Unlocking Local Energy Markets

Historically electricity markets and network operation in GB have been designed to reflect the centralised top down configuration of the system; with generation flowing from large scale power stations and fed through the arteries of the transmission network down through to the distribution network. Within this, consumers have had a passive role in how the energy system actually operates. This traditional model of system design and operation, however, has already begun to change and further change can be expected, potentially creating a wider role for consumers (BEIS and Ofgem, 2017; IRENA, 2018). The need to decarbonise generation to meet the targets within the Climate Change Act 2008 (HM Government, 2008); the falling costs and increasingly competitive state of renewable technologies and leaps in IT capabilities, provides GB with a huge opportunity to revolutionise the way in which electricity is generated and traded (Ramos et al., 2016). This has the potential to change the energy system from a top-down system in which power flows one-way to a much more complex decentralised system with multiple power flows. Such a system would have much lower carbon emissions through the deployment of small-scale renewable technologies and storage at the local level. Such a system would potentially provide consumers with more opportunity to participate, and allow them to access greater reward in respect to the services they could receive or provide to the system (Ofgem, 2016; IGov, 2018). One route to enabling greater consumer involvement is through a Local Energy Market (LEM) approach. The authors are currently researching the Cornwall Local Energy Market project, which is a three year trial from 2017 to 2020, jointly funded through the European Regional Development Fund and Centrica. The project is led by Centrica in association with project partners Western Power Distribution, National Grid, the University of Exeter and Imperial College London. The content of this paper however is applicable to any emerging LEM within GB and is not a reflection of the Cornwall LEM project, although this obviously provides context.