The energy and climate change committee of MPs has backed the construction of a ‘smart’ grid to accommodate the increasing proportion of renewable energy sources coming on-line, but says the government and regulator Ofgem needs to be more active in driving this.
Launching the report, interim committe chair Paddy Tipping MP said: “Our existing regulatory and policy frameworks, along with the grid infrastructure we currently rely on, were developed to serve the fossil fuel economy of the twentieth century.
“The future looks very different. By 2020 the UK electricity network will need to accommodate a far more diverse energy mix that includes a much higher proportion of renewables that cannot respond so easily to fluctuating demand. The only cost-effective response to these developments is the creation of a smart grid that intelligently manages demand and supply across the energy system.”
The Committee says 60GW of new power generation is awaiting grid connection - a large proportion of this is from renewable sources, and a regime needs to be put in place that would give renewables a priority. They say the energy sector: “has for far too long forestalled reform in areas such as transmission access”.
Regulator Ofgem came in for criticism, saying it may be funding grid infrastructure projects too early, before a review of how the existing network could be better used. The committee says more cost-effective options to connect new power stations may be available, such as improved demand management.
Ofgem should also address the skills gap, and invest in new skills, or we face: “A dirtier, more expensive and less efficient future,” said the committee’s report.
One barrier is the absence of a “culture of innovation” within the networks sector, the committee says, and urges businesses to take advantages of new opportunities in the global smart grid market.
It says four principles should be a priority:
- The need to avoid locking the UK into a particular outcome for the future energy mix at an early stage;
- Integration and management of energy demand within the energy system;
- Minimisation of regulatory and policy uncertainty for network companies who must invest in network assets; and
- The possibility of a new industrial structure emerging over time.
“The market alone will not be able to achieve these changes—it requires strategic leadership from Government delivering a vision for the future that engages actively both consumers and the energy sector,” the report reads.
The Renewable Energy Association’s networks advisor Tim Russell said: “Whilst we may not agree with every detail, the report makes a valuable contribution to the debate. We particularly welcome the committee’s emphasis on the urgency of completing the work on transmission security standards.
“It’s good they drew attention to proposals to impose transmission charges on generators connected to the distribution network, for flows that do not even reach the transmission system. We believe that such charges would be inequitable and totally non cost-reflective. This threatens the long-established principle of embedded benefits,” he said.