Ofgem plans to undertake a “complete rethink” of Britain’s energy systems as the country seeks to support clean energy and “serious innovation”.
The regulator’s head of consumer and markets, Mary Starks, said markets should be shaped by innovators, not regulators.
She said Ofgem would try to foster “revolutionary changes that benefit customers” as it moves into the future.
Innovation can allow the regulator to take a backseat role, providing protections that will only be needed by a few customers, Starks said.
She added: “Getting there requires a complete rethink of how the energy system works, where it fits into the bigger picture of consumers’ lives, and the role of regulation in supporting the future system.”
The calls follow a report from experts which said that “current arrangements will crush innovation and also add significant cost [for] the consumer.”
Dr Jeff Hardy, a senior research fellow at Imperial College London and one of the report’s authors, told City A.M: “If Ofgem opens up to more innovation in the supply and retail market, it could create the opportunity for businesses to completely understand their consumers and deliver the services to them in a way that they want.”
Starks said: “The feedback we get from innovators is that the current system of regulation, including industry codes, is standing in the way. Our role in the revolution must be an enabling one.
“We need to make sure the regulatory framework supports change and creates the conditions to foster the kind of innovation that consumers want and need, while ensuring consumers are protected appropriately.”