Energy market reform in the UK and China

Wind turbines and fields seen from above
Credit: Thomas Richter/Unsplash

Research by Cambridge’s Energy Policy Research Group (EPRG) has played an important role in energy market reform in the UK and China.

Work led by Michael Pollitt underpinned the announcement by the UK’s National Grid in 2017 to create an independent system operator legally unbundled from their transmission asset business.

The research also proposed and supported adjustments to the National Grid’s transmission arrangements, in particular the rationalisation of their procurement of electricity security of supply products. These developments bring benefits to consumers through improved energy market function, allow for greater accountability through a more decentralised system focused on customers, and provide savings of up to £8 billion per year.

Pollitt and colleagues at the EPRG have been working with National Grid since then to better facilitate the rapid increase in renewable electricity generation.

The EPRG has also been working with the British Embassy in Beijing to support their efforts to assist the Chinese government in reforming the Chinese power sector. As the largest power sector in the world, China’s electricity sector produces around 8% of global greenhouse gases. It is now trying to introduce competitive wholesale power markets and efficient renewable support mechanisms, drawing on UK and other international experience. The EPRG has extend their insights to inform power sector reform, both at regional and national levels, in China.

“Michael pitched his number one recommendation: the establishment of an independent system operator. After the meeting, the Secretary of State said “yes, we should do this”.”

– Special Adviser to Secretary of State, Department of Energy and Climate Change (now Department for Business, Energy and Industrial Strategy), referring to a meeting in August 2015