Calls for fundamental change to the structure and regulation of the electricity system to meet the net zero target are increasing.  A recent article in the Financial Times by Scottish Power CEO, Keith Anderson, highlighted again some of the arguments for moving away from the current cost recovery model for grid infrastructure and towards an anticipatory investment (investment ahead of need) model.   The main argument against an anticipatory investment model is stranded asset risk, but it is interesting to consider whether that might be seen as a risk that has to be taken if the mandatory requirement to achieve net zero takes precedence over the objective of delivering a grid at least cost. 

In that context it is also worth noting the National Infrastructure Commission's recent call in its Strategic Investment and Public Confidence report, for Ofgem to have a new statutory duty to promote the achievement of net zero greenhouse gas emissions by 2050.  That would be a significant change in emphasis, particularly if it were given precedence over the other core priorities in Ofgem's current framework (enabling competition and innovation and protecting consumers), such that those priorities were to be delivery in a manner consistent with a net zero trajectory.

There is also the potential for fundamental reform of the industry codes which was the subject of a joint Ofgem and BEIS consultation earlier this year.  As BEIS and Ofgem themselves stated in the foreword "The rules governing the energy system need to adapt much more rapidly to enable the transition towards a more flexible energy system with net zero emissions, while minimising costs and protecting consumers. Reforming the code governance framework could, therefore better facilitate strategic changes in the sector, unlocking innovation and significant benefits to consumers".  Laudable aims - the challenge for government and industry if such fundamental change to the market is required to deliver the rapid decarbonisation required for net zero is how to deliver it without deterring investment or creating new and different inefficiencies.   Of course, with a general election coming up, it would be impossible not to note the possibility of even more fundamental change if proposals for public network ownership and national and regional energy agencies to deliver decarbonisation targets were implemented.