A fragmented energy supply industry ‘will raise regulatory challenges’

The decarbonisation of heat will fragment the UK’s utility structure and throw up new challenges for regulation, suggests discussion at the British Institute for Energy Economics (BIEE) biannual research conference.
A potential future emerged that would see households split between those using heat pumps, those on a large hydrogen network those served by one of thousands of local monopoly heat networks – some of which would have fixed links with other infrastructure, such as industry providing waste heat and few would take a consistent approach. That threw up a host of questions. Should the consumer, network and local monopolies be regulated under separate regimes? Ofgem chief executive Jonathan Brearley, addressing the meeting, admitted that a regulator would not be able to scrutinise many small hat networks in the same way it did the small number of power and gas networks, suggesting instead a regime that “allows customers to understand how they fare compared to others” and respond quickly to problems. He suggested Ofgem’s ‘e-serve’ experience would help as it was dealing with many small scale schemes.
The shift to a place-based and whole-system approach was also discussed, suggesting that Ofgem should put more emphasis on linking network operators’ programmes with local authorities’ planning. That had the opportunity to take a broader approach that examined local energy planning along with other vectors like waste and transport. Utilities are opening their data in one initiative that may help with that approach but in a session on community energy delegates heard that local authorities did not have the capability to use the data being released.
Other questions around a more fragmented and decarbonised energy landscape raised at the conference, whose theme is Energy for a Net Zero Society, included the provision of fuel poverty measures and the future of the universal service obligation. In an industry with many small providers who could aim to recruit “more affluent” customers, would fuel poverty measures increasingly devolve to network companies? And what would become of the ‘universal service obligation’?

Leave a Reply

Your email address will not be published. Required fields are marked *


*