Lord Hutton calls for energy policy white paper

Energy UK chair Lord Hutton has called on the government to draw up a white paper to co-ordinate policy across the rapidly changing sector.

Responding to a question at a seminar organised by Elexon recently, the former secretary of state for trade and industry said there was “not much” evidence of governmental response to the strains on the grid resulting from the increased decentralisation of generation.

“On this issue, we need someone to bring everyone together and design a set of responses that will meet the challenges.

“It’s one of a series of issues where we need to do some detailed work right now. In my head it looks like an energy white paper, we need to have something to draw all these various strands together pretty quickly with a future direction of travel.”

Referring to the government-commissioned Helm review on energy costs, he said: “Dieter Helm has lobbed the ball into the court, someone else needs to get the racquet out and hit it. If we don’t address it [the problem], it doesn’t go away.”

The peer, who is also chair of the Nuclear Industry Association, warned that a repeat of the continuing “wind drought” could have serious consequences if it happened in the winter.

Pointing to how the nearly two-month long heatwave has created a “sustained period of wind drought”, which had pushed down day ahead electricity prices to their highest level for “at least a decade”, he said: “Low wind power isn’t a problem in June but on cold dark days in the winter, it will present challenges to the grid.”

He said codes had to be simplified to make it easier for networks to respond more flexibly, irrespective of historical boundaries, to increased fluctuations in generation and greater demand in the number of electric vehicles.

“Data similarly needs to be available as needed and not constrained by proprietary rules.”

Lord Hutton added: “Lots of regulations have been put in for a good reason to protect customer and sometimes revenue streams. This is an opportunity to look at how codes can be simplified and therefore opened up to allow innovation. It is a challenge that can’t be ducked.

“We need to keep the best bits but not allow this to ossify the system, creating a forest of rules that is impenetrable to new entrants.

“It is not clear to many people, particularly new entrants, why we have so many coding bodies operating and administering different codes in different ways. It creates real costs in efficiency and delays.”

Energy UK will publish a report later this year outlining options for a “dynamic and competitive energy market,” he said.