The UK’s transition to Net Zero (including the decarbonisation of power, heat, and transport) will reshape the energy landscape over the next 20 years and have a significant impact on a broad range of industries.

To address these issues, Ofgem, the UK’s regulator for the gas and electricity markets, has published a draft strategic document outlining what it calls its ‘innovation narrative’ for 2021-25. You can find it here.

The aim is to inform markets of those areas that the organisation believes demand urgent innovation in order to meet Net Zero objectives.

Ofgem is now seeking dialogue and contributions to help fine-tune its policy moving forward. These should be in line with three broad objectives, it says:

  • The organisation believes that innovation does not redistribute costs, but instead effects true cost reduction and/or an increase in value to the consumer.
  • Innovation should enable inclusive design that allows different types of consumer (including those in vulnerable situations) to participate in and benefit from a smarter, more flexible, energy system.
  • Innovation should also stimulate a culture of openness and shared insights among designers and developers of new technologies.

The draft document covers key priorities in a number of different areas, including:

  • the built environment, where energy usage is often wasteful and inefficient
  • gas & hydrogen, such as the increased blending of ‘green gases’ into the energy mix
  • local decarbonation initiatives
  • smart energy & energy storage, such as grid-aware systems
  • electric vehicles, including the adoption of vehicle to grid (V2G) systems that use vehicles to store electricity
  • and the role of consumers in the drive towards Net Zero – a factor that will be helped by more inclusive design, believes Ofgem.

It also addresses the topic of digitalisation, focusing on cybersecurity and energy data usage, along with the need for alignment with other public innovation bodies.

So why the short timescale for strategic renewal? Ofgem says, “We do not seek to engage a longer-term time horizon, because much will change, and we expect innovation to be a driving force within that.

“This narrative establishes a desired direction of travel for the next three to four years. Within that period, we will review our priorities and issue updates as the landscape changes.

“This short period can only be navigated successfully through wider collaboration and open discussions around innovation, and the technological as well as social solutions they unlock toward a decarbonised world.”

To get involved with the discussion, contact Ofgem’s Strategy & Decarbonisation Team at StrategyFeedback@ofgem.gov.uk.