Utility Week

I N A S S O C I A T I O N W I T H UTILITY WEEK | 29TH MARCH - 4TH APRIL 2019 | 25 cent), the overwhelming majority have a posi ve percep on of their regulator. However, just 36.1 per cent of the supply chain and 21.9 per cent of energy genera on and retail businesses voiced confi dence in their regulator. The survey ques oned whether current regulatory regimes off er suffi cient freedoms and incen ves to foster innova on. Interes ngly, 41.1 per cent either strongly or somewhat agree, while just 12.4 per cent strongly disagree, that today's regula on facilitates innova on. There are myriad examples of the posi ve impact regula on can have in terms of encouraging innova on and new technologies. For example, the essen al work on hydrogen blending for the HyDeploy project, supported by Ofgem innova on funding, is laying the founda ons for decarbonised heat in the UK. "That's a good example of what regula on should encourage," says Mike Foster, chief execu ve of the Energy and U li es Alliance. "We have seen RIIO driving change within networks and the supply chain. It is important to keep this momentum going during GD-2 and beyond, so future as well as current consumers can also benefi t." But Foster is adamant that this level of innova on, and ul mately advantages for consumers, will be heavily impeded if the regulator fails to successfully promote a collabora ve culture. "Great care is needed by the regulator to encourage collabora on and mutual learning. Crea ng ar fi cial compe on between regulated energy networks, for short-term impact, risks harming the consumer if companies in their keenness to impress, fail to share good prac ce," he says. "If Ofgem fails to recognise it or even worse, reward those that don't share, then overall consumer benefi t is reduced." Foster also insists that the "here and now" poli cal expediency of the day should not s fl e innova on for short- term gain. The impact of RII02 While the introduc on of the RIIO model was centred on innova on and how innova ve systems and products can benefi t consumers, there is a concern that Ofgem's SANDBOX SOLUTIONS With innova on at the top of the agenda for energy fi rms looking to fi nd solu ons to the long-term challenges facing the industry, Ofgem's regulatory "sandbox" off ers an opportunity to iden fy rules that pose barriers to innova on. Ofgem launched the regulatory sandbox service in February 2017, enabling innovators to trial new products, services and business models without some of the usual regulatory red tape applying. Engaging with innovators through the process has provided input to regulatory policy development, such as Ofgem's Future Retail Market Design project. As part of the second window of the sandbox ini a ve, oil and gas company BP is developing a pla orm that will allow consumers who generate their own electricity, known as prosumers, to sell excess electricity within a marketplace. This could create market-based revenues for prosumers, o en not available to small-scale domes c generators. Renewable energy supplier Tonik Energy is partnering BP to explore the opportuni es for using a pla orm to match supply and demand, as well as how customers might interact with and benefi t from it. BP's digital pla orm simulates energy trading from prosumers. While simulated trades will be based on real- me user data, no physical electricity will be bought or sold during the trial. The company says it wants to do much more than simply supply clean, aff ordable gas and electricity. "We plan to halve our customers' bills by 2022 through accelera ng the uptake of microgenera on, ba ery storage and electric vehicle charging infrastructure," says Tonik's managing director Chris Russell. "The trial contributes to Tonik's vision of changing the way people generate, store, use and now trade energy for a smarter, more dynamic and decentralised electricity market. It is a step towards connec ng our members to new technologies and innova ve ways of powering their homes with clean energy." Up to 250 domes c customers will be involved with the project. During the trial, par cipants will pay no more than the price of their normal tariff from Tonik. Where simulated trades on the pla orm create a lower price of electricity, that value will be provided to trial par cipants by Tonik, represen ng a saving. We plan to halve our customers' bills by 2022 II

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