Energy networks could deliver social programmes such as domestic energy efficiency improvements in future, because pressure on network capacity and the shift to a more dynamic energy system will mean they engage directly with customers.
That was one of the conclusions of Networks’ Good Intentions, a wide-ranging review of how networks deliver social obligations, published by Citizens Advice this week.
In some cases networks are well-placed to deliver social obligations, the watchdog says – especially those that affect a geographical area, because “only networks have that comprehensive reach”.
Energy efficiency, for example, could help reduce network costs: “By helping consumers in a very specific area to use less electricity, either by installing energy saving equipment or offering training and advice, it might be possible to avoid or delay an expensive reinforcement, while also saving money directly for those involved and reducing environmental cost”, the watchdog said. Modelling and practical trials by National Energy Action, Northern PowerGrid and Electricity North West had found “a small but meaningful opportunity” for such projects.
Separately, the new data provided by smart meters could help networks help vulnerable customers in ways which “will make the current running of the Priority Services Register, in which each DNO and supplier maintains a separate list and pass the details of vulnerable consumers between them when they switch, seem even more antiquated”, Citizens Advice said.
These are seen as future innovations. The Citizens Advice paper also looks at how networks’ social obligations are currently delivered.
Networks are regulated businesses whose income is set over eight-year “price control” periods by regulator Ofgem in return for delivering outputs such as reliable supply. Social obligations are a new requirement from Ofgem on the networks, and their form is still evolving.
The watchdog said in this period “the real activity under social obligations is only now starting to gain momentum. In some areas, it has still to get underway.” Nevertheless, the watchdog sees it as an opportunity and says Ofgem should consider increasing the ambition and scope of social obligations funding.
It says that networks’ funding for innovation – £150 million annually – dwarfs the £4 million available each year for social obligations. Sometimes the two aims work in tandem and the watchdog says that should be rewarded – but the networks should not be rewarded twice for the same actions.
Download the report here
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