A sneak peek: Local Energy Markets
With the National Grid to be effectively nationalised UrbanChain takes a look at the importance of local energy markets.
To focus on the challenges posed by decarbonisation a new public body is being formed. The Future System Operator (FSO), by 2024, will be responsible for the planning and management of the UK's energy distribution. It means a return to public control when it comes to keeping electricity and gas flowing.
The part of the National Grid that keeps Britain's lights on, the Electricity System Operator (ESO), is set to be taken over by the government. Plans revealed only a few weeks ago by The Department for Business, Energy and Industrial Strategy (BEIS) included their reasoning and intent which included 'driving progress to net zero while maintaining energy security and minimising costs for consumers'.
So, what does National Grid - listed on the stock market since 1995 - selling its ESO division means for the future of UK energy?
John Pettigrew, National Grid chief executive last month said: "We have been working closely with government, industry and the regulator to create a Future System Operator that enables long-term holistic thinking, drives progress towards net zero, and lays the foundations for the regulatory reform necessary to deliver a clean, fair and affordable energy transition."
How will the shift impact corporate consumers during this time of unprecedented energy market change? Where will renewable assets and consumption of truly green energy fit in with this plan? With the new FSO public body launch, will new technology and building security of supply be supported?
And ultimately will this move strengthen the resilience of our energy system?
Ofgem review into local energy system operation launched
Interestingly Britain’s independent energy regulator Ofgem last month announced that it is reviewing how the energy system is planned and operated locally. Ofgem is doing this in a bid to ensure that Britain is primed for a step-change increase in green and more affordable homegrown power.
The regulator had previously called for the new FSO and for it to be fully independent of National Grid. And it is making these moves due to a belief that the current system is not fit to support net-zero at the lowest cost to customers.
No.1 in the UK
As the only British renewable energy exchange company, UrbanChain supports Ofgem’s review launch into local energy markets. We are the number one expert in peer-to-peer (P2P) energy exchange and local energy markets. And we have been since 2017 when UrbanChain was born. Put simply, we have created an energy market just for renewables.
An alternative, safe, and unique energy market where corporate consumers place an exact order for electricity and renewable power producers meet that order. More about how we do that later.
'Local power grid rise' versus 'Cost of energy and living crisis'
Energy bills in business and at home have risen to levels not seen before. There are multiple reasons for this. But one aspect has remained for far too long and is the core driver. It’s the UK’s broken and inefficient energy model.
In essence, renewables are intermittent. Green energy is affected by ups and downs in the gas market. Green energy has long been - and continues to be - fed into the wholesale market before customers buy it back at much higher prices. This is a model that has fundamentally remained the same and sees energy consumers hit with rising bills.
Through the creation of the P2P energy exchange and numerous local energy markets since, we have cut this out, as once consumers are part of our platform; they buy 100% green energy, and save at least 25% on bills, while renewable energy generators get at least 25% better margins and earn more money in the medium to long-term.
Our eChain product is a peer-to-peer energy exchange system - the platform and marketplace - that directly connects corporate consumers of green energy with power producers while decoupling renewables from the gas market. It takes care of profiling, aggregating, matching, balancing, settling, billing, and managing generation and consumption in the most accurate, transparent, and secure way.
eChain also overcomes the intermittency and fluctuation of renewables thanks to AI and blockchain technologies. We support the push for local power grids as they will play a critical role in helping to reduce our reliance on expensive imports of gas. I’ve no doubt corporate entities and bodies across the public sector do too as they review their energy use in line with net-zero targets.
To finish with here's a quote from Charlotte Ramsay and Richard Smith, co-directors of energy systems, management and security of Ofgem. 'To reduce our reliance on expensive imports of gas and bring down customers' energy bills, we need to accelerate our transition to net zero. This will require a transformation of our energy system, in particular at a local level.
"This review will ensure that local energy systems across Great Britain are set up for a huge increase in green, more affordable, and homegrown power."