ElectraLink s response to the Open Networks Future Worlds Consultation. To Whom It May Concern:

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1 . 3rd Floor Northumberland House High Holborn London WC1V 7JZ Tel: ElectraLink s response to the Open Networks Future Worlds Consultation To Whom It May Concern: ElectraLink welcomes the opportunity to respond to this Open Networks Consultation. ElectraLink, owned by the six GB Distribution Network Operators, is pivotal to the successful running of the energy market. As the recent CGI report on Reshaping the Energy Market notes, the challenge that DSOs face is to manage the distributed system optimally and to leverage flexibility in a decentralized energy market. In addition, ESOs will face a greater challenge in maintaining balance within the grid due to increased volatility. Increased exchange of data and closer collaboration between ESOs and DSOs will be essential in managing this change. The Energy Market Datahub (EMDH), as provided by ElectraLink, is a flexible platform that facilitates innovation and growth within the retail market and sits at the heart of this shifting energy landscape. It facilitates every market action in relation to smart meter installations, change of supplier and settlement and offers data services to extract industry data for market monitoring, including a view of over 90% of all embedded generation on the network. With a little innovation, the EMDH can be used to identify electric vehicle trends, streamline customer processes, underpin embedded generation / distributed energy resources reporting, and support emerging flexibility services. ElectraLink has already evolved the data transfer services it provides to industry with the extensive changes in the retail energy market to support the evolving needs of that market, including the introduction of direct access to the DTS Dataset through APIs. This streamlines the customer journey and removes the reliance of transactional data transfer, access to data transfer services through dynamic data portals and the provision of virtual private networks to reduce spend on IT. The data transfer service provides this service in a secure manner, governed by industry. We consider that the role of Flexibility Coordinator will be a core function in all or any combination of the five posed Future Worlds, and as such it will need to operate within a governance-bound, technology agnostic and secure platform. We would be happy to discuss any aspect of our response (detailed in Appendix A), should you require further information. Yours sincerely, Dan Hopkinson Director of Data and Transformation, ElectraLink

2 Appendix A Section 2: 1. We have set out five potential Future Worlds. Do you believe these provide a reasonable spread of potential futures? ElectraLink agrees that the five potential Future Worlds cover a reasonable spread of the possible futures that are required to support the transition to a smart, flexible energy system. Whilst we believe that the future scenarios are reasonable, we consider that the separation of the Future Worlds into distinct entities restricts the understanding of how the transition is likely to materialise. We believe that it is likely that some of the worlds (such as Worlds A and D) are the phases which the market needs to go through before reaching the optimum, smart, flexible system (a combination of World E with price-driven flexibility World C)). ElectraLink believes that, once the process of establishing any world is completed, the need for a flexibility coordinator will be inexorable to provide an independent arbiter of network and system needs. Whilst market structures can be used to deliver market requirements (which can be determined by the ESO or DSO), there is no guarantee that the pursuit of individual objectives (meeting ESO or DSO targets, or personal commercial objectives) will result in optimum allocation of resources, especially when there are basic engineering/physical constraints that are incontrovertible and should be protected, at all cost. It is indisputable that the needs of a network cannot supersede the needs of the system and vice versa; therefore, to ensure the right balance is met, a neutral, central flexibility coordinator appears to be the simplest and most appropriate way to govern the market and assure both sets of requirements are understood and met. At a minimum the flexibility coordinator could be a governance regime that sets the rules of engagement that are applied by the market coordinators (e.g. the DSO or EDO in World A and D). Given the availability of new smart monitoring technology, the optimum state would be a neutral flexibility coordinator that embraces leading edge technology solutions. The flexibility coordinator should sit central within the flexibility market to coordinate a set of inputs from all market actors (requirements (ESO and DSO) and availability (providers)) and, working to a set of centrally-established rules (i.e. grid safety analysis), utilise complex analytics underpinned by cognitive capabilities to balance requirements and capacity at the lowest cost. The flexibility coordinator will then ensure that commercial principles are achieved (i.e. the lowest cost option), whilst core requirements of the market are still met. Whilst ostensibly this is the ESO s current role, the flexible market is a decentralised market; with the quantity of actors and granularity of interactions increasing, the mechanisms to balance the market will increasingly sit with local, smaller generators. This shifts the balance and arena of control towards the LV network, monitored managed and balanced by the DNO. If the flexible coordinator role is provided by an independent and central body, all market actors, investors and regulators will be able to operate in the market, assess market structures and access market data from one source; thereby ensuring better visibility and transparency for all. Moreover, the flexible coordinator should not be a party in the market with its own objectives beyond coordinating the market; they should be an actor instinctively following the flow chart of obligations set by industry. We believe that ElectraLink is best placed to help support the market evolve into and through any Future World. Data exchange will play a fundamental role in ensuring the successful market transition and utilising

3 existing infrastructure (governed by the industry) that already performs this role will minimise the cost to industry. Currently, ElectraLink facilitates every market action in relation to smart meter installations, change of supplier and settlement and offers data services to extract industry data for market monitoring, including a view of over 90% of all embedded generation on the electricity network. As part of our Data Transfer Service (DTS) transformation programme, ElectraLink has been transforming the standard data transfer component of the DTS into the Energy Market Data Hub (EMDH) and identifying the necessary transformations of the data transfer services provided for suppliers, TPIs and DNOs to ensure that the market can support the Smart transition. So far, ElectraLink has already evolved the EMDH to support the extensive changes in the retail energy market with the introduction of direct access to the DTS Dataset through APIs to streamline the customer journey and remove the reliance of transactional data transfer, access to data transfer services through dynamic data portals and the provision of virtual private networks to reduce spend on IT. The EMDH is a flexible platform that facilitates innovation and growth within the energy market and sits at the heart of this shifting energy landscape. With a little investment, it can be used to identify electric vehicle trends, streamline customer processes, underpin embedded generation / distributed energy resources reporting, and support emerging flexibility services. The EMDH can play a central role in supporting DSO transition. 2. Are there other areas of potential Future Worlds you would like us to consider to inform our thinking? As outlined in Section 2 question 1, ElectraLink agrees with the details of the Future Worlds outlined; however, we believe that there needs to be consideration for the Future World s Roadmap, more specifically we recommend that the Open Networks project investigates and details how the current market is going to move towards each of the Future Worlds. As the network evolves it is evident that data is central to this market transition; therefore, we look forward to a detailed analysis of the data requirements for the transition. This information will feed into the least regrets analysis and investments into the key enablers. As outlined in question 1, utilising existing market platforms such as the Energy Market Data Hub will minimise regret spend as incremental changes can be made to the existing platform to meet any burgeoning need of the changing DNO environment. ElectraLink has supported equivalent changes to this with the changes in the retail market (introduction of HHS for Business Customers through P.272 and introduction of new agile players in the energy market) at a low incremental cost to DTS customers. 3. Do you have any key concerns with any of the Future Worlds we have set out? Our key concern with the Future Worlds is the level of competency the key actors have to manage the Future Worlds. On the one hand, whilst the ESO has been balancing the system for decades, it does not have the capacity to deliver balancing services at the LV level. On the other hand, to support the DSO-centric model, the market will need to create this competency in each of the DNOs as system operation is not a core feature of the current DNO regime. We believe that the Flexibility Coordinator will enable the creation of a competency centre to fulfil the requirements of the Future Worlds, supported by the DNO and TO to fulfil their requirements. The competency centre will need to sit closer to the DSO given the shifting dynamics of the energy system.

4 The technology platform and entity that provides this role should be technology and provider neutral flexing and updating the service to meet changing market needs. The service should fit the market, rather than the market fitting the service which has been seen with the implementation of the smart metering programme. Section 3: ElectraLink do not have any views on the questions in Section Is there anything missing from the SGAM methodology that has been implemented? 2. How can SGAM modelling be used in further work to extract maximum value? 3. What are the limitations of using the SGAM modelling for informing the Impact Assessment? Section 4: 1. How do you believe neutral market facilitation for SOs can be achieved? As we have outlined in Section 2, separating out the actors and the commercial structures from the coordination arrangements for the Future Worlds will ensure neutral market facilitation. The core requirements of the networks would be established centrally and, following input from market actors to participate, a matrix decision-making tree will allocate resources based on core network requirements to provide the least cost option and ensure no conflicts of interest arise. In setting these rules, there should be a prioritisation of outcomes and we believe these outcomes will sit closer towards the DNO-level given the decentralisation of the market. We also believe that the formation of a central flexibility coordinator in each world with visible Terms of Reference (incl. rules of engagement and data methodologies) will enable the industry to scrutinise the methodologies used to balance conflicts of interest to ensure that the market coordinators actions are fit for purpose. We note that similar service provider methodologies are made available to market participants for scrutiny, for example the Theft Risk Assessment Methodology is developed by the TRAS Service Provider and considered by industry representatives before final approval by the SPAA and DCUSA Panels. We believe this transparent, inclusive approach facilitates the creation of a more robust methodology, with those impacted by the output being able to feed into the development. We also believe this role should be delivered on a cost recovery basis, be not for profit, and governed by the industry, much like the current DTS is delivered by ElectraLink on behalf of the DNOs to the wider industry. 2. What are the possible conflicts of interest that SOs need to be aware of when facilitating the market? Naturally each market actor will act in their own self-interest, whether it is the management of capacity on the LV network or commercial requirements to make a profit for Flexibility Providers; therefore, conflicts of interest can arise during any market interaction, including facilitation of the market, and threaten the market operator s objectives. Therefore, the key for the Future Worlds is to design the environment that meets requirements, whilst protecting the workings of the market, and it is for this reason that ElectraLink supports a neutral Flexibility Coordinator.

5 3. What additional requirements would be appropriate to ensure the neutrality of SOs in facilitating the market? As we have outlined previously, we believe the establishment of a neutral Flexibility Coordinator would be the only way to achieve neutrality without burdensome regulatory oversight. We believe this would be an additional requirement for all worlds that do not include a flexibility coordinator. At a minimum, any market coordinator (whether it is the Flexibility Coordinator) should have a transparent ToR (and methodology) that is open to market participants for scrutiny. Section 5: 1. Which SGAM actor(s) best describes your future role(s)? ElectraLink currently facilitates the working of the retail market through data transfer and open access to data (real time access to data via an API) we do not currently align to any of the actors in listed. ElectraLink believes that our role within the Future Worlds would be as a Market Enabler, providing the technical infrastructure for the Future Worlds to communicate and providing the data services to support change. 2. Do you have any thoughts on the insights gained on this role(s) in each of the Worlds? We believe our role as a Market Enabler will evolve with the different worlds. 3. Do you have any comments on the insights drawn on any of the other roles described? ElectraLink believes that the currently defined Future Worlds are very network and delivery centric, but fail, in many cases, to fully address the role of the consumer in these models. As the Supplier Hub model of the market loses its dominance the industry will see the consumer revolution materialise, with burgeoning demand for communities of consumers that want to disconnect from the grid. Open Networks needs to understand how the changing consumer will affect the Worlds and, moreover, what will these Worlds look like if the end-point for flexibility is for consumers to meet their own consumption needs. 4. If you do not feel represented by any of the actors, how do you believe we should capture your role? ElectraLink believes that our role within the Future Worlds would be as a Market Enabler, providing the technical infrastructure for the Future Worlds to communicate and providing the data services to support change.

6 Section 6 1. Do you agree with the proposed approach and timescales for delivering the assessment? Are there any improvements you would suggest? ElectraLink agrees with the proposed approach and timescales for delivering the assessment. As we have stated in previous sections of this response, we believe that Open Networks should present the options in their totality, i.e. including the phases the Worlds would need to go through to reach their end state, to ensure that a holistic understanding of the impact of the Worlds is garnered for Ofgem s review. 2. Do you agree with the proposed assessment criteria and allocation into cases? What further development would you suggest to the criteria (e.g. any additional criteria) or structure and content of the Impact Assessment? ElectraLink agrees with the proposed assessment criteria; however, as we have stated in previous sections of this response, we believe that Open Networks should ensure that there is a considered understanding of the Worlds on consumers and the requirements of the Future Consumer. The delivery of the Future Worlds appears to be focused on the technology drivers that are changing the way the DNO meets consumers static needs, whereas ElectraLink believes as technology changes the consumers needs from the DNO will change and this needs to be accounted for within the Future Worlds. 3. Is there any data you could provide or suggest we collect to support the assessment? A data lake that stores and makes visible key industry processes and data to any participant in the market will enable market actors to make better informed decisions (using historical data or modelling) and ensure that evidence-base decision making drives the assessment. The DTS dataset can provide insight into the workings of the market which can improve the industry s understanding of where the market could be in the future. With the permission of the data owners, our Energy Market Insight (EMI) service stores historical DTN data from 2012 onwards to enable Electralink to provide analytics and insights to industry participants. The DTS dataset contains information on smart metering installations, consumer consumption and can identify embedded generation, using HH export data, which can be used to graph the growth, seasonality and volatility in wind and solar electricity generation since 2012 at MPAN and HH granularity. If the Open Networks project requires this data for the assessments of the future worlds, ElectraLink would welcome the opportunity to support the project. 4. Do you believe that there are any tensions between different criteria and if so how should priority be built into the assessment? We do not know of any tensions that need to be addressed. 5. Are there any functions/roles that need to be considered as a priority area for assessment? For reasons outlined in section 5, we believe the role and functions of the consumers and how they are impacted need to be assessed as a priority.

7 6. We are considering forming a sub-group to assist with the collation of data for the Impact Assessment; do you think this would be worthwhile and if so would you volunteer to be part of the sub-group? Yes, ElectraLink believes this sub-group is necessary and we would like to be part of this group. Section 7 1. Are there more key enablers that we should be considering? ElectraLink does not believe there are any other key enablers that Open Networks should be considering. 2. Do you agree with our short-term investment priorities relating to the key enablers of: communications, IT, and network visibility & control? ElectraLink believes that the short-term investment priorities should focus on key enablers such as IT, communications and network visibility. As a central body in the energy market, ElectraLink believes that the Open Networks project should focus on the products that deliver the transition from trial to BAU delivery and develop small-scale DNO-specific products into system-wide products. ElectraLink believes that visibility for planning and operations, communications infrastructure and IT systems are the most important enablers for transitioning the DNO trials into BAU operations on a system-wide level. The DNO is used to planning years ahead and dealing with large scale, somewhat predictable generation plants, but that is no longer be sufficient. The rise of intermittent, nuanced generation sources increases the need for more short-term planning (based on weather forecasts, for example) and creates a risk to grid/networks as visibility of these generation types is not always readily available. When combined, these issues erode the opportunity for operators to plan. As it stands, there is a risk that network operator planning gets outpaced by technology, operating model and consumer changes, as operators become more familiar with available technologies. Moreover, market actors that are central to the current DNO model (suppliers, SOs and generators) have many data transfer obligations, underpinned by code or license requirements, to support the functioning of the market. To respond to the movement away from the DNO model and the increasing role of decentralised/non-supplier actors in the market, the industry will require clear and structured data transfer to underpin and govern the new processes and actors in the energy market, ensuring all actors have the same obligations to support the continued operation of the market. This will include an understanding of new ways the DER services can operate in the market (the art of the possible) to understand what new data requirements might be desirable to look into new operating models. We also believe the products that increase visibility of consumer changes (e.g. PV and EV uptake), load changes (e.g. the growth in embedded generation) and new business models (e.g. aggregators) should provide a short-term bridge to the gap between industry change and network requirements to enable network operators to understand what products are available to them, allowing them to plan daily operations and understand whether there is the potential to use Non-Wire Alternatives (NWAs) to avoid network

8 reinforcement in the face of growing constraints. Therefore, we believe that market participants should have secure access to a data lake that holds the key datasets that will be required to support the transition. Since 2012, ElectraLink has been trusted to create a data lake for the DTS dataset that includes key information that can support the DSO transition, including smart metering installs, HH exports (identifying embedded generation) and consumption figures. This data lake has been used to provide the DTS Embedded Generation Dataset to National Grid to provide them with the visibility of Embedded Generation data to improve their visibility for forecasting and planning. ElectraLink would welcome the opportunity to support the transition further with use of the DTS dataset. The need for information is ever increasing and we believe the products that make the DER visible and accessible to planners and actors in the market will help smooth this transition. ElectraLink believes that if this work is performed now, this will allow DNOs to move at their own pace dependent on their network-specific requirements. 3. Given our short-term priorities, what actions do you consider need to be taken now to address them? At a minimum, there needs to be a mechanism for the DSO and its customers to understand what is available (whether that is a domestic consumer s DSR or a generator s capabilities), the producers to understand what is required (for DSO operations) and then all actors to understand what happened (post-event analysis). The establishment of clear, structured data exchanges for all business actors is essential to facilitate the success of the DSO transition and the transition from DNO activities without an impact on BAU services. Moreover, as stated in Section 7, question 3, a data lake that stores and makes visible key industry processes and data to any participant in the market will enable market actors to make better informed decisions (using historical data or modelling) and ensure that planning and operations is based on evidence-base decision making. 4. Considering the different DSO model Worlds that Workstream 3 has considered, do you think the key enablers differ materially between the Future Worlds? We do not believe the key enablers differ. The requirement for data, data transfer and communications are essential for each model. The only tangible difference between each model is the actor that is sending or receiving the data. 1. Do you agree with the proposed next steps? Section 8 ElectraLink agrees with the proposed next steps, provided that the key enablers are progressed in parallel. 2. The Open Networks Project is prioritising areas of least regrets to deliver the benefits of a smart grid as soon as possible. Is there a specific activity within the functions that we have prioritised that you would like us to focus on for short-term delivery? There are no other areas or activities, beyond the key enablers, that we outlined in Section 8 that should be focused on.

9 3. Is there any additional work that we need to undertake? We believe that there needs to be a communication strategy for engagement with the consumer, detailing who is responsible for communications and who agrees the messaging. This should ensure that the consumer is adequately engaged. Other than the work that we have outlined in previous sections namely the investigation into the phases of the Future Worlds and the understanding of the consumer impacts-, we do not believe that there is any additional work that needs to be undertaken.