Responding to a call for evidence on the licence exemptions regime, Nigel Cornwall of New Anglia Energy has called for it to undergo a revision and be extended to facilitate greater competition, flexibility and innovation – all key to affordably achieving net zero.
Launched on 30 October, it sought to uncover how well the regime has coped with Britain’s changing energy landscape and whether changes are needed to reflect the government’s aims and objectives. It will be used to inform a future consultation on changes as part of a wider review. Cornwall signalled strong support for modernising and extending the regime, especially for domestic supply, alongside greater use of derogations where licenses are still needed with small businesses and innovators unable to justify taking them out in their current form. Rather than barring exempt suppliers from access to market, a lighter touch arrangement should be developed, enabling small niche players to develop bespoke propositions in response to local stakeholder needs through a wider menu of class exemptions.
New products and services are emerging, capable of delivering cost savings, flexibility and wider emissions reductions opportunities, but are constrained by the current framework. BEIS should, therefore, think harder about the significant benefits resulting from such change, with extended and more consistent supply licence exemptions bringing value to consumers and supporting net zero through two broad avenues. These are innovative supply offerings, such as dynamic pricing, community schemes or heat as a service, and facilitating local energy markets, including peer-to-peer (P2P), community offers and integration with heat and transport.
It should undertake a focussed review of consumer protection, look at how similar issues are handled on private networks and how other jurisdictions offer suitable environments for innovation, experimentation and choice. With the GB national electricity market template having a poor record of supporting innovative supply, there are three specific issues BEIS should consider, including the potential from local energy markets as licence exemptions could allow for a scenario where a consumer contracts from a traditional supplier but has the freedom to buy a subset from a local producer.
It should also explore P2P trading platforms, namely how local trading and balancing can be accommodated, and also look to other jurisdictions where consideration is given to allow multiple providers to supply a premise, without the need for all parties to be license or an upfront agreement on how volumes are allocated.
In pursuing a full consultation on this topic, BEIS should do so presuming problems arising from the existing class exemptions and procedures should be addressed and the current national licensing regime, especially for supply, relaxed. It should address how devolved solutions supporting community involvement and consumer engagements can be facilitated to deliver consumer betterment and flexibility; develop proposals on a more flexible licensing and an exemptions regime that supports retail innovation and smart local energy systems, no later than 2022. Ofgem also needs to expedite its consideration of derogations and use of licenses for specific geographic areas or premises, with this and the licence exemptions review carried out in parallel.
Read the full response here.