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The current regulatory arrangements in the energy market are stifling non-traditional business models (NTBMs) trying to innovate, industry have warned Ofgem.
Flexibility services and localised energy were two areas particularly highlighted as being difficult to provide in the current framework in submissions to an Ofgem consultation on NTBMs.
The submissions said that NTBMs wishing to provide flexibility services “could not reach their full potential.”
Retail market policy relating to switching and tariffs and the national nature of supply licensing, balancing and settlement are key regulatory issues for business wishing to provide localised supply.
The submissions said the current framework is more suited to larger participants, and instead called for a move towards principles-based regulation.
Industry has also called for an “innovation space” in which to trial business models and demonstrate the impacts.
Ofgem said: “The vast majority said that regulation needs to become more flexible and agile to enable NTBMs. It needs to accommodate, respond to and enable energy system change.
“We already have a number of projects underway examining elements of this change. In light of responses we are considering whether we should examine these issues in the context of our wider work on regulation and future energy system arrangements.”
Ofgem opened the consultation in May as part of a longer-term engagement on how NTBM could transform the energy market and improve customer experience.
On opening the consultation Ofgem chief executive Dermot Nolan said he didn’t want regulation to “stand in the way.”
Ofgem said it would publish its proposed course of action by the end of the year.
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