Align network price controls to boost innovation

Ofgem should change to regulatory price control periods for gas and electricity networks in order to encourage joint investment planning and a “whole system” approach to decarbonisation, according to a leading academic.

There is increasing interest in the energy sector in the practicalities of delivering “multi-vector” or whole system planning and operation. To support this, Professor Phil Taylor, head of the national Centre for Energy Systems Integration (CESI) at Newcastle University, has said changes are needed to the regulatory price controls for energy distribution networks.

“Ofgem are a regulator of both gas and electricity, but the regulatory periods for the gas and electricity networks are out of step with each other. They don’t sit side by side, so actually you can’t plan your investment in your gas and electricity networks in a joined up way,” he told Network, Utility Week’s sister publication.

Taylor went on the urge Ofgem to align the regulatory periods for gas and electricity distribution and to stipulate “joint investment policies” for networks sharing the same geographic license areas.

This story first appeared on networks.online, the website of Utility Week’s sister publication, Network.

“If we believe that industrial strategy needs a whole system approach, then we need to change what we do in the energy space,” concluded Taylor, referencing government’s launch of a modern industrial strategy consultation on Monday.

Taylor made his comments at the launch of a new report by Northern Gas Networks and consultancy KPMG in Westminster yesterday.

The report showed that a whole system approach to decarbonisation, including decarbonisation of the gas grid, could support significant growth in the energy industry in the north of England, boosting the regional and national economy.

An additional £2.3bn could be generated in regional gross value added by 2050 if energy sector innovation – particularly for the decarbonisation of heat and transport – is encouraged in the area, said the report. 

In tandem with the launch of the Energising the North report, Northern Gas Networks and CESI revealed a new partnership which will pour an initial £30m into the creation of a multi-vector energy innovation centre at Low Thornley, near Newcastle. This will provide a “safe playground” for the demonstration of innovative whole energy system ideas, said Taylor.