Customers, Policy & regulation

New approaches to charging for use of the electricity grid will need to meet "expectations of fairness and reliability”

A senior figure at Ofgem has called for a public debate on how consumers pay for and make use of the UK’s electricity networks.

Moves to increase flexibility and squeeze the most out of existing infrastructure could otherwise allow “one group of customers to outbid another group of customers for access”.

“When we consider that capacity may be at a premium – it is increasingly expensive to provide on a marginal basis,” said Ofgem senior partner Andrew Wright, “allowing everyone to charge their vehicles and power their heat pumps without constraint could turn out to be prohibitively expensive for everyone and increasingly difficult to manage on the system.

“In the future, we may need to find new ways of paying for and providing access to the electricity system.” He said the issue is “contentious” and will need to be approached in a way which “meets society’s expectations of fairness and reliability”.

Wright, who has previously raised fears over the creation of a two-tier energy system, said those who want greater access to the grid in order to use a fast charger for their electric vehicle may need to pay more for it. “Alternatively, people who want to accept some limits on their ability to consume large amounts of electricity when they want may be able to benefit in terms of prices.”

If consumers are allowed to pay extra for enhanced access to the grid, then there will need to be “some sort of priority access for the basic needs for everyone, over other less essential or more flexible requirements”.

Speaking at an event in London, Wright noted that the drive to increase flexibility in the energy system is likely to require “more markets rather than less”.

“We could see, for example, a market materialising in network access or perhaps a market in flexibility products, or local devolved balancing markets.”

Wright said there needs to be a discussion about what form these markets take, particularly given the tendency of more engaged consumers to get “a better deal” out of the energy market.

“We need to think about the extent to which we are comfortable with people having different outcomes, given that there are more dimensions on which the product can be differentiated. If there are local balancing market, then would people be comfortable with different prices in different parts of the country, or different parts of the town.”

Wright warned that unless there is a public debate over the issue of network access “sooner rather than later” the UK risks ending up with a “completely unfettered market”; one which leaves some consumers “without access to the energy they need, when they need it and at prices they can’t afford.”

Describing flexibility as the “new energy efficiency”, he said it will become an “increasingly important focus of policy going forward”: “Like energy efficiency, it’s a way of meeting all the aspects of the trilemma at the same time without conflicts.”  

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