As technology makes significant strides in the energy industry, we can expect regulation to keep pace with these developments.
AI, analytics, and advanced renewable technology are transforming the industry from production to consumption. To ensure that the technology proliferates to energy producers, vendors, and consumers (households and businesses), regulators have to make significant changes to energy law, regulatory frameworks, and policies.
Hence, we can expect energy regulatory trends for 2022 to cover a wide gamut of operations, ranging from production to distribution to consumption.
Defining energy regulatory trends in 2022
Here are some of the points that define regulatory trends in 2022
The shift towards distributed energy resources (DERs)
As the energy industry undergoes a rapid transition, one of the questions regulators will have to answer is the issue of centralised vs distributed energy sources.
Distributed energy resources (DER) could be a significant turning point in energy distribution and consumption.
Where once conventional energy was produced through a single, large producer to be consumed by multiple households, DER consists of several energy-producing assets aggregated together to create a single energy network instead of relying on a single producer. Moreover, energy consumers can store their energy using units and systems stored in households.
This new system could benefit consumers in the form of better energy independence, lower cost, and increased energy efficiency.
However, making DER more common across the UK requires significant changes to energy production due to pricing structure making distributed energy unsustainable.
Instead, regulators will need to nudge the industry towards a DER mode of production through changes to policy and framework that encourage DER through different modes, like the production of distributed generators.
A radical change in the pricing structure
Given the growing prominence of renewable energy and the proliferation of AI in energy production, we can expect remarkable innovations in how energy is produced and consumed.
However, this change in energy production and consumption will also bring significant changes in pricing.
Traditional pricing structures are becoming inflexible, inefficient, and archaic in the face of evolving energy technology.
Energy regulatory leaders recognise that new dynamics in power require pricing to be smarter and more flexible.
For example, adapting a multi-part rate design could make energy more affordable to corporations and households, leading to a cleaner, more reliable power system.
However, energy regulators will not only be responsible for establishing a policy and framework for more flexible pricing, but they are also responsible for implementing mechanisms that promote more flexible responsive pricing.
Hence, we can expect regulators to make gradual changes to the pricing structure this year and make it more suited for the tech-driven energy industry.
A greater push towards renewable energy
In 2022, the shift towards green energy and away from non-renewable sources will be more ambitious than years ago.
The COP26 gave the UK government a powerful impetus for pushing climate-friendly energy sources with well-defined targets for power generation.
Hence, we will see regulators push legislation that encourages the adoption of renewable energy while making non-renewable energy either more costly to adopt.
For example, the UK is looking to end all coal-fired electricity generation by 2024.
Meanwhile, the Department for Business, Energy and Industrial Strategy (BEIS) stated that they plan to accelerate plans for supporting home-grown energy sources, ranging from nuclear to wind and solar.
Moreover, the Climate and Ecological Emergency (CEE) bill, an ambitious bill tackling climate change and was submitted to the parliament some months ago, has received growing support in recent months.
These developments indicate that energy regulation is pushing renewable energy.
Greater focus on tech and resiliency
While experts expect the electric grid to remain stable and relatively secure, there are concerns about the resiliency of software used in energy companies.
With AI and analytics becoming an integral part of energy company operations, the software is playing a critical role in critical operations, leading to a rapid expansion of the network.
However, this means that resilience in tech is more important than before because a cyberattack could have devastating consequences for company operations.
To prevent such problems from plaguing the industry, we can expect regulators to publish more rulings and amendments regarding cybersecurity.
While not significant, at first, we can expect energy regulators to pay more attention to this area in the coming years.
Adapting to a new energy norm
As the energy industry undergoes a radical transformation thanks to advancing renewable technology, regulators are responsible for ensuring that energy consumers, producers, and vendors benefit from this transformation.
This means ensuring that technology proliferates throughout the industry, implementing mechanisms to make energy more accessible, and taking a proactive approach to issues that could be a significant problem in the long run. Given these objectives, we can expect these trends to define energy regulation in the next few months.