As technology advances, use of electricity evolves. And with severe weather and aging infrastructure placing more stress on power grids, changes are needed to deliver the reliable and resilient networks customers expect.
The Covid-19 pandemic has reinforced the need for change. The immediate impact on generation and demand patterns may be short-term, but as people adjust their lifestyles and work patterns it may also have an enduring effect. Domestic demand has risen as working from home becomes more common. As a result, individual needs and expectations have shifted.
Further, there is increasing discussion about how to respond to the economic challenges of the pandemic, with a greater focus on renewable energy as part of powering a green recovery. This could mean an acceleration in decarbonisation, distributed generation, and electrification.
In Britain, RIIO-ED2 comes at the right time to address these challenges. With its methodology consultation expected to be published this summer, Ofgem has the opportunity to send a signal about the importance of reliability, including short interruptions.
Will a greater focus on short interruptions translate to improved reliability? Evidence from a range of international jurisdictions suggests it will. Examples include Italy, where short interruptions have fallen by 40 per cent since 2008; Sweden, with a 27 per cent reduction since 2010; and Victoria, Australia, with a 19 per cent reduction since 2013.
Incentives change behaviour. Therefore, the signals Ofgem sends on interruptions in its methodology consultation will undoubtedly influence investment decisions in grid reliability.