The government’s proposed framework for a more flexible energy system raises question marks over whether the planned new fleets of gas and nuclear power stations will be needed, Labour’s energy spokesman has said.
Responding to the joint Ofgem-BEIS (business, energy and industrial strategy) paper on smart systems, published last week, Alan Whitehead told Utility Week that the government should review its assumption that future energy security had to be maintained by building a level of baseload capacity.
He said that while the paper was ‘overdue’ it marked a ‘potentially positive’ move in energy policy.
“These changes imply a much wider look at capacity and will have to inform debate about what kind of additional power we need over the next period.
“If we manage to find much more productive uses for what is in the system, there will be very different conclusions to be reached about whether we need a new fleet of nuclear and gas power stations. The paper suggests that baseload is effectively a thing of the past.
“The EMR (Electricity Market Reform) process was carried out on old energy assumption that there was a capacity gap that still needs to be filled with large capacity new power stations and baseload certainty. I can’t see those two fundamental propositions being defendable over the next period with what we know about how the system is going to work.
“This particular paper very refreshingly catches up where the world is moving to rather than where it was. There is a series of assumptions, which still underpin how we go forward on energy policy that this document effectively overthrows.
“It’s an overdue recognition that the system is changing rapidly and therefore we need to take different approaches to flexibility in the system.”
The smart systems and flexibility plan was published jointly by BEIS and Ofgem on July 24. It proposes a number of actions to resolve the “specific regulatory and policy barriers” faced by providers bringing their technologies to market. This includes consulting on changes to a possible new generation licence for storage which would allow storage facilities to identify themselves as exempt from so-called final consumption levies, which operators have complained undermine their business models.
It also ruled out DNOs directly owning storage assets – a move which the ENA said it sees as an “invitation to discuss”.
Whitehead recently told guests at an ENA reception that the traditional approach to renationalising energy assets would be a ‘monumental misuse of public money’. He outlined a vision of renationalisation – a Labour manifesto policy – whereby parts of the energy system would be “municipalised and localised and under accountable control,” but the government would not buy up existing asset bases.