Government and Ofgem need to do more on delivery of a Smart Grid say MPS

UK ParliamentIn a report on The future of Britain's electricity networks, the Energy and Climate Change Committee calls on government to provide strategic leadership to ensure the timely delivery of a smart grid.

Launching the report, Paddy Tipping MP said: "Our existing regulatory and policy frameworks, along with the grid infrastructure we currently rely on, were developed to serve the fossil fuel economy of the twentieth century.

"The future looks very different. By 2020 the UK electricity network will need to accommodate a far more diverse energy mix that includes a much higher proportion of renewables that cannot respond so easily to fluctuating demand. The only cost-effective response to these developments is the creation of a smart grid that intelligently manages demand and supply across the energy system."

The report considers a number of issues that will be crucial for building a smarter grid:

The Committee raises concern that Ofgem has granted funding for new grid investment projects before the completion of a fundamental review of how better use can be made of the existing network. Strategic investment in transmission capacity will be required to avoid delays in connecting new power stations, but the existing regulatory framework may be driving the case for transmission investment presented by the industry at the expense of other more cost-effective options such as greater management of demand for energy.

The Committee highlights the increase in the cost of managing electricity flows across the system in recent years, and finds that this is caused by inherent flaws in the British Electricity Trading and Transmission Arrangements (BETTA). It also notes allegations that anti-competitive practices by certain electricity companies may also have contributed to increasing costs. The report welcomes the Government's decision to enhance Ofgem's powers to regulate companies in the current Energy Bill and calls for a specific review of the BETTA market.

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