Energy innovation should be funded by the industry, rather than by the regulator, according to the chief executive of UK Power Networks.
Speaking at Utility Week’s Energy Summit in Westminster today, Basil Scarsella said it was good that Ofgem had brought in innovation funding when it did.
However, he suggested that now, with the costs of different technologies coming down, it should be up to the energy networks to fund their own innovation.
As part of its RIIO price controls, Ofgem introduced two funding vehicles to create “innovation stimulus”.
One, the Electricity Network Innovation Competition (NIC), is an annual opportunity for electricity network companies to compete for part of a £90 million funding pot for the development and demonstration of new technologies, operating and commercial arrangements. These must be genuinely innovative projects that make a real difference to the energy system.
It also introduced the Network Innovation Allowance (NIA), a set amount of money – between £1 million and £5 million pounds – that each of the 22 gas and electricity network licensees receive as a set part of their price control allowance.
NIC and NIA are the successors to the low-carbon network fund (LCNF), which Ofgem introduced as part of its electricity distribution price control arrangements from 1 April 2010 to 31 March 2015.
The water regulator Ofwat does not currently offer innovation funding to the water companies, and has no plans to.