Energy for a Net Zero Society – Comments on Energy Policy

Energy for a Net Zero Society – Comments on Energy Policy

Catalina Guillen Rozo

The UN Climate Change Conference of the Parties (COP26) presidency provides an opportunity to drive further action and change in policy. The UK was the first major economy to legislate for a net-zero target, and the Energy White Paper is intended to demonstrate leadership and commitment.

While broad policy statements are ambitious, the implementation and detailed regulation can sometimes be slower and less bold. This session will analyse the barriers and inhibitors of the delivery of policy for a net-zero society taking the example of the electricity storage sector.

Government, The Department of Energy, and Industrial Strategy (BEIS) and Ofgem, the regulator, recognise storage as an essential enabler of a net-zero energy system. Multiple examples of actions taken by BEIS or Ofgem show their interest and support to the sector. However, there is room for improvement when changing the regulatory landscape.

I identified five key issues affecting the delivery of a decarbonised energy system and the removal of regulatory barriers for the deployment of energy storage, renewables, and other clean technologies. Each point will be illustrated with examples I will draw from my experience in the storage sector.

1. The resistance to chang e.g., Historically the role of regulators has been to balance the monopoly advantages and ensure a fair price and a good level of service. The mandate did not include environmental externalities. The need for change became evidence but the resistance to change from the status quo has acted as a barrier.
2. Embedded decarbonisation targets – the different actors and stakeholders have ambitious and good intended decarbonisation plans. However big intentions are not always embedded into practical actions. E.G, capacity markets, balancing services markets.
3. Accountability – Government Departments, Ofgem and the private sector rely on each other to deliver on decarbonisation targets. Should Ofgem take more risk when legislating? Should Government allocate more taxpayers money to subsidies? Or should investors bear the risk of innovation? Not surprisingly the answer is no players want to bear the risk.
4. The ‘lag’ decision making – Innovation and change come with uncertainty and the policy barriers are difficult to forecast, but in some cases the barriers are predictable, and the different actors could be more proactive when creating a technology-friendly legislative environment.
5. Least-worst regret is not always an optimal solution – Managing risk in an uncertain future is not an easy task but there is almost an obsession with the least worst regret decision. The different actors model scenarios (even government departments and regulators) where Government is not even close to its own commitments and then evaluate its decision based on the impact on these scenarios.

Please note the paper and session’ views are mine and do not represent the views of any organisation.