The real cost of power: energy networks need a revamp

3rd August 2017 — This week, energy giant British Gas announced plans to increase electricity prices by 12.5 percent from the 15^th September – a decision that has led to widespread criticism from consumer groups calling for action to protect households facing steeper bills. The cost of electricity is only half the debate, and British Gas seem to be the first supplier to acknowledge that network costs need to be addressed too.

The announcement follows similar moves by other energy giants, such as E.ON and EDF, to increase the amount consumers pay for their household electricity bills. They are, in fact, the last of the big energy suppliers to raise push costs on to consumers.

Whilst other suppliers have laid the blame of rising costs on the rocketing price of wholesale energy, British Gas owner Centrica has said that the price rise was due to higher transmission and distribution costs – a first amongst the Big Six.

With Ofgem currently conducting a review of the network price controls – their RIIO 2 consultation is due to be published in 2018 – there is a clear understanding amongst industry that energy networks costs need to be addressed, or they will be passed to consumers.

Alongside plans by Government to invest heavily in new technologies to facilitate the UK’s future energy system as part of its Industrial Strategy, it seems that steps are being taken to address the underlying problems in the market.

This action is welcome, but there are still challenges that the industry needs to address. First and foremost, is that the networks that carry our energy are outdated, built for a bygone era where electricity travelled one-way and to fewer households.

One of the problems facing outdated infrastructure is the cost of electrical losses. The Digest of UK Energy Statistics puts UK electrical losses during transmission and distribution at 7.6 percent, amongst the highest in the EU. This is an added burden to consumers who, as part of their energy bill, are paying for the electricity that doesn’t make it to their homes.

Enertechnos’ innovative cable – the Capacitive Transfer System (CTS) – can help address this burden on consumers by reducing the amount of electricity that is lost during distribution. Cost competitive with conventional cable, the CTS improves the efficiency of the network whilst using the same jointing systems that DNOs currently employ.

With the energy system rapidly evolving, and UK consumers facing increasingly high household bills, it is vital that the UK Government start investing in technologies that improve the efficiency of the energy network. It is clear that the Government needs to act to ensure consumers get a fair deal and upgrading the UK energy network should be part of the solution.