The current system of energy regulation is not fit for the more decentralised and digitalised energy that is emerging, Alan Whitehead has said.

The Labour party’s energy spokesman told the House of Commons launch of the new report, “ReDesigning Regulation: Powering from the Future”, that current regulatory arrangements look “very creaky and outdated” given the rapid changes that the industry is undergoing.

Stressing that his comments were not intended as criticism of the “dedication” and “hard work” displayed by Ofgem, he said: “The bigger question is whether that arrangement of regulation is fit for the system described now.

“It’s very clear that it isn’t and therefore we need to start with the fundamentals of what we regulate and how we regulate.

“We need to get the most out of every electron that is generated or transmitted rather than the substantial redundancy we see in the system today.

“We can gain ourselves a great deal of benefit as far as security and resilience of the system is concerned. If we can achieve all of those things through a reform of regulation it would be a great stride forward.”

He added that the energy system’s increasing reliance on very “fine grain” data means that there should be “open and transparent” access to data.

Dr Jeff Hardy, a senior research fellow at the Grantham Institute, Imperial College London and one of the report’s authors, explained the study’s backing for replacing supplier licensing with a risk assurance framework that he claimed would give new business models greater scope to flourish.

He said the existing system of licensing suppliers is “not fit for purpose to unleash this kind of innovation in the market”.

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