Press Release: Create an 'Uber for electricity' by deregulating power supply, argues new report

For further comments or to arrange an interview, contact Head of Communications Kate Andrews: | 07476 915072

  • Energy market experimentation is being held back by risk-averse regulators
  • Technology like smart-meters, microgrids, and distributed generation will take off, if innovators given opportunity to thrive
  • OFGEM should to adopt a system of ‘permissionless innovation’, granting innovators the freedom to experiment without a regulator’s say-so

The UK's energy market is unfit for the modern age, a new report from the Adam Smith Institute argues.

The report, Power Up: The framework for a new era of UK energy distribution, argues that new technologies such as smart grids and distributed energy production can revolutionise old models of energy distribution and pricing, in the same way that apps like Uber are disrupting traditional models of transport.

In a world of expensive of energy prices, the report suggests regulators should encourage experimentation with new technologies, rather than cutting them off at inception. Regulating the market too heavily - often justified by claims that consumers are being 'ripped off' or overwhelmed by the number of tariffs available - closes down consumer experimentation and prevents technological and economic progress, which keeps energy prices high.

The paper envisions a world of choices in the energy market; where smart meters that relay real-time price changes to encourage better energy use are just the beginning. The author, Dr Lynne Kiesling, imagines consumers being able to see where their energy is coming from, and to choose what kind of green-grey energy mix they want.

Most important, Dr Kiesling argues, is for OFGEM to adopt a structure of 'permissionless innovation' - which allows companies to experiment freely without being granted permission from regulators. In the early days of the internet, no-one envisioned a world of Amazon, iPhones and Uber; but these inventions were able to thrive, as there were not limited by regulatory barriers. OFGEM, Kiesling argues, needs to adopt a more relaxed regulatory structure that dismantles the barriers that have been created.

Commenting on the report, author Dr Lynne Kiesling said:

In light of the dramatic innovations in digital technologies in the past two decades, the organisation and regulation of the electricity industry must be free to modernise if Britain is to enjoy the transaction cost reductions and new value propositions that these technologies make possible.
The paper's argument supports the Competition and Markets Authority conclusion that OFGEM's regulations contribute to making energy markets less competitive than they could be. Reducing barriers to bringing innovative energy products and services to market will enable consumers to protect themselves better than regulations that look to slow the pace of change.
ASI Head of Research Ben Southwood said:

Innovation in the production of energy is steaming ahead, with rapid and steady improvement in the effectiveness of renewables like solar, and many changes that make existing fuels cleaner and cheaper to use.

But distribution has enjoyed less in the way of disruption. This is in large part not just because the technology doesn’t exist, but because it is being held back by regulation that makes it unprofitable for consumers and firms to employ it—for example controls on vertical integration.

If the government wants a more fluid, consumer-centred, and futuristic energy distribution network, it should look at carefully deregulating supply.

Notes to Editors:

Download ASI report Power Up: The framework for a new era of UK energy distribution here.

For further comments or to arrange an interview, contact Kate Andrews, Head of Communications, at | 07476 915072.

The Adam Smith Institute is a free market, libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

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However, the tax has come under fierce criticism. Ben Southwood, of the Adam Smith Institute, said:

"GPs, who are excellent doctors but not necessarily fully up-to-date with the empirical nutrition literature, may tell us that sugar is poison now. But the evidence base for this claim is relatively weak. In 30 years, with higher quality, higher powered studies, we could just as easily find no relationship here."

"In general, nutrition is a hard subject, and we should be much more careful before making strong claims. Grand social engineering schemes tend not to work too well, and the government should be careful before giving into the demands of the baying public health lobby on the sugar tax."

Read the full article here.

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In-work poverty might just be one of the biggest problems the UK will face in upcoming years. The damning combination of low wages and high costs of living is making it impossible for millions of households to liberate themselves from benefits and state support; the price of self-sufficiency has been set so high, even full-time workers can’t afford it.

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Read the full article here.

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Read the full debate here. 

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Though barely anyone predicted it at the time, George Osborne’s 2015 budget looks like it will be defined not by his vaunted hiking and rebranding of the minimum wage, but by his massive cuts to tax credits. This is because everyone has suddenly realised that these cuts will take large sums of money—thousands of pounds in many cases—out of the pockets of blue-collar and sometimes Tory-voting workers.

Read the full article here. 

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Read the full article here.

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Two free market think-tanks, the Adam Smith Institute and the Institute of Economic Affairs, argue that the entire tax credit system should be dismantled and replaced with a simple “negative income tax” — a minimum guaranteed income that tapers away as earnings rise.

Sam Bowman, the Adam Smith Institute’s deputy director, argued this would “radically simplify the welfare state and guarantee that everybody is better off in work”.

Read the full article here. 

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The chancellor had a greater ambition in mind, to create a “lower tax, lower welfare, higher wage economy”, as he told the Commons yesterday. Few oppose the principle but when both rightwing think tanks such as the Adam Smith Institute and the unions lambast the policy for deterring work, it’s clear the delivery is flawed.

Read the full article here.