NIC weighs in on argument for independent SO

The National Infrastructure Commission (NIC) has called for greater independence of the system operator (SO) role, but has said the creation of an entirely independent SO “should not be a priority”.

The NIC said in its “Smart Power” report that the SO has been “very successful” in balancing supply and demand in the UK energy system to date, but said there is “merit” in increasing the independence of the SO role from National Grid’s private businesses.

Is said potential conflicts of interest within the role were outlined by many respondents in the commission’s call for evidence, but it has found “no evidence” that National Grid has acted in any way that has led to conflict.

It said the scope for perceived conflicts of interest is likely to increase as the electricity system evolves, but National Grid remains “well placed to advise on longer term security of supply”.

It therefore warned against creating an entirely independent SO, saying National Grid should instead work towards becoming more independent.

It was reported yesterday that ministers are looking at the possibility of stripping National Grid of its SO role in favour of creating a not-for-profit company supervised by Ofgem.

The NIC’s recommendations for the SO role have been made as part of a set of measures it is calling for to ensure the UK’s energy networks can cope with the necessary changes needed for its vision for the UK’s energy system.

The measures include the creation of new markets by the SO to provide ancillary services which allow new technologies to participate more easily, and the transition to more “actively managed” local networks, which the NIC said should be a government priority.

It has also called for Ofgem to continue encouraging network companies to make long term strategic decisions.