Planning and the regulatory state: decarbonisation of electricity and the new tools of regulated anticipation

Liberalised electricity markets have marginalised the role of government long-term planning for the development of the electricity industry. However, decarbonisation or electricity and the electrification of energy consumptions require inter-sectoral coordination, state policy support, and large investment in new infrastructure systems, all within a context of high technological, geopolitical and environmental uncertainty. The demand to coordinate action under uncertainty has open an opportunity for the development and experimentation with new forms of energy planning, or anticipation more broadly, by state agencies or regulated companies. These experiments require the adoption and appropriation of new anticipation tools by industrial stakeholders, to a large extent through new legal or regulatory obligations. The tools most fulfil concrete objectives and be deployed in appropriate governance arrangements. In the UK, the regulator have mandated the creation of national Future Energy Scenarios (FES) which should also be used at regional level for the assessment of infrastructure requirements, creating new form of regulatory conflict and uncertainty. The paper will introduce Scenarios approaches into electricity planning, and will analyse the nature of scenarios making as a regulatory tool in the UK and their use in in the development of strategic plans for the electricity networks, and the conflict that have arisen as scenarios are first use to define regulated tariffs and rates of return. The paper is important as other regulated environment expand the adoption of scenario analysis, including in US electricity markets, as well as financial prudential regulation.