Chris Harris , npower
The fourth and fifth carbon budgets have challenges in implementation of current policies, and some remaining policy gaps. The Paris commitments are a further challenge.
This will require radical change, not just in the efficient use of energy but in the way we live, work and travel in the next generation. Very substantial, if not almost complete electrification seems almost inevitable in any feasible compliant scenario.
The gig economy will be a critical enabler for the changes to the rhythm of life, and is particularly suited to an electrified society.
Technology, and its cost, does not seem a major constraint. The critical restriction is the ability of the physical system, market arrangements, regulation, and industry operations, to accommodate it.
It is almost impossible to visualise a very low carbon system with infrastructure and operation with very large volumes of “predict and provide” central generation and capacity infrastructure to accommodate inflexible variable demand. Conversely it is relatively straightforward to envisage a very low carbon system with highly active prosumers.
Further it is possible to visualise how the regulation, market arrangements and market participants can keep up (just) to accommodate all of the innovation.
The migration to a consumer centric system in which all elements of the market are democratised can be envisaged, with direct consumer participation in ancillary markets such as de-constraint, frequency response and voltage support.
Similarly it is possible to envisage how the peer-to-peer market universe and an array of different Third Party Intermediaries somehow can integrate into the contractual electricity market whilst minimising the “signal conflict” that may drive demand up to reflect a national energy surplus and down to reflect a local constraint
All this looks possible then
But there are two related problems that need more attention;
- Electricity is an essential service, with absolute continuity on the National Grid of totemic national significance
- The digitised empowered prosumer, who both has the democratic right to participate in this rich commercial landscape, and whose participation is absolutely essential to achieve the transition, has an engagement level and likely possession/utilisation of “kit” (e.g. electric vehicles and heat pumps) and automation that simply looks nothing like the passive consumer for whom the current market caters for. There is risk of getting left behind and even of cross subsidising the more enabled prosumers.
There seems then to be three questions to consider now;
1. What does Universal Service look like – in its widest sense. For example the legal requirement to provide a system connection suited to the pro-sumption behind the meter, the supply of energy through the meter, and an array of consumer support activities mainly focussed on vulnerability. What should the market arrangements be and in particular what elements of this service should be with the suppliers, networks and existing or new actors. In addition to this, what is the pricing structure of the backstop service and what consumer protections are appropriate to prevent bad choices being made in contracting with existing market actors and new actors which fall outside the current regulators’ ambits.
2. How can we ensure that for those who can go on the journey that no-one is left behind simply because they are not sought by the innovative sector.
3. What does the backstop provision of the basics of heat, light and communication look like, including beyond pure provision of energy. For example, home efficiency.
This paper provides no answers but it does endeavour to frame the questions in a manner for them to be addressed.We consider this from these standpoints;
4. Consumer choice