Break-up National Grid monopoly and probe OFGEM transmission charges, say energy MPs

Smarter Grid Solutions pylonsMPs on the Commons Energy Committee are recommending a major change in the way the UK energy system is operated, transferring system operation from National Grid to an Independent System Operator (at the national level) and Distribution System Operators (at the regional level).

They also call today for the UK Government to investigate the transmission charges levied by OFGEM on electricity generators which are ‘among the highest in Europe’.

This is a particularly vexed question in Scotland, and was one of the key reasons cited by Scottish Power for closing its Longannet coal-fired power station earlier this year.

Angus MacNeil MP, Chairman of the Energy Committee, said today: “National Grid’s technical expertise in operating the national energy system must be weighed against its potential conflicts of interest.

“The Independent System Operator model has worked in the USA. It is time for it to be brought to these shores.

“Local energy is here, with astonishing growth in generation connected directly to regional networks. Distribution Network Operators (DNOs) remain somewhat blind to their energy flows and passive in managing them.

“DNOs must transition to a more active role as Distribution System Operators so that they can use smart technologies to manage ever-more complicated energy flows.”

The Committee notes the importance of smart meters and a smart grid to enable this transition, but expressed concerns that the roll-out of smart meters is not progressing quickly enough to achieve the necessary mass to truly create a smart energy network.


New technologies for a new network

The report also examined energy storage, Demand Side Response (DSR), interconnection and other ‘smart-grid’ technologies – and MPs recommend that ‘storage be deployed at scale’ as soon as possible.  However, its development is being hindered by archaic regulations.

MacNeil added: “Innovative solutions—like storage and DSR— to 21st-century energy problems have been held back by legislative and regulatory inertia. The Government has committed to addressing these issues, and we will hold them to account on making good on this promise. DECC must also learn lessons from these policy lags so as to be better prepared for ongoing changes.”


OFGEM probe

MPs also supported significant expansion of interconnection to help balance a low-carbon network.

However, with transmission charges for generators in the UK remain high by EU standards, the Committee calls on Government to investigate the disadvantage UK generators may consequently face against other European generators as Great Britain becomes more interconnected.


Connecting low-carbon energy sources

Developing low-carbon electricity is key to the UK’s decarbonisation ambitions.

However, the Committee found that small-scale generators faced long and uncertain queues to connect to the grid; at a larger scale, the cost of connections does not always help sourcing electricity where the resource is best. The MPs recommended a review of connection costs.

MacNeil added: “The UK needs clean, renewable power, but it won’t be built if it’s too costly or difficult for generators to connect to the electricity grid. Distribution networks have been overwhelmed at times by the challenge of integrating small-scale renewables.”


Low-carbon gas and heat networks

The Committee recommends that the Government:

  • Sets indicative targets for biomethane and hydrogen deployment in the gas grid, and:
  • Establishes a regulatory framework – overseen by OFGEM – to encourage investment in district heating and complement existing voluntary schemes in safeguarding consumers.

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed