Think-tank Sustainability First (SF) has warned that Ofgem’s publication Future of Local Energy Institutions and Governance does not go far enough, and said the regulator will have to look more broadly than energy.
SF welcomed Ofgem’s aim in the Call for Input to take a broad view of the energy system – but said that in practice, the document is “very narrowly framed in only addressing supply-side issues and focussing on a narrow set of challenges.”
The think tank said success in net-zero delivery, including ensuring an inclusive transition, will require institutional arrangements at a local level that include heat and transport. It says, “Clearly this is not within Ofgem’s gift and needs work across government”. Ofgem acknowledges this, but does not have a clear mechanism for taking such work forward.
Even in energy, the think-tank says, “there is a need to think more broadly about potential future challenges to the energy system, not just the immediate and narrow questions of conflicts of interest and the development of flexibility markets”.
Referring to heat, transport (such as vehicle charging) and other infrastructure SF says the key missing element in the institutional framework is a way of bringing local actors in these sectors together. “This may not need new institutions but it is clear that local authorities do not have the resources or all the relevant expertise required,” it says.
SF wants Ofgem to avoid ‘picking winners’ this early and calls on it to take an adaptive approach. Decisions about more radical change can be left until the evidence is clearer, and meanwhile Ofgem should focus on the current distribution price review and improving co-ordination with local government.
Distribution networks have suggested a variety of ways to support local authorities in developing local area energy plans. “A clear vision from Ofgem for how this could be made to work should be a priority in thinking about local institutional arrangements.”
Read the full response here.

Further reading
Global investors: UK regulatory framework needs urgent reform to deliver Net Zero infrastructure