Ofgem: Future Insights
Blog
Martin Crouch
Publication date
Industry sector
Supply and Retail Market
Over the coming years, new technologies, services and consumer behaviours will transform the UK energy system. This week we published the first in a series of discussion papers for our new Future Insights programme to explore the opportunities and challenges for consumers that could result from this transformation.
Our approach to the regulation of the energy market needs to remain relevant and responsive in the face of rapid energy system change. Whilst it is impossible to know what the energy market will look like in 2030 or 2050, these papers will help us to develop a strategic vision so we can protect consumers now and in the future.
The first paper provides an overview of likely key developments in the energy system which upcoming papers will explore in greater detail.
Opportunities and challenges
The changes that are likely to take place present both opportunities and challenges. The huge growth in distributed generation and local energy business models could turn the traditional centralised utility model on its head. How households use and pay for energy is likely to change. Energy could be included in the provision of utility services rather than charged separately for each unit consumed, challenging the whole concept of an ‘energy consumer’.
Future Insights
The use of smart technology will lead to a flexible energy system in which consumers have more control. These developments represent significant opportunities for engaged consumers who are able to benefit from new technologies. Making sure vulnerable consumers are not left behind is a significant challenge for us as a regulator.
Stakeholder input
There are a wide range of drivers of these changes, including Government policy, tackling climate change, technological innovation and consumer attitudes. We need to consider these changes in the context of the growing interconnection and interdependence between the energy system and all aspects of our society. Earlier this year we held workshops with stakeholders to discuss these issues and have fed their views into our discussion papers.
Over the coming months, we will publish more papers that will take an in-depth look at key topics including heat, the prospects for local energy markets and innovation. The series aims to provide an overview of some of the main drivers of change impacting consumers, how they interact with the economics of the energy sector, and the possible implications for regulators and policymakers. As part of our Future Insights programme, Ofgem will hold further stakeholder events to discuss these issues in the coming months.
Being flexible
The Future Insights programme isn’t about settling on a preferred pathway based on a particular technology or set of assumptions about the future. We can’t predict – or control – the future. If we tried, some assumptions would inevitably turn out to be wrong as new technologies and unexpected trends emerged.
We need to remain open-minded about what we don’t know. We hope the programme will help make our approach to regulation sufficiently flexible so we can adapt to a wide range of possible future scenarios. We welcome engagement from across the energy industry and other stakeholders on the issues presented in the discussion papers. We will be outlining how stakeholders can engage with us in due course.
In the meantime, to find out more please email energy.futures@ofgem.gov.uk.