Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/847993
People & Opinion Opinion UTILITY WEEK | 14TH - 20TH JULY 2017 | 7 Regulatory revolution With renewables and distributed energy becoming the norm, Laura Sandys says a new way of thinking is needed. T he excitement at the innovation of new entrants into the energy sector – and their impact –is something no-one expected ten 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 under- stand enough about the market and the 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 – plan- ning 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 policymakers 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 consum- ers. 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 consumers 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 players 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 compo- nent. 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 tech- nologies and options on offer to manage a balanced energy system at the lowest cost. We have been working with other regula- tors, 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 los- ing 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 rec- ognition as we move forward. Come and help us! Laura Sandys, chief executive, Challenging Ideas Paul Cooley, director of genera- tion gevelopment, SSE, writes: What's the future for onshore wind in Scotland? As the birthplace of wind-powered electricity generation, and the windiest country in Europe, Scot- land has been a world leader in harnessing this natural power. Onshore wind is set to be the cheapest form of electricity genera- tion and it can be deployed quickly. It also benefits the UK economy with a recent study by BiGGAR Economics showing that two-thirds of the lifetime financial spend of a typical GB onshore windfarm remains within the UK. The Scottish government's draft energy strategy contains an ambitious target of generating the equivalent of 50 per cent of the country's total electricity, heat and transport demand from renewables by 2030. There is rightly broad sup- port for this ambition. Doing that, the Scottish govern- ment's figures show, will mean significant renewables develop- ment– both new onshore wind sites and the re-powering of existing ones with more powerful turbines. Scotland has 6.1GW of onshore wind in operation with (at least) a further 1GW expected to come online before 2020 and it's encour- aging that the excellent wind conditions on the remote islands could soon be harnessed. Yet as we move into the 2020s the operational project life of a lot of these sites will begin to near the end of their cycle. This trend will continue into the late 2020s and into the 2030s. Onshore wind makes up 70 per cent of Scotland's installed renew- able capacity and contributes over half of the UK's total onshore wind capacity (9.9GW). If this capacity is not replaced through re-powering, it will be lost from this total. SSE therefore believes it would be in the best interest of custom- ers, and for Scottish economic ambitions, for onshore wind devel- opment, including re-powering, to be supported in order to meet decarbonisation targets and deliver economic benefits. To read the full blog, visit: http://bit.ly/2v2zTwb Blog