Professional services firm Gemserv has called on the government to reform governance of the UK energy market to enable the energy transition.
In the latest in a series of papers on the topic, the company laid out three key areas it said the Department for Business, Energy and Industrial Strategy (BEIS), Ofgem and the industry could bring in “no regrets” changes.
Trevor Hutchings, Gemserv’s director of strategy, said there are several opportunities that could be acted on now, “making demonstrable improvements to code governance which will unleash further innovation, competition and efficiencies in the market”.
“This can be done without jeopardising wider reform over the longer term.”
Gemserv’s three key areas for reform include strategic guidance to Code Panels and Code Managers issued by Ofgem to ensure coordination of government and industry priorities to reach net zero.
Secondly, introducing reputational and financial incentives to improve performance, accountability and incentivise better code management would add greater transparency to the code process, and competitive tendering by code managers would ensure value for money.
Finally, simplification and accessibility should be targeted through reform, utilising the power of digitalisation to reduce regulatory burdens. BEIS and Ofgem should make rule changes that make the market more accessible and simplify the rule book.
“Energy codes have successfully underpinned the energy system since the late 1990s but have become complex and change is slow,” added Bob Hull, lead author of the paper.
“In the meantime, markets and technologies have moved on and they need to be modernised to help drive the transition to net zero. Our recommendations should deliver early benefits and can provide a strong catalyst for future change.”
Gemserv’s report joins a number of calls for reform in recent months, including from National Grid ESO. The operator stated in a report at the beginning of March that the electricity markets need wide-ranging reforms in order to sustain the country’s transition to renewable energy resources.
Changes have begun to take place, with Elexon for example hailing a “ground-breaking” modification to the Balancing and Settlement Code recently, which makes the Balancing Mechanism more accessible to smaller asset owners.
