The need for independent energy system operation is a live debate across the EU. It may be raised as an issue by the European Commission in their forthcoming Grids Package or White Paper on Electricity Market Design. Decisions about institutional reform are never taken lightly. They consume resource and political energy and may temporarily delay many important processes, especially if the affected parties are resistant to the proposed change. However, the cost of failing to effectively deliver policy goals is huge. We cannot wait to fail before acting.
The challenge for system operators and planners to rapidly transform the energy system is enormous. It is unsurprising that they do not want to be deflected from the task at hand. However, the European Commission and Member State governments must be clear about what needs to happen and be laser focused on ensuring success. This includes challenging the ability of system operators to deliver. Failure to deliver effectively is a problem and, in some circumstances, institutional reform may be the best solution to that problem.
The UK has already gone down this path by creating an independent energy system operator and planner (NESO). This decision was driven by concerns over conflicts of interest, the need to integrate electricity and gas activities, and the realisation that the government must have high quality independent advice to support the policy decisions it will need to make. The value of this move is now being tested as the government aims to deliver a clean power system by 2030 on the path to a highly electrified and decarbonised energy system to support net zero targets.
The UK energy system must change quickly as is the case across Europe. Deployment of renewables, electrification of demand, and grid buildout all need to move in-step. The requirement for grid upgrades must be anticipated given locational forecasts of supply and demand. NESO is currently producing a spatial energy plan to allow anticipatory grid investment to proceed. Initial experience is highlighting the importance of strategic spatial energy planning – it is the beating heart of a successful energy system transition.
The type of spatial planning that is needed today is very different from the typical scenario analysis undertaken by grid planners across the EU. Firstly, it must allow grid buildout to accelerate by reducing grid permitting and planning timescales. It can achieve this through establishing needs at a system level, including undertaking strategic level environmental and land use assessments. Armed with a clear view of strategic needs, system operators should be better able to engage with local communities and their representatives to ensure local impacts are considered early in the planning process. They need to demonstrate that all credible alternatives have been explored and the choices and trade-offs that have been made are in the national interest.
It is not possible to build a network to cover all potential supply and demand scenarios. Some options cannot be retained, and this means making policy choices. For example, how much hydrogen will be needed and in which locations? How much land will be available for solar developments? Spatial planning highlights the policy decisions that governments must make and when this must happen. Setting a clear timetable for policy decisions is the second key feature of the spatial planning that is needed.
The spatial plan is a system plan. It will only result in a low-cost energy system if all assets are available as anticipated. For example, the emergence of new demands from electrification may be essential to avoid renewable generation being curtailed and wasted. Alternatively, the ability of consumers to control the time when they use electrical devices such as electric vehicles may be vital to enable supplies and demands to be balanced. The spatial plan creates a delivery ‘burning platform’ and this is the third crucial aspect of a successful process. It places a clear focus on delivery across the energy system.
Accelerating grid buildout, supporting governments in making policy decisions when required, and focusing the delivery processes of system assets are the key outcomes that are needed for a successful energy transition. There is no reason that this cannot be delivered by existing institutional structures. However, the need to align organisational and public interests, integrate approaches across the energy system, and provide the trusted technical advice that governments need to make informed choices, can be time-consuming and resource intensive. Biting the bullet now and creating independent system operators and planners could save cost and time in many countries and at EU-level.
Delivering a successful clean energy transition rapidly and at low cost remains a priority for European leaders. This is a time for the European Commission and Member State governments to explore bold solutions and create the next generation of system operators and planners. By focusing on the outcomes that create a successful energy transition, they may appreciate that they have a problem to which independent system operation and planning is the solution.
The views and opinions in this article do not necessarily reflect those of the Heinrich-Böll-Stiftung European Union | Global Dialogue.
