New report explores the options for reforming the governance and regulatory arrangements needed to enable major changes to, and investment in, UK energy network infrastructures as we move to a low carbon future
The ETI commissioned four industry experts to examine options for ‘whole system’ reform, given the challenges facing UK networks
ETI scenarios for the UK energy transition highlight major challenges for energy network infrastructures and how investment decisions are governed, incentivised and regulated
The Energy Technologies Institute has published a new report which examines options for reforming how investment in the UK’s energy network infrastructure is governed and regulated as we move to a low carbon future.
The ‘Enabling efficient networks for low carbon futures’ project commissioned ‘think pieces’ from four industry experts on the challenges for investment in the UK’s energy network infrastructures and options for reform.
The four expert perspectives provide contrasting and challenging views and have been produced by:
Bob Hull (now with KPMG, formerly Managing Director of Ofgem eServe and other senior positions at Ofgem)
John Rhys (of the Oxford Institute of Energy Studies, formerly NERA Economic Consulting and the Electricity Council)
Jorge Vasconcelos (Chair of New Energy Solutions, formerly Chair of the Portuguese energy regulator and founder and chair of the Council of European Energy Regulators)
Keith Maclean (Chair of UKERC, Co-chair of the Energy Research Partnership and formerly Policy and Research Director at SSE).
All of the perspectives agreed on the need for new or reformed governance mechanisms to steer the transformation of the energy system and infrastructure – but a range of potential solutions were proposed.
Ensuring that a whole energy system perspective shapes decisions about investment in long life infrastructure assets was a key theme in all the papers, but the experts varied in their emphasis and in their proposals for the design of new governance arrangements to address the needs they had identified.
All the authors see a role for markets and competition in enabling the right kinds of investment, but envisage a variety of mechanisms for this.
A theme that emerged in all of the perspectives was that of a more prominent local and decentralised dimension to decisions on energy networks and operation.
ETI scenarios for the UK energy transition highlight major challenges and opportunities for investment in energy network infrastructures. Realising these futures could also require substantial change in how investment decisions are governed, incentivised and regulated.
The ETI scenarios were developed from a ‘whole system’ perspective, and point to the high value of enabling a broader mix of energy vectors (heat, power and gaseous fuels), within a more integrated ‘system’ of energy transmission, storage and distribution.
In terms of energy network infrastructure, the scenarios implied the need to substantially adapt and enhance existing network infrastructures, create efficient new network infrastructures (for example, new city-scale heat networks) and integrate different networks to operate together in real time as a ‘system’, enabling the efficient transmission, storage and use of energy in different forms.
Enabling these kinds of future energy mixes would raise new and different issues for the regulation and governance of energy network infrastructure which both challenge and go beyond the current essentially ‘vector-specific’ statutory regimes covering gas and electricity.
Head of Economic Strategy
We did this project to stimulate wider thinking about how we govern and regulate investment in major new energy networks. These infrastructures have long lives and we need to make the right decisions for a low carbon future.
Much of the current debate is about new electricity infrastructure, but our work on the UK’s low carbon future suggests that we may also need completely new kinds of energy networks, like heat networks, working together with existing networks. So we’d like to see more emphasis on looking at the ‘whole system’ nature of the challenges for how we govern and regulate the billions of pounds of investment in energy network infrastructure needed for the UK’s transition to a low carbon future.
In the next month we will also be publishing a series of insights that explore the practical, logistical and engineering challenges for energy networks raised by the transition to low carbon futures. These point to the need for strategic and timely decision-making based on sound evidence about investments in long-life assets.
The ETI will continue to explore and analyse the UK’s transition to a low carbon future from a whole-system perspective and share its insights, and we welcome further engagement with stakeholders on these issues.