Smart leadership required

In a new report on the subject, Paddy Tipping MP said: ’By 2020, the UK electricity network will need to accommodate a far more diverse energy mix, including a much higher proportion of renewables that cannot respond easily to fluctuating demand. The only cost-effective response to these developments is the creation of a smart grid.’

The select committee’s report raises concern that Ofgem has granted funding for new grid projects before carrying out a fundamental review of how better use could be made of the existing network.

Acknowledging the fact that investment in transmission capacity will be required to avoid delays in connecting new power stations, it said that the existing regulatory framework may be driving the case for such investment at the expense of other, more cost-effective, options - such as managing energy demand in a more efficient way.

The committee said that it was extremely disappointed at the industry’s failure to agree a new transmission access regime that will tackle the 60GW of power generated from predominantly renewable sources that are waiting to connect to the grid. The report urged the department to move quickly to implement a regime that will encourage the sharing of grid capacity and prioritise renewables.

The select committee also considered the role of the skills that would be needed to deliver a smart grid. It expressed concern at the growing shortage of trained people in the networks sector and warned that, without such skills, the UK faces ’a dirtier, more expensive and less efficient future’.

The Institution of Engineering and Technology (IET) gave written and oral evidence to the inquiry, and said that the main thrust of the report reflected its advice.

The IET agreed that distribution was the area where the biggest changes were required, as a system designed for one-way delivery of electricity would need to be transformed to accept renewable generation from households or communities and enable users to play a role in managing electricity demand.

In a statement, the IET said that: ’Today’s networks are not technically able to accept high penetrations of distributed generation because they are designed for one-way flows only. New technologies have huge potential but they need to be brought forward from the lab to real networks.’

The select committee’s report also made mention of allegations that anti-competitive practices by certain electricity companies may have contributed to increasing costs, and welcomed the government’s decision to enhance Ofgem’s powers to regulate companies in the current Energy Bill.

Ofgem published its plans to increase such competitive pressures on energy suppliers on its website yesterday. Previously, in its energy-supply market probe, Ofgem identified that liquidity - the ability of smaller firms to purchase a variety of deals to help them manage risk - in wholesale electricity markets was poor and, therefore, a major obstacle that was preventing new suppliers from entering the market.

Now, it seems that Ofgem plans to address this issue and help the market work in consumers’ interests.