Andrew Wright, an Ofgem senior partner, has warned that the transition towards a more renewable energy mix nationwide may mean the introduction of a tiered system whereby households pay extra for a more reliable energy supply.
Wright explained that while the closing down of coal-fired power plants across the country is good news for the environment, the renewable generators replacing them suffer from issues with reliability. The energy provided by solar and wind farms can be intermittent, and increased reliance on them as a primary source for power means “much less flexibility” for suppliers, Wright said.
Ultimately, he said, the full closure of the UK’s coal fleet (due to happen by 2025), will mean that a guaranteed consistent supply of energy will be difficult to provide. A significant restructuring of the energy market will be required in order to an acceptable service to continue to be provided.
“The system we are all familiar with has some redundancy built into it. It was pretty straightforward and there was a supply margin, but increasing intermittency from renewable energy is producing profound changes to this system,” he said.
“We now have much less flexibility with the loss of fossil fuel capacity. Coal has been important, but this is disappearing.
“In the future not everyone will be able to use as much as electricity as they want, and there will be a need to re-write the rules.”
What Wright foresees is a two tiered system, with some households who can afford to (and are willing to) paying more than others for a more reliable service.
He said: “We are currently all paying broadly the same price but we could be moving away from that and there will be some new features in the market which may see some choose to pay for a higher level of reliability.
“One household may be sitting with their lights on, charging their Tesla electric car, while someone else will be sitting in the dark.”
Ofgem made it clear that Wright’s comments, made during a conference at Durham University, were delivered in a personal capacity, rather than by him as a representative of the regulator.
While they did not refute his claims, they did say that they should be taken more as speculation on the future of the energy market in 10 to 15 years time, rather than as a statement of an imminent policy change.
A spokesperson for the regulator said: “Ofgem is fully committed to delivering secure supplies for all consumers now and in the future. This is our number one priority. This is why we have driven up network reliability standards and worked closely with government to ensure secure energy supplies.
“In order to protect consumers, every regulator has to look a possible future challenges. Mr Wright was talking at a university conference in a personal capacity and looking at possible issues that might or might not arise in 10 to 15 years’ time.”
