Policy & regulation

“Frustrating” setback will hold back innovative energy solutions

The overwhelming likelihood of setbacks to the government’s smart and flexible energy systems investigation, following the announcement of a snap general election, has caused dismay in the energy industry.

The joint study, being conducted by the department for business, energy and industrial strategy (BEIS) and Ofgem, was enthusiastically welcomed by the energy industry as a signal of fresh thinking around energy policy.

The study, which included a call for industry evidence which closed in January, is due to address crucial technical and regulatory issues which are currently thought to be blocking the development of new markets for energy storage, demand side response and energy aggregation.

It is also due to suggest a model for the evolution of distribution network operators into more active “distribution system operators” or DSOs.

But because of the shock announcement of a June general election this week, the outcomes of the investigation are now more than likely to be postponed. This is due to the restrictions imposed by so-called “purdah” rules in the run up to the election and, sources suggested to Utility Week, because of the lack of parliamentary time following the election before summer recess, and then party conference season.

Peter Emery, chief executive of Electricity North West (ENW) is among those who have voiced concerns to Utility Week.

“Calling an election has the potential to delay or put pressure on the development of energy policy,” he said, singling out the smart and flexible energy systems work as an example.

“Any delays are frustrating for companies like Electricity North West as we understand the need to develop and rapidly deploy innovative energy solutions and this is inextricably linked to the policy agenda.”

Another leading energy network expert told Utility Week they feared the study will become a “casualty” of the snap election.

Other sources have also expressed concern that other key policy decisions will be thrown off course by the new political developments.

Simon Virley, head of power and utilities at consultancy KPMG and formerly director general for energy markets and infrastructure at the Department for Energy and Climate Change, told Utility Week that there is a risk “of further delays to key decisions that are pending, like the future of carbon pricing, the government’s emissions reduction plan, or the Ofgem decision on embedded benefits”.

He said this will “add to the uncertainty faced by investors”.

Responding to concerns raised about the future of its work on system flexibility and network charging arrangements, an Ofgem spokesperson said: “Clearly these are among the areas of work in which we want to make progress this year.

“We are independent but we will carefully consider any guidance on the pre-election period once it is published. Following the election we will also continue to develop policy in these areas, working with Government where appropriate.”

ENW’s Emery also said it is now a “priority” to “support BEIS and Ofgem to ensure that the sector continues to be well-placed to meet the changing needs and expectations of our customers”.

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