The Electricity Storage Network has responded to Ofgem’s call for input on reform of locational charges and regulatory siting levers under Reformed National Pricing (RNP). This follows our recent response to NESO’s call for input on balancing, settlement and dispatch reform.
Locational charging should be considered alongside wider reforms to markets, spatial planning and grid connections to avoid unintended impacts on the energy storage sector. Ofgem’s call for input outlines five potential reform options, all of which would require significant further development and detail. At this stage, our response argues for the following.
The role and effectiveness of transmission network charging (TNUoS) will depend on wider reforms to strategic planning, grid connections and other siting levers under Reformed National Pricing. Reforms should support clear and predictable investment signals, while enabling delivery of the Clean Power Plan and Strategic Spatial Energy Plan at least cost to consumers.
Our response calls for a holistic review of energy storage policy and the wider investment environment for storage. ESN members are concerned that multiple reforms affecting storage are being progressed simultaneously, risking a siloed approach that creates unintended consequences and inconsistent investment signals. A holistic review should consider key policy and market reforms together, including Reformed National Pricing, locational procurement of response and reserve services, network charging reform, code modifications such as CMP470 and P462, and repetitive re-trading reforms.
Our members have highlighted that current TNUoS arrangements do not adequately reflect the costs and benefits associated with storage. Existing arrangements classify storage alongside conventional generation, undervaluing the flexibility storage provides through the ability to both import and export. This classification fails to capture the full value of storage to the system, and a more tailored approach to locational charging is warranted.
Transitional arrangements should be treated as an urgent priority ahead of locational charging reform. Projects approaching Final Investment Decision (FID) require certainty about future charging arrangements to avoid additional investment risk and increased cost of capital. Our response calls on Ofgem and the government to work together to provide immediate clarity and assurance for projects nearing FID, while longer-term reforms are developed.
The Electricity Storage Network brings together developers, investors and innovators to shape a thriving grid-scale storage sector in GB. If your organisation is working in this space, we’d love to hear from you.
Contact: Olly Frankland, ESN lead, Regen
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