Change is going to come

Change is going to come

In my mind, there’s something inevitable about change. You cannot stop progress. That can be good progress as driven by technological change, new thinking and new technology. Or bad, as driven by entropy, the passing of time, and the tendency of everything eventually to return to whence it came.

In previous blogs (, together with my colleague Graham Schorfield, we’ve explained how the UK power market was structured to support an old-fashioned set of market operators. And that today these market structures impede change. Yet those with kudos in the market, lobby and stretch and strain at every thread to cling on to the old ways.

The reason for that is clear. In the new world whether you generate or consume power, you will receive a fair price for the generation or consumption at the location and voltage level on the grid. Our new technical revolution allows rapid and detailed metering data down to the appliance level. We can record response times, and switch devices on and off without lifting a finger, from many miles away, and then collect information about the events in real time. And this is at the kilowatt level, not megawatts as before. There is absolutely no technical reason why today, we cannot provide you with a fair price for switching on or off your battery/freezer/tv/lights at this very moment.

Contrast this situation to where we are today. Barriers to innovation and change exist because the old market structures ‘own’ the value you create in taking these actions. And guess what? The incumbents don’t want you to gift you these benefits. They want to take a slice of them as they have always done for their troubles. Taking a slice of benefits which never belonged to the energy supplier is a problem because it means that at the margin, economically efficient and rational decisions are no longer economic. This means that at the margin new business models don’t quite get over the line, and hence this prevents economies of scale from developing.

What’s my point? As a basic principle, all parties, no matter how big or small, should be able to extract the value of a profile if they can prove they have created it (at the same time they will need to bear the cost of the same profile). The value should include both energy and system charges, and should be free of administration costs (or these costs should be borne centrally). If we create a market that allows this to happen then we will see change, innovation, and improvement to increase efficiency, and reduce the costs and carbon intensities on the system.

Without a market that supports fair pricing, we risk change which is sub-economic, or needs to be supported by subsidy scheme. Or worse still we risk a stand-off in which entropy and the passing of time can leave us lagging behind more forward-looking economies.

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