Low carbon network infrastructure Contents

5Flexible policy for a flexible energy system

120.The Minister gave an account of the complexity of energy policy:

There are an awful lot of people involved in energy policy. It hits so many Departments, and three, a trilemma287 is very complicated. The issues for keeping costs down, lights on and decarbonising often work against each other. We have the added complexity of this is not just about—I don’t want to belittle anyone else’s policy area but you will all be aware of black and white issues—shall we do this or shall we do that? With energy it is like that alien’s game where you bop one on the head and another one pops up here, so everything you do has a counter-reaction somewhere else. In order to not make a bad decision we do have to go around a lot of loops and look at things from different perspectives.288

121.We appreciate these necessary difficulties; however, throughout this inquiry we have found examples of low-carbon network development being hindered by inertia in the Government machinery. The rise of distributed generation appears to have overtaken networks’ and the regulator’s capacity to respond. What seem to be straightforward regulatory changes required to deliver widespread storage deployment still have no clear solution in sight. The pathways to creating Distribution System Operators and eventually an Independent System Operator remain unclear. The scale of networks’ challenges is great, but the Government has not presented a holistic plan to meet these; policy in this area instead seems fragmented, with different ideas moving at different speeds. Technologies may develop quickly, but as RWE noted, “network infrastructure typically takes a long time to design, consent, and construct” and “can be the bottle-neck in low-carbon generation deployment”.289 The UK’s electricity and heat may need to be carbon-free by 2050 (see paragraph 116). The Government therefore cannot afford substantial delay in the process of creating suitable network infrastructure.

122.We understand the complexity of energy systems and of the policy framework to meet them. We would not want DECC, Ofgem, National Grid or any other body with strong influence to make rushed and consequently poor decisions. However, sometimes making no decision on a rapidly-moving issue is worse than an imperfect one. The timescales for important decisions regarding the regulation of connections, storage, Distribution System Operators and an Independent System Operator—to pick but a few of the issues covered in this report—have often been neither efficient nor transparent, and this undermines confidence in the Government’s ability to support an evolving UK energy system. Networks are transforming. We recognise that this presents challenges for the Government, but it has been slow to present a clear, holistic plan for the evolution networks need; instead, it seems to have disconnected policy ideas at varying stages of implementation. Our overarching message to the Government is to take seriously the criticisms about its speed of delivery, as expressed in this report and elsewhere, and to learn lessons from its approach to energy networks that can be used to improve its change readiness in future. We will look deeper into the Government’s adaptability to emerging technologies in our ongoing inquiry into Energy revolution.

287 The ‘energy trilemma’ refers to the challenge of pursuing three aims—affordability, decarbonisation and security of supply—which often require trade-offs in practice.

288 Q318

289 RWE (LCN0017) para 1.3

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15 June 2016