The Catapult has responded to three recent consultations from Ofgem on:

• The future of local energy institutions and governance
• The future of distributed flexibility
• Frameworks for future systems and network regulation

We welcome Ofgem engaging with these topics and agree that all three require timely intervention:

• the disjoint between energy infrastructure planning and spatial planning at local level is a weakness of current governance arrangements and a barrier to decarbonisation;
• flexibility is essential for a zero carbon energy system but the current market landscape is inadequate to deliver flexibility at pace and scale; and
• economic regulation of network companies should be an enabler of meeting the Net Zero target

We are also broadly supportive of the proposals set out by Ofgem across the three consultations. However, our responses drew out areas for further emphasis as Ofgem develops its thinking – across the tree consultations, we particularly highlight:

1. Taking a whole systems approach. Ofgem’s proposals appear to be overly focused on electricity. The Catapult agrees that electricity will play a foundational (and larger) role in a zero carbon economy, but we also consider that the greatest opportunities in terms of local energy governance and flexibility are in cross-vector interactions. So it is essential that institutional arrangements and digital infrastructure are designed to enable whole-system approaches, and that price controls do not create incentives for siloes investment planning. Local Area Energy Plans can have an important role in facilitating genuine whole-system planning and coordination at a local level.
2. Aligning regulatory interventions with market design. The current electricity market design with single national price in the wholesale market does not reflect local constraints. This suppresses the value of flexibility and does not provide information on the location where network reinforcement would be most valuable. We advocate for the introduction of locational marginal pricing (LMP) in the wholesale electricity market to better reveal the local value of flexibility and of reinforcement. In turn, this may affect the relative benefits (and costs) of the different interventions explored by Ofgem.
3. The digital enabling environment. To avoid duplication and maximise the benefits of digitalisation, Ofgem’s proposals should be developed by taking account of current initiatives such as the Digital Spine Feasibility study and Automatic Asset Registration.