IEEE Power & Energy Magazine - September/October 2016 - 22

Flexibility corresponds to a key feature of electricity markets
as it can be used by diverse market participants to manage
their operations efficiently.
The regulatory evolution of Ofgem in the last decade makes
it clear that innovation must be considered key in ensuring
the transition to a low-carbon economy. Nonetheless, the
adoption of new technologies and appearance of new markets and/or business models that could further help in this
transition might be limited by current regulation. Further
work is being carried out by Ofgem to understand and overcome potential regulatory barriers.

Ofgem Vision
In 2015, Ofgem published a position paper setting out its
vision of flexibility in the future electricity system. Flexibility,
defined as the ability to modify generation and/or consumption patterns in reaction to an external signal to provide a service within the electricity system, corresponds to a key feature
of electricity markets as it can be used by diverse market participants (those that generate, consume or do both) to manage

their operations efficiently. In this context, Ofgem believes
that the future electricity system will need to be characterized
by the smarter and more efficient use of traditional and new
flexibility sources to benefit consumers as much as possible.
This future system, illustrated in Figure 6, is envisioned
to feature an efficient and sustainable mix of generation
sources both at the transmission and local levels, making use
of sufficient cross-border electricity flows and the increased
and efficient deployment of demand-side response. It should
incorporate emerging flexibility sources, such as storage, to
help manage the system and also enable new business models to participate, from both existing and new market actors,
and support better provision of flexibility. Clearly, in this
vision of Ofgem, the role of future DNOs in managing flexibility is fundamental.
Crucially, in its 2015 position paper, Ofgem also discussed
issues that could inhibit flexibility in distribution networks.

350

Funding (US$ Million)

300
250
200
150
100
50

Harmonics

Measurement

Community Schemes

Transforms

Substation Monitoring
Fault Current

Asset Management

Protection

Photovoltaics
Overhead Lines

Distributed Generation

Resilience
Stakeholder Engagement

Carbon Reduction

Voltage Control
Fault Level

Meshed Networks
Fault Management

Modeling
Commercial Aspects

MV Technology

Electric Heat Pumps

ICT
Active Management

Electric Vehicles

Low Carbon Generation
Network Monitoring

Storage

LV and MV Networks

Demand-Side Response

0

figure 5. The aggregated investment of LCN Fund projects per scope (many with multiple instances) based on 2016 ENA
Smarter Networks Portal data.
22

ieee power & energy magazine

september/october 2016



Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - September/October 2016

IEEE Power & Energy Magazine - September/October 2016 - Cover1
IEEE Power & Energy Magazine - September/October 2016 - Cover2
IEEE Power & Energy Magazine - September/October 2016 - 1
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IEEE Power & Energy Magazine - September/October 2016 - Cover3
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