Ofgem added that making energy storage a separate licensed activity – another key ask of the industry – is not “the immediate solution” from its analysis.
The regulator said it wants to see “competitive markets develop”, and allowing regulated monopolies into that arena “immediately raises some issues”.
Ofgem associate partner, energy systems, Andy Burgess, told the Energy and Climate Change Committee today: “Our principle is network companies shouldn’t own or operate storage.
“We recognise there might be some exceptions to that based on particular circumstances, or particular needs, or where you define storage as something where you just can’t develop a competitive market.
“But I think if you want competitive markets to develop, you need to keep regulated monopolies out of them.”
The NIC last month called on Ofgem to undertake a raft of regulatory changes to encourage distribution operators to use storage to help the UK become a world leader in the area.
Energy storage is currently licenced as a generation asset, which prohibits network companies from owning and operating the technology.
Burgess said Ofgem’s priority instead is “making sure storage is a viable option in all the relevant markets”.
He said an upcoming call for evidence with the Department of Energy and Climate Change would include a question on storage licensing, but that the solution could be a modified generation licence.