Ofgem chief executive Dermot Nolan has stressed that whichever path is chosen for the solution to decarbonising heat, it will cause huge disruption for consumers.
Speaking at the Energy UK annual conference in a “semi-valedictory” address Nolan, who will be replaced by Jonathan Brearley in the new year, said that the difficulties of the smart meter rollout showed the level of challenge ahead.
Declining to comment on the relative merits of electrification or green gas solutions, Nolan said: “Whichever path we go down on heat, it will be incredibly intrusive. It will involve going into pretty much every home in the country at least to replace their boiler system, possibly something much more complicated.
“The smart metering rollout has been mentioned already as a difficult process. Imagine how much more difficult it will be to not just have to fit a meter but replace an entire heating system along with various other energy efficiency measures.”
Nolan also talked about the transformation needed to accommodate the rollout of electric vehicles, saying a discussion was needed about the regulatory regime for charging points.
He said: “There are calls that in order to tackle range anxiety we should allow charging points to be built through the asset base and that will facilitate further EV take-up. My initial reaction to this argument was deeply sceptical but having thought about it further, while I remain mostly sceptical it’s not intrinsically a bad argument. The question is who intervenes in that situation – is it the government, is it Ofgem, do we let the private market deal with these kind of issues?
“If you look at the infrastructure beneath that – the DNOs, the transmission network – what reinforcements do we facilitate? Do we take an almost “if you build it they will come” view, which would probably see electricity prices rising considerably more than we would have liked in the short to medium term but might facilitate the net-zero goal?”
He went on to reiterate a point he made at Utility Week Congress last week that Ofgem was considering the possibility of introducing higher tariffs at peak times, to tackle the pressure of mass EV charging.
He also addressed last week National Infrastructure Commission report on the future of regulation in utilities.
He said: “I would welcome some clarity on net zero being brought into our statutory objectives though of course that is ultimately a matter for government and for parliament.”