Electricity supplier licences should be replaced with a risk-assurance framework in order to stimulate innovation, according to a new report.

The Grantham Institute at Imperial College London said the switch would allow new business models to flourish.

It highlighted the growth of decentralised and digitalised energy.

Senior research fellow Jeff Hardy branded the current system for licensing suppliers as “not fit for purpose to unleash this kind of innovation in the market”.

‘Creaky and outdated’

His comments were echoed by Alan Whitehead, Labour’s energy spokesman, who told the launch of the report at the House of Commons that the current system looked “very creaky and outdated”.

Whitehead stressed that he was not criticising Ofgem,but said: “The bigger question is whether that arrangement of regulation is fit for the system described now.

“It’s very clear that it isn’t and therefore we need to start with the fundamentals of what we regulate and how we regulate.”

> Download the report

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