MPs call for a fragmented National Grid

MPs have called for a complete overhaul of the UK's energy network operation, recommending that operating systems should be transferred from National Grid to independent operators in order to mitigate the potential for "conflicts of interest".

In a new report published Thursday (16 June) the Energy and Climate Change Committee (ECC) recommended that the UK energy system be taken over by an Independent System Operator (ISO) at national level and Distribution Network Operators (DNO) at regional level.

The ECC warned that the future of low-carbon network infrastructure is at risk of being diluted by unnecessary asset expansion and interconnectors developing an unfair advantage over existing and emerging balancing tools. The report calls for the Government to set out its intentions regarding an ISO “as soon as possible”, and consult on a detailed plan for their implementation to avoid “injecting uncertainty” into the energy sector.

“National Grid’s technical expertise in operating the national energy system must be weighed against its potential conflicts of interest,” Committee chair Angus MacNeil MP said. “The ISO model has worked in the US. It is time for it to be brought to these shores.

“Local energy is here, with astonishing growth in generation connected directly to regional networks. DNOs remain somewhat blind to their energy flows and passive in managing them. DNOs must transition to a more active role as DNOs so that they can use smart technologies to manage ever-more complicated energy flows.”

‘Regulatory inertia’

Moreover, the report looked at ‘smart-grid’ technologies such as energy storage and Demand Side Response (DSR); surmising that the roll-out of smart meters is not progressing quickly enough to create a “truly smart energy network”.

The Committee urged for storage to be deployed at scale as soon as possible, lamenting the “archaic” regulations that hinder its development, while stating that the Government needs to set out a more detailed strategy for DSR.

MacNeil continued: “Innovative solutions—like storage and DSR— to 21st-century energy problems have been held back by legislative and regulatory inertia. The Government has committed to addressing these issues, and we will hold them to account on making good on this promise. DECC must also learn lessons from these policy lags so as to be better prepared for ongoing changes.”

‘Crying out for investment’

The Committee highlighted that low-carbon gas and heat networks also present challenges to the development of a low-carbon network infrastructure, recommending that the Government establishes a regulatory framework – overseen by Ofgem – to encourage investment in district heating and complement existing voluntary schemes in safeguarding consumers.

The move was supported by industry experts who suggested that Government investment would provide investors with renewed confidence and “reignite interest” in UK energy infrastructure.

Energy and Climate Intelligence Unit’s (ECIU)’s energy analyst Dr Jonathan Marshall said: “Without knowing what the future will hold, in terms of cost implications of storage and new generation types, the move to a decarbonised electricity supply will be made easier – and cheaper – if a grid is in place to enable all technologies to compete on a level playing field, ensuring that the most cost efficient will prevail.

“The UK electricity grid is crying out for investment, and is currently stuck in a mould that favours old fashioned, centralised power stations that do not allow new technologies to compete fairly. Without swift and efficient upgrades, the system will continue to favour ageing power stations which, as we saw in May’s NISM, are becoming increasingly subject to failure.”

George Ogleby

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