system of the future A new set of challenges… and the solutions ELEXON’s role: Enable and support innovation

  3. 1 What is driving the energy system of the future? Changing policy and regulation focus All parts of the industry have changed… Supply Distribution network Transmission network “After the trilemma - 4 principles for the power sector” November 2018 • Increases in embedded generation • Growth in the number of suppliers • Government intervention and price caps • European standardisation • Ongoing smart meter roll-out • New role for DNO transforming into DSO • Expanding range of market participants • Value assigned to flexibility • New technologies and solutions Market Principle Insurance Principle Agility Principle “No free-riding” Principle ... and will continue changing. 3

  4. 2 The energy system of the future The old energy system The new energy system Policy focus Regulation focus 4

  5. 3 A new set of challenges… and the solutions What are the solutions? New challenges for balancing the grid & managing the networks Hard to predict renewable generation      Wider access to markets Changing demand patterns due to on-site renewables and storage Visibility of new resources New sources of demand (EVs, heat)  Changing role for DNOs and the SO Changes to market design principles New sources of flexibility and balancing services

  6. 4 ELEXON’s role: Enable and support innovation Energy storage Consumer- facing business models and innovative services rely on changes to market arrangements Peer-to-peer trading New types of flexibility (e.g. demand-side response) ‘Behind the Meter’ EVs and Vehicle to Grid (V2G) Smart tariffs (Time of use tariffs) Energy as a service (bundled offering) ELEXON leads/ contributes to core ongoing initiatives and pro-actively identifies new practical solutions Modification: Electricity Market Sandbox Opening Balancing Mechanism to smaller orgs Modifications: Enabling customers to buy power from multiple providers DNO to DSO ELEXON supports BEIS/Ofgem initiatives to enable a timely transition to a smart and flexible system

  7. 4 ELEXON’s role: Enable and support innovation Multiple Providers Model Current situation Practical solution New business models and consumer opportunity enabled • Supplier Hub is an established market design principle • Meaning that most customers can only have one Supplier at a time Modification: Enabling customers to buy power from multiple providers • Bundled Services • Peer-to-Peer trading • Community Energy • Aggregators • Rapid switching Future energy retail market review While working on the practical and quick-to-implement solution with the industry, we also feed into BEIS/Ofgem review of the future energy retail market 7

  8. 4 ELEXON’s role: Enable and support innovation Digital platform Foundation architecture: Data and services platform 1 Current situation • Fragmented systems; data in silos; old technology; slow to change • Energy Data Taskforce Foundation architecture: Party Management Platform 2 Benefits to existing and new market participants Benefits to central services utilised by all market participants Practical solution • Data available for analysis (open data principle) • Scalable and flexible solution for future changes • Faster, automated processes • Secure by design • Opportunity to use emerging technologies (Blockchain, AI, IoT) • Improved customer experience • Faster, digital registration • Unified customer portal • Real-time analytics and insight • Easy integration with other data sources through APIs We are re-architecting our central systems, to deliver a scalable, agile and efficient platform to provide settlement and other value-added services to the market, with accessible data.

  9. 4 ELEXON’s role: Enable and support innovation : How can we do more - REC governance Retail Energy Code Manager REC REC to be model for future codes Immediate opportunity to simplify and streamline the codes landscape      Code Manager (CM) role - not ‘code administrator’ Opportunity to align retail and wholesale markets CM to have wide powers to drive change  Wide Performance Assurance role We believe ELEXON is best placed to be the REC Code Manager Manager of service providers Consumer- facing business models and innovative services rely on changes to wholesale and network market arrangements (codes and systems).

  10. Angela Love Director of Strategy and Communications www.elexon.co.uk

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