New report calls for consumer led decisions on local clean energy investment
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Energy UK and Europe | 20/03/2024

New report calls for consumer led decisions on local clean energy investment

Adam Bell

A new report calls for widespread reform of energy regulation to speed up local distribution of clean energy to homes and businesses across the UK.

A new study by strategic sustainability consultancy Stonehaven warns new energy networks need to grow and adapt “further and faster than ever before” to reach net zero, but the current regulatory system risks slowing down change.

Rethinking energy regulation

The report, called Rethinking Energy Network Regulation, warns that while the Government’s planned National Energy System Operator (NESO) will help strategic planning and drive investment in large scale networks, a top-down approach to meeting local clean energy needs will not work.

“We do not know what technologies consumers will prefer, but we can anticipate how they will respond to politicians and regulators attempting to choose on their behalf,” the report warns.

The study calls for the replacement of the current “cumbersome, bureaucratic” system driving new investment and upgrades. Instead, it calls for a new system called Planning Pathways that puts consumer choice at the heart of investment decisions.

It argues the current approach for large scale infrastructure will not work for distribution investment, “where the need for upgrades will be dispersed around the country and where a slow pace of delivery will only become apparent with a rising tide of anger from consumers who find they are unable to upgrade to local carbon heating or switch to an electric vehicle.

“Instead, we advocate an approach known as Pathway Planning. Rather than having to go back to the regulator for approval for every street-level upgrade, networks should be empowered to invest once certain triggers are reached or evidence becomes available.”

Pathway Planning would allow networks to investment in stages based on a series of trigger data, such as the number of electric vehicle charges in an area or the number of heat pumps installed on a street. Once it becomes clear that investment is required to meet consumer demands for hydrogen boilers, EV chargers or heat pumps, it can be rolled out by the network without waiting for Ofgem’s approval.

"The way we make decisions about our energy networks is not working"

Adam Bell, Director of Policy at Stonehaven, said: “The way we make decisions about our energy networks is not working. We’re already seeing industry not growing because they can’t get power, people who want to go green but can’t get a connection, and considerable uncertainty over the future of boilers in all our homes.

“Instead, we need to start planning our various possible futures properly. If lots of people on a street buy a heat pump, that street should get an upgrade as soon as possible. If lots of businesses want to build new data centres in a particular area, we should build new infrastructure to support that. And if we get to a particular date and people haven’t bought heat pumps, we should convert that area to hydrogen.

“This kind of rapid decision-making is critical not just for Net Zero, but to restart the economy and get Britain building again.”

The report was sponsored by Cadent Gas, one of the UK’s energy distribution networks.
In its foreword, Dr Tony Ballance, Cadent’s Chief Strategy and Regulation Officer, said: “We need long term certainty for investment to keep costs and bills down for consumers, but at the same time we will need to be agile and fleet of foot to respond to how different technological solutions might change what might be the right decarbonisation pathway to pursue.

“I hope this report helps to stimulate the debate around this and other related issues to help ensure our regulatory institutions evolve in the way in which they operate to enable the effective and efficient delivery of net zero.”

Download the full report, here.

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