24 November 2019
Government and Ofgem to deliver market mechanisms which reward EV drivers’ actions.
The Government and Ofgem must ensure that the value of system services and the financial benefits of optimised network reinforcements and whole electricity system efficiencies, created by the actions of consumers, are reflected and accessible through market price mechanisms. EV chargepoints have the potential to support the operation and decarbonisation of the wider energy system in a number of ways. For the potential benefits to be fully realised it is vital that consumers are incentivised and rewarded for the system benefits arising from their actions. The benefit will be mutual allowing for improved propositions for the consumer and wider system payback. As part of its Targeted Charging Review, addressing residual network charges, and its Access and Forward-Looking Charges projects, Ofgem is reviewing price signals sent to users of distribution networks through the charging arrangements. Building on such activities, tariffs that better reflect true network costs and which more closely align retail price to wholesale variations (e.g. day-ahead dynamic tariffs) would further encourage demand flexibility. These propositions are designed to engage and bring about behavioural change, motivated in part by the carbon and environmental benefits but also through price and/or revenue incentives. This objective would be further supported through a regulatory framework which encourages innovation in whole-system and energy transition solutions.
Consideration should be given to the following points:
The Government and Ofgem must ensure that existing markets for flexibility are made accessible for EV drivers. They must also support the development of new co-ordinated and accessible markets for flexibility to compete with traditional networks and wider whole electricity system solutions by 2023 at the latest. Markets and price signals should maximise the opportunities for consumers to utilise their flexible resources, including EVs, and sufficiently reward them for offering demand flexibility services that support optimised network operations and investment, emission reductions and whole electricity system efficiency.
3 December 2020