and facilitate more demand-side response in
residual balancing.
In line with these reforms, National Grid has
also committed to reform the procurement processes for flexible energy resources. In June
2017, National Grid published its System Needs
and Product Strategy to address key challenges to
the deployment of flexible energy resources in
Britain’s electricity markets:
• National Grid identifies the number of products, lack of transparency over product specification and unclear assessment criteria for
product parameters as key challenges to the
deployment of flexible energy resources. First,
the set of products offered for system services
is large and complex (providers can choose
from more than 20 different products, each
with different technical requirements and
routes to market). Second, there is a lack of
transparency in product specifications, which
vary with system conditions and which themselves are the result of underlying conditions.
Third, assessment criteria are unclear, as the
system operator does not specify the importance and value it attaches to key parameters,
such as length of contract or speed of delivery,
in the products it procures; and overlapping
markets, where more than one product exist to
solve the same system problems, each with
different procurement processes.
• National Grid commits to simplify the products for system services through rationalisation, standardisation and improvement.
National Grid commits to three actions. First,
to carry out a review to reduce the suite of
products that it procures, to remove products
that are no longer required in their current
form, or have been superseded by later
products, and offer market-based alternatives
where possible. Second, to standardise products within each service market, with standardised parameters such as contract length
(e.g. 1 month, 6 months, 1 year, 2 years) and
speed of delivery of reserve energy (e.g. 2, 5,
10 or 20 min). Third, to improve the products
procured to better suit the technical abilities
and economic characteristics of the assets
providing the services.
Alongside these reforms, the UK energy networks industry is planning the reforms required
to deliver the smart grid. The Energy Networks
Association, the industry body for owners and
operators of gas and electricity networks in the
UK, has set up the Open Networks Project, an
initiative to reform the operation of electricity
networks and underpin the delivery of the smart
grid. The Open Networks Project’s objectives
include developing improved processes for
transmission system operators (TSOs) and distribution system operators (DSOs) in connections, planning, shared TSO/DSO services and
operation; and developing a more detailed view
of the required transition from a distribution
network operator (DNO) to a DSO, including the
impacts on existing organisational capability.
(5) Summary of arrangements
See Table 6.
(5) Germany
(1) Institutional arrangements
Before liberalisation, the German electricity sector
was characterised by regional monopolies at three
levels. At the supra-regional level, eight network
energy supply companies, each active in its own
region, produced around 80% of all electricity.
Four of these were vertically integrated from
generation to retail, while the other four were
vertically integrated across generation and transmission only. All eight companies also provided
electricity to regional energy suppliers. At the
regional level, around 80 energy supply companies generated electricity (10% of total electricity),
managed the distribution network and supplied
electricity to end consumers or municipal utilities.
At the local level, around 900 municipal utilities
generated the remaining 10% of total electricity,
managed the municipal distribution networks and
supplied electricity to end consumers.
The German electricity sector went through a
structural change in the 1990s and 2000s. Territorial monopolies were abolished and generators
gained access to end consumers in other
116
W. Xiaoming et al.
residual balancing.
In line with these reforms, National Grid has
also committed to reform the procurement processes for flexible energy resources. In June
2017, National Grid published its System Needs
and Product Strategy to address key challenges to
the deployment of flexible energy resources in
Britain’s electricity markets:
• National Grid identifies the number of products, lack of transparency over product specification and unclear assessment criteria for
product parameters as key challenges to the
deployment of flexible energy resources. First,
the set of products offered for system services
is large and complex (providers can choose
from more than 20 different products, each
with different technical requirements and
routes to market). Second, there is a lack of
transparency in product specifications, which
vary with system conditions and which themselves are the result of underlying conditions.
Third, assessment criteria are unclear, as the
system operator does not specify the importance and value it attaches to key parameters,
such as length of contract or speed of delivery,
in the products it procures; and overlapping
markets, where more than one product exist to
solve the same system problems, each with
different procurement processes.
• National Grid commits to simplify the products for system services through rationalisation, standardisation and improvement.
National Grid commits to three actions. First,
to carry out a review to reduce the suite of
products that it procures, to remove products
that are no longer required in their current
form, or have been superseded by later
products, and offer market-based alternatives
where possible. Second, to standardise products within each service market, with standardised parameters such as contract length
(e.g. 1 month, 6 months, 1 year, 2 years) and
speed of delivery of reserve energy (e.g. 2, 5,
10 or 20 min). Third, to improve the products
procured to better suit the technical abilities
and economic characteristics of the assets
providing the services.
Alongside these reforms, the UK energy networks industry is planning the reforms required
to deliver the smart grid. The Energy Networks
Association, the industry body for owners and
operators of gas and electricity networks in the
UK, has set up the Open Networks Project, an
initiative to reform the operation of electricity
networks and underpin the delivery of the smart
grid. The Open Networks Project’s objectives
include developing improved processes for
transmission system operators (TSOs) and distribution system operators (DSOs) in connections, planning, shared TSO/DSO services and
operation; and developing a more detailed view
of the required transition from a distribution
network operator (DNO) to a DSO, including the
impacts on existing organisational capability.
(5) Summary of arrangements
See Table 6.
(5) Germany
(1) Institutional arrangements
Before liberalisation, the German electricity sector
was characterised by regional monopolies at three
levels. At the supra-regional level, eight network
energy supply companies, each active in its own
region, produced around 80% of all electricity.
Four of these were vertically integrated from
generation to retail, while the other four were
vertically integrated across generation and transmission only. All eight companies also provided
electricity to regional energy suppliers. At the
regional level, around 80 energy supply companies generated electricity (10% of total electricity),
managed the distribution network and supplied
electricity to end consumers or municipal utilities.
At the local level, around 900 municipal utilities
generated the remaining 10% of total electricity,
managed the municipal distribution networks and
supplied electricity to end consumers.
The German electricity sector went through a
structural change in the 1990s and 2000s. Territorial monopolies were abolished and generators
gained access to end consumers in other
116
W. Xiaoming et al.