Perspectives on UK Energy from a Trade Association

           Energy Markets
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Energy UK has released a new report: The Future of Energy. Energy UK is a major trade association for the energy industry in the UK, representing the interests of generators, suppliers, and stakeholders in electricity and gas. The report promotes technology-neutral opportunities for low-carbon energy technology through supportive mechanisms, effective carbon pricing, and flexible and liquid markets. It also welcomes new services driven by new technology, highlighting the progress already made in the commercial energy industry.

Suppliers are already helping lower the cost of energy for commercial consumers using on-site generation, storage, and demand-side response measures. These have improved resilience, reduced energy usage, and allowed flexibility in demand to be monetised. These developments are encouraged for domestic energy consumers. Energy UK’s views on developing technology-driven services in energy are progressive: trade associations representing utilities and transmission networks have historically been slow to promote demand-side response because of perverse incentives that favour high energy consumption. The interests of the energy industry are shifting from generation, transmission, and distribution towards energy efficiency and the provision of new services. This change is the main component of the ongoing transition from Distribution Network Operators to Distribution Systems Operators.

Developing fair markets is also a focus of the report. Energy UK views the current Contracts for Difference (CfD) scheme as successful in supporting low-carbon generation but recommends that it extend its coverage to solar PV, onshore wind, and less-proven technologies. Furthermore, it stresses that effective carbon pricing be a greater focus in supporting low-carbon generation. Energy UK also has the view that greater numbers of energy suppliers entering energy markets will support competition in supply. However, energy suppliers, especially small ones, do fail in the UK. Confidence in the energy industry is another focus of the report, which might be met with regulation that secures consumer protection without stifling innovation.

Energy UK’s report has been welcomed as a collective statement of ambition from the energy industry and presents a market-focussed view in line with the direction of wider UK development.

Nick Fedson MEng MSc

Nick is an analyst with an interest in energy, climate, and sustainability. Nick maintains both technical and policy interest in these areas, with an undergraduate background in mechanical engineering from the University of Bristol and a recently completed Master’s degree in Global Energy and Climate Policy from SOAS, University of London. He has completed internships in a solar energy consultancy in Brighton, a not-for-profit independent think tank in New Delhi, and in data analysis at a software company in Cambridge.