EnergyREV reaction to the proposal for an Independent System Operator

EnergyREV reaction to the proposal for an Independent System Operator

By Jeffrey Hardy, Grantham Institute, Imperial College London, Jonathan Radcliffe, Energy Systems and Policy Analysis Group, University of Birmingham and David Elmes, Warwick Business School

Ofgem has recently announced its recommendation to create an Independent System Operator (ISO), ultimately taking the planning of electricity and gas networks out of National Grid. EnergyREV welcomes this move as we recognise the need for independent advice to Government on our energy system's net-zero transformation.  But Ofgem's initial proposals are for a national-level independent system operator focused on electricity. We feel this needs to go further from the start in considering what smart local energy systems (SLES) offer the UK.

As we slowly emerge from this pandemic, which has already substantially altered energy consumption patterns in the UK, there is an opportunity to stimulate a rapid and green recovery. EnergyREV's recent report, ‘Post-pandemic recovery: How smart local energy systems can contribute’, made the case that adopting a SLES approach could deliver a faster recovery and more equitably distributed benefits.

Ofgem's recommendation for an ISO appears to miss the energy transformation's local nature, where much of the zero-carbon action will occur. For example, there is little reference to the crucial relationship between the ISO and the Distribution System Operators, and how those local system operators can be more than just the companies that are today's distribution network operators. It is also quiet on the importance of local governance, SLES, emerging business models (such as energy-as-a-service), and how future energy infrastructure interacts with other infrastructure (such as ICT and water).  A national system architect may fail to recognise and deliver SLES' benefits and innovations.

We look forward to engaging with Ofgem and BEIS on this crucial subject further.