Future of local energy institutions and governance (2023)

This response is provided by the Future Power System Architecture (FPSA) Group, an informal collaboration of experts from the Energy Systems Catapult and The Institution of Engineering and Technology, with wide experience across the whole energy system. The Group was formed around the Future Power System Architecture (FPSA) programme and is now actively supporting energy system transformation in pursuit of Net Zero.

The FPSA programme undertook the analysis needed to understand the functions that would be demanded of the future power system and considered the innovation, implementation and governance needs that would have to be addressed.

In our view, a coordinated whole energy system approach is essential for achieving Net Zero targets in an affordable and resilient way. Local energy systems have an increasingly important role to play. In our prior response to you on this topic we set out our views that:

• Energy infrastructure for heat and transport will largely be developed at a local level.
• Local and regional area energy planning is needed to optimise the whole energy system.
• Agile and inclusive decision making is needed to optimise energy resources at a local level.
• Local governance and support structures, including information sharing are needed.
• Local capability and funding deficiencies must be addressed.

The current governance arrangements are not able to address these key drivers and constraints.

The current arrangements may be characterised as top-down nationally led silos for specific sectors, with whole system coordination being mainly strategic, and not operational.

In particular, local or regional input is informal, reactive and inconsistent.

All of these factors result in sub-optimal energy transition operation and planning.

In order to address these issues, we suggested that a regional system planner and operator (RSPO) model could be an effective way forward. We suggested such bodies should:

• Be independent but also accountable to give legitimacy.
• Have the relevant expertise and funding.
• Be licensed entities, with independent funding and obligations to deliver public service responsibilities consistent with the energy transition.
• Have obligations to interact and coordinate with other parties e.g., FSO, DNOs, GDNs, Local Authorities, etc,
• Have their interactions with other bodies codified where appropriate to ensure effective interaction.
• Be established on appropriate regional boundaries e.g., DNO licensed company areas.
• We suggested that these RSPO’s should be responsible both for local planning and operation so that whole system optimisation could be performed at both a planning and operational level. They would be able to optimise whole energy infrastructure for the future, addressing:
• Local economic, environmental, and social plans
• Interaction across electricity, heat, and transport, and
• Interaction with other local industry and public bodies.