07/05/2020: Updates and opinion pieces

I hope everyone is bearing up and keeping positive in these difficult times.

Over here at New Anglia Energy, we have been keeping busy. One of the key attributes of the energy and low-carbon sectors is that come rain or shine (metaphorically speaking), there’s always something to write about and things to keep on top of.

I continue to write occasional opinion pieces. Two are probably worth a particular mention. 

The first is a recent LinkedIn comment on an urgent Grid Code change proposal to formalise powers to allow the system operator to instruct DNOs to disconnect distributed generation (GC0143) and a new flexibility service being launched by National Grid to deal with the record recent low demands as more intermittent generation comes onto the GB power system. I am posting that today on this site here for ease of access, and we should find out today whether Ofgem approves it.

As ever, though, these change proposals in different ways raise issues about the GB approach to energy sector governance. Even two ostensibly related rule change proposals are subject to different processes. There is also an alarming lack of supporting analysis and explanation on why changes are being brought forward now and in the form they have been given. It’s no wonder market participants get confused. A further point is that they also both demonstrate a lack of a coherent view of what the market expects from small players and how we can move forwards towards treating them on a par with larger generators.  The bottom line is that – assuming both are implemented – giving network operators rights to curtail small players property rights without providing an avenue for them to engage with the market in a similar way to their larger peers is plain wrong. Let’s hope National Grid working collaboratively with the DNOs can use the period through to winter to levelise the playing field.

A second highlight is a series of pieces I am writing for @ICONNews from Nottingham about the electricity trading arrangements at 30 – a milestone reached on 31 March 2020. I’m only half way through it but having been one of the team intimately involved in the original market redesign and vesting process within government back in 1990 it is making me think about how far we have come but also mistakes along the way. A second part looking at the early years of NETA and the roll-out of the market to Scotland with the introduction of BETTA should be issued over the weekend, so keep an eye out on LinkedIn. In due course, when I have updated to 2020 and cast an eye forward to the next decade, I’ll put the series up on this site too, but I am rapidly coming to the conclusion that the current market structure cannot deliver net zero, especially with very depressed levels of commodity prices. If the recent BEIS consultation on renewable heat is anything to go by, we have not begun to grasp the scale of the challenge.

Meanwhile, I have been continuing to develop a social media footprint and it looks like I will exceed 2,500 followers on twitter over the bank holiday weekend. I always emphasise this is not about quantity alone, and I have some top-notch followers, very high engagement levels and positive feedback. A average of 10,000 impressions a day isn’t bad going so I’m told.

More generally I continue to be kept busy supporting the UKPN Customer Engagement Group, which is now picking up momentum. Its disappointing that the public hearings into the gas distributors and the transmission entities have been delayed as it would be good to see a sanity check of what consumers and other stakeholders think of the phase 1 reviews, and Ofgem needs to get these back on the road quickly. If parliaments, select committees, judicial proceedings and the excellent Citizens Assembly can move on-line effectively stakeholder consultation on RIIO-2 business plans should be able to as well. For what its worth I think there have been many imperfections in the RIIO-2 process to date and I’d like to see the learnings gathered before the DNO engagement groups get too far down the road.

I also continue to support the London Power energy white label. Its certainly an interesting – no, difficult – time for municipal power brands with Bristol Energy just put up for sale and also with a major review being undertaken by Deloitte of Robin Hood Energy. As a general rule, very low market prices are not great for local energy companies who are concerned about social equity and local agendas. At the same time market rules load policy costs onto household consumers making it very difficult for local players to differentiate, and with many more customers falling into the vulnerable category we need to think about community energy and how it can be made sustainable in a post FiT world. Wholesale prices are also in the doldrums with no early prospect of a respite, so cost cutters seem to be dealing with the current strong headwinds better than most. We continue to talk about putting customers at the heart of the energy market but the challenges to this would seem to be increasing, and I would expect there to be a much more focussed debate on these issues once the lockdown begins to unwind.

Anyway, do keep safe, and please feel free to continue to circulate my thoughts to colleagues and contacts.

And, of course, if you don’t already follow me at @newangliaenergy, please do.

Nigel