Innovation in a transforming energy system
Blog
Martin Crouch
Publication date
Industry sector
- Transmission Network
- Distribution Network
- Supply and Retail Market
Innovation is a growing feature of the energy system, affecting the ways in which energy is produced, transported, managed and consumed. It’s not just about technologies, but about new products, services, processes, market participants and business models that can benefit consumers, both today and in the future.
We are holding a stakeholder event on 9 February to discuss our proposed Innovation Plan which will be streamed live for you to watch. We welcome your comments on this blog and the event, as well as our other open consultations in this area which are listed at the end of the blog.
Because energy is an essential service, the energy sector has to be managed – regulated, in one form or another – for the benefit of household and business consumers, and the economy as a whole.
The energy system is undergoing a deep and wide-ranging transformation. The energy system of tomorrow could be as unfamiliar to us as today’s information technologies would be to the early internet pioneers.
The pace of this transformation – and the potential for genuinely different and disruptive ways to do things – is greater than ever before. In part this transformation is being driven by innovation, with technologies rapidly remaking the energy landscape. This shift also offers opportunities for innovation - the move from the current largely centralised, aged asset, carbon-intense model to one which is increasingly carbon constrained, smart, decentralised and flexible creates challenges which innovation will address.
Within this transformation, regulation needs to be sufficiently flexible and agile to facilitate and encourage innovation that is in consumers’ interests. It is also essential that during this transformation the energy system continues to deliver reliably, safely and at good value to consumers.
Alongside other regulators and departments, government has asked us to produce an Innovation Plan to address three key questions about how our regulation could adapt to new technologies and disruptive business models, in context of how these technologies are likely to shape the sector. The three questions are:
- How new technology is likely to shape the regulated sectors?
- How legislation and enforcement frameworks could adapt to new technologies and disruptive business models to encourage growth?
- How regulators could better use new technologies to generate efficiency savings and reduce burdens on business?
Our Innovation Plan which we will publish in March, explains how our work and ongoing engagement with stakeholders supports, promotes and enables innovation to deliver better consumer outcomes. It also explains our future plans, including how new work on horizon scanning will help us understand future priorities for where regulatory change or space for innovation is needed to unlock positive consumer outcomes from innovative approaches.
Engaging effectively with our stakeholders is key to helping us better understand what type of innovation is coming to market, the challenges innovators are facing and the implications for regulation. We’ve already started the journey of removing barriers to innovation and creating the conditions for energy companies to innovate, such as through our RIIO price control incentive framework and our consultation on moving to more of a reliance on principles in the retail market.
We will be discussing innovation in more detail at our event on the 9 February with guest presentations from Innovate UK about their approach to innovation, and the Financial Conduct Authority who will be discussing their Regulatory Sandbox concept which is designed to encourage and facilitate innovation. You can watch this on a live stream.
We welcome your comments on this blog and governments three questions. We also welcome your input to relevant consultations we have open, including our Forward Work Programme, our Simplification Plan, Future Retail Regulation. We look forward to engaging with you going forward.