LEMs coordinate the generation, supply, storage, transport, and consumption of energy from decentralised energy resources within a confined geographical area.
A new policy review that sets out to make businesses interested in participating in local energy markets (LEMs) aware of the potential benefits and risks has been released.
The policy and regulatory context for new local energy markets, published by Energy Systems Catapult, focuses on electricity networks and markets in the UK.
According to Energy Systems Catapult, an independent not-for-profit, LEMs are emerging as a potential solution to coordinate an increasingly complex decentralised energy system.
They serve as instruments to coordinate the generation, supply, storage, transport, and consumption of energy from decentralised energy resources within a confined geographical area.
The review aims to help stakeholders interested in developing and participating in LEMs understand how the policy and regulatory future might evolve and outlines the opportunities and challenges that they may need to navigate.
“It is key for stakeholders entering the local energy market space to consider how to future-proof projects and design them in a way that allows successful integration in the wider system”
Key considerations for all local energy market projects, include:
In the UK today, LEM concepts are still in initial stages of development and vary greatly in their design and functionality, including the attribute being traded, the market participants involved and the role they play. The value of different arrangements is also yet to be tested and evaluated, notes Catapult.
“Ongoing demonstration and design projects have the potential for profound impacts on local energy markets. The challenge and the opportunity is to develop these trials with an eye on wider, simultaneous sector changes,” said Eva Gromadzki, director of the prospering from the energy revolution’s Energy Revolution Integration Service.
“With reforms in network charging arrangements, market settlement and retail supply, and continuous changes in the way the electricity system is operated, “it is key for stakeholders entering the local energy market space to consider how to future-proof projects and design them in a way that allows successful integration in the wider system.”
She continued: “This review goes a long way in highlighting how the policy and regulatory future might evolve, as well as outlining the potential risks and benefits.”
In the context of the wider system developments, further considerations that should be considered by all local energy market projects, include:
The document has been delivered by the Catapult’s markets, policy and regulation team. It was commissioned by the Energy Revolution Integration Service programme to support projects in the £102.5m Prospering from the Energy Revolution (PFER) challenge, which focuses on supporting the accelerated development and sustained success of smart local energy systems.
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