National Infrastructure Commission call for Evidence
Catherine Mitchell, Energy Policy Group, University of Exeter
We, the Energy Policy Group of the University of Exeter, welcome the NIC’s investigation. We argue that the fundamental problem for GB energy infrastructure and the balancing of supply and demand within markets is that the current GB governance system is not fit for purpose. IGov, a project within the EPG, has put forward an alternative governance framework (as shown in Figure 1, 2 and 3). We believe if this governance framework were put in place, competition between the various energy resources – whether they be demand side or system capabilities, such as interconnection or storage – would be improved, as would operation, security and environmental outcomes. We would also see this as the long term cost minimisation strategy to meet the GB carbon commitments. The transformation to an energy system capable of meeting the environmental, security and social goals – and the infrastructure and market needs of that – should be overseen by an Independent and Integrated System Operator (an IISO), as the technical executor of Government policy. It should be a state owned not for profit IISO created from the SO functions of National Grid. This alters the balance of power between institutions in the GB energy system. We do not believe that Ofgem should continue with multiple competing Duties. It should revert to being an economic regulator. These two institutions should be on the same level of institutional hierarchy. The IISO should implement the required energy system transformation from the CCC recommendations, and the economic regulator should regulate it. Both of them would be working to a Strategy and Policy Statement (SPS) from an Energy Policy Committee (the executor of, and advisor to, the Secretary of State) and DECC. We think this will go a long way to help overcome the barriers of storage, but at the moment a central barrier to a ‘smarter’ energy system are data flows. Until there is a fundamental re-structuring of those flows and who ‘owns’ that data, it is difficult for storage (and many other capabilities) to capture its value to the energy system. Also, there is no right answer to the amount of interconnection there should be. This is something the IISO will re-assess at regular intervals as the energy system develops. Finally, there is a great deal of international best practice the GB should learn from. IGov’s work falls squarely in the area of the NIC exploration. IGov itself has been investigating international best practice in this area (Denmark, Germany and the US) and would welcome more detailed discussions of the issues.
The full submission can be downloaded here: National Infrastructure Commission call for Evidence – submission from EPG 8-01-16