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Global Trends in Energy Regulation

As utility regulators from around the world gather in Istanbul later this month, the landscape they survey is dramatically changing.

EDITOR’S NOTE: As utility regulators from around the world gather in Istanbul later this month, the landscape they survey is dramatically changing. The Energy Times invited John Mogg, a leading voice in global regulatory matters, to discuss the shifting realities confronting utility regulators the world over.

Energy markets differ widely from one country to another, from the emerging economies to the developed world. Currently 1.3 billion people in the world are still without electricity. Wherever they are in the world, citizens and businesses alike want and deserve secure, sustainable and affordable energy.

Energy markets everywhere are undergoing fundamental changes. One of the biggest global trends is the move towards a low carbon society with increased renewables and smart, flexible responsive energy supply. Climate change targets and national and state level policies have fostered the penetration of renewable energy sources (RES).


John Mogg

 

This growth in RES is driving changes in generation towards smaller, more distributed and less predictable generation. At the same time, more renewables increases the need for more flexibility from other sorts of generation plant and from the demand  side through demand-side flexibility. Meanwhile, the rapid development of shale gas has been a game changer in terms of the global dynamics of energy markets. New technologies, such as electricity storage may well play an increasingly important role in the market.

Regulation has moved much further beyond the core business of regulating the monopoly network element, to facilitating dynamic market services, fostering innovation and integrating new technologies. Very real changes are starting to emerge in the way consumers engage in the energy market. Regulators are working to facilitate the active participation of all consumers, from retail customer to large industrial users either directly, or through service providers in the market. Some consumers are becoming prosumers, producing generation capacity themselves. Smart technologies and new services can help consumers manage their energy needs more effectively, and the traditional role of the distribution system operator is changing.

The benefits of regional market integration have been seen in many continents. As national and state markets are increasingly linked together, electricity and gas flow across borders and we will see higher levels of security of supply. This does not happen on its own accord.  It requires significant harmonization of rules and much regulatory cooperation across borders.

Transmission grids are becoming increasingly interconnected. Cross-border capacity is being calculated dynamically for maximum efficiency. All forms of generation, storage and demand response will compete on a level-playing field across all timeframes. Much progress has already been made towards creating a single Internal Energy Market in Europe, for example, through day-ahead market coupling in electricity and entry-exit systems in gas which cover most of the European Union. The expected result is more liquid and competitive wholesale market which when combined with well-functioning retail markets, deliver benefits to consumers.

Regulatory cooperation at regional, continental and world level is a trend which is set to continue. The International Confederation of Energy Regulators (ICER), which brings together more than 200 regulators from around the world has proved to be a very valuable platform for the exchange of good regulatory practice and facilitating regulatory cooperation.  We will be showcasing the results of our ICER work for the past three years at the World Forum on Energy Regulation in Istanbul, 25-28 May.

John Mogg is the chair of the International Confederation of Energy Regulators (ICER), president of the Council of European Energy Regulators (CEER) and chair of the Board of Regulators of the European Agency for the Cooperation of Energy Regulators (ACER).

 

 

 

 

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