Delivering radical reform in the UK energy market

[edit] Can Government deliver radical reform in the UK energy market?

For radical reform to be effective, Government must set a permissive framework, with robust regulations, which are consistently enforced to ensure individual and national safety.

Government can join the dots between energy security, energy supply and demand, workforce requirements and population flow and they can influence consumer behaviour. Government has the overview of all parts of the jigsaw.

Without a Government roadmap, essential elements will be missing, leading to potential imbalance of supply, security and safety issues.

[edit] What are the major benefits that the UK should be seeking to deliver from energy market reform?

• Less reliance on energy from fossil fuels.
• Producing enough home-grown energy to satisfy the UK demand.
• A fair and equitable pricing and taxation system for all types of energy.
• For the UK to become a world leader in an innovative energy market, attracting investment and economic growth.

[edit] What are the chief barriers to reform of the energy market and is the Government serious about addressing those?

[edit] Lack of electrical core competencies

The shortage of a qualified and competent workforce to implement any changes. Any reforms to the energy market must map the workforce needed in collaboration with industry. Electrical core competencies are essential to achieving the changes of a reformed energy market. All new technologies need a competent and well-trained electrical workforce to install and integrate energy systems. The workforce will require electrical core competencies ahead of any technology-specific training. DESNZ and DfE need to work in tandem to overcome this deep-rooted problem.

[edit] Lack of Systems Integrators

There is a need for more trained Systems Integrators (bringing together component systems in the whole building and ensuring that those subsystems function together) to maximise energy efficiency. This would involve seamless integration of smart controls and a range low-carbon technologies using different energy sources.

[edit] Unfair Taxation

Tax changes to treat all energy sources equally are necessary. One solution could be to reevaluate the distribution of costs related to frequency and charging rates among electricity suppliers while also integrating them into the broader framework of social and environmental initiatives overseen by OFGEM.

[edit] Lack of energy storage capacity

Although we can already produce substantial home-grown energy, we do not have sufficient battery and other storage capacity to store it for when we need it most.

[edit] Weak investment in transmission and distribution networks

To enable increased generation and storage solutions, significant investment is needed to increase the capacity for the transmission and distribution networks capable of accepting a greater number of connections. Investment in this area has fallen behind other countries and left the UK at a significant disadvantage.

[edit] Underlying principles of the UK energy market

[edit] Safety

Safety must be embedded as a principle for any decisions about, or changes to, the energy market. An accelerating demand for energy, and in particular electrical energy, without a full understanding of the complexity of integration, is potentially dangerous. Similarly, weak regulation could lead to infrastructure damage or loss of life. The Grenfell tragedy was caused by an electrical fire. Future energy markets must bake in systemic safety processes to prevent future tragedies. Electric shocks and local and national power outages caused through faulty installation of new appliances or systems integration could also have tragic consequences.

[edit] Consistency

UK home nations, Government Departments, the Building Safety Regulator, Office for Product Safety and Standards and Local Authorities must walk in lock step as they take a leading role in enforcing industry agreed safety standards.

[edit] Energy security through Grid resilience

Multiple energy generation in multiple locations, rather than large scale centralised generation. Using local natural resources, such as biomass, waste products or hydro to supplement solar or wind, spreads the risk of reduced grid capacity at times when weather conditions are unfavourable for energy generation. ‘Hybrid-distributed generation’ is cost-effective and suitable for domestic needs. Focusing only on centralised energy generation presents a risk to national security. For example, Ukraine has moved to Hybrid-distribution (multiple energy generation in multiple locations) following the attacks on its large scale central generating power stations.

[edit] Fair pricing

Large scale centralised energy generation is expensive but may be needed for some heavy industry users of energy, such as a steel plant. While domestic users do not benefit from large scale central generation, they carry the burden of its cost. Smart technology could be used to vary the costs for different types of energy production.

A review of energy taxation is overdue and is vital to ensure different forms of energy are treated equally.

[edit] Is the Review of Electricity Market Arrangements likely to deliver the necessary changes to the energy sector?

There is a widespread appetite for Electricity Market Reform. It is becoming increasingly necessary in order for the UK to capitalise on new technological and economic opportunities. The new arrangements need to be permissive enough to allow innovation, without losing sight of the robust regulation necessary to ensure safety. It is vital Government seeks advice from those who understand practical technologies and the implications for their integration in the existing built environment.

[edit] Is it possible to ensure that consumers are insulated from market failures in the energy sector?

With reform of the energy market the need to navigate potential complexity will require a new role - trusted independent advisors (like a mortgage advisor). With both technical know-how and knowledge of the market, they will be able support the public in choosing the right solution for their homes. By incentivising one energy solution over another, governments run the risk of encouraging unscrupulous agents who advise consumers inappropriately.

To learn more about ECA’s work to enable positive change for electrotechnical contractors, visit our Taking Action page here.

This article appears on the ECA bog page as "Can Government deliver radical reform in the UK energy market?" dated 12 November, 2024.

--ECA

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