Regulatory revolution from the future

With renewables and distributed energy becoming the norm, Laura Sandys says a new way of thinking is needed.

The excitement of the innovation and impact of new entrants into the energy sector is one that no one could have believed of 10 years ago. Renewables are no longer the odd man out but the norm, distributed energy generators, balancers and system service providers are multiplying and non-energy players in the technology and data sectors now view energy as an exciting new market.

However, these new norms and exciting developments are merely the start of a much wider revolution at the heart of our system. I, with Imperial College London and the Energy Systems Catapult have established a Commission to look and see if we understand enough about the market and regulatory architecture of the new world of power.

This is not aiming to look at incremental change or managing “transition” but to identify and shape the destination – Planning from the future. This is to complement the exciting work that the Future Power System Architecture project is doing, but lies more in the political and regulatory space.

In a new system, there will be new risks that need to be addressed, new players who will change the dominant structures of the sector, different consumer needs and all of this will require foresight by regulators and policy makers to ensure that the exciting future is not held back. We are examining the whole concept of systems optimisation and how the local energy market could be designed around best value for consumers. We are questioning the very loose and overused term “Security of Supply” that puts the fear of God into most ministers and regulators and is used when someone has run out of excuses.

The most exciting aspect will be the total change to how consumer will buy energy. Sorry guys, they might not even realise that they are paying for energy and energy might not even cost them anything! The point is that energy suppliers might well not be a player in this market and it will be new highly marketed products and services that might come to dominate run by companies with fast-moving consumer goods backgrounds.

If our shape of the future materialises which to be frank it is already on its way to realisation, then consumers will not need to be protected or regulated around energy but around the bundled and embedded services into which there will be an energy component. Those who own consumer data will be key and where the value in the system will lie. That data will drive optimisation of the local and national energy systems driving a tough price with a range of different technologies and options on offer to manage a balanced energy system at the lowest cost.

We have been working with other regulators, not least in the food sector, to see how a system moves from a few players and a few products to everyone becoming a cheese maker or a coffee shop owner without losing out on food and hygiene safety. This might seem like an unusual analogy but the similarities around consumer centric supply chains – starting at the plug not the power station – at the fridge not the farmer – really shapes a very different and much more cost-effective system.

The new energy sector will need a new set of regulatory principles and these are key to releasing those whose power in the market will be reduced while identifying where real risk lies to the consumer and the system.

We will be launching our findings in early autumn but in the meantime, we are very keen to crowd in lots of different ideas about the future and would welcome inputs from all those who are excited by change. It is going to be a brave new world with brave new companies and a lot of innovators who will change our system out of all recognition as we move forward.

Come and help us!