National Grid (Electricity Transmission) and Electricity North West recently commissioned Pöyry to examine the relative value of the likely range of interactions and transactions between the market participants in the future.
Whenever a customer flicks a switch, they can take for granted that the lights will come on. As we move to a lower carbon economy, where our electricity will be coming from less controllable resources, such as wind energy, the energy system will need to adapt to continue to provide the same high standards. In order to deliver affordable energy prices in the low carbon future, we will need to help customers to participate in the energy balancing process. This is likely to be best achieved through the provision of "demand-side" and "generation-side" response services, where customers change the time they choose to use energy to benefit from lower prices or even payments. In order to facilitate this we need to understand how the current UK energy market mechanisms affect the value and flow of benefits to the participants including customers, and in particular how those mechanisms might need to evolve.
This important report examines the relative strength of signals available as an alternative to investment by network operators and as an alternative to energy generation by wholesale market participants, and represents in industry-leading research into the development of new energy markets. This report builds upon the work published by Department of Energy and Climate Change in June 2011 and takes this work on to explore potential scenarios and outcomes where energy balancing signals overlap or contradict network balancing signals.