This is Icebreaker One’s response to Ofgem’s AI in the energy sector guidance consultation.
Please note that throughout this consultation, Icebreaker One uses the terms Open, Shared and Closed data as defined here.
If you have any questions or clarifications contact us at policy@ib1.org.
Consultation questions:
1. Do you agree with our conclusion that the existing regulatory framework is adequate to govern the use of AI, based on current understanding of the technology?
AI presents immense opportunities for driving economic growth, accelerating the transition to net zero, and enhancing financial and regulatory frameworks. However, AI must be deployed responsibly—ensuring trust, transparency, and interoperability across sectors.
IB1 advises adding clear guidance and timeframes as to when Ofgem will be reviewing AI policy determinations in light of AI landscape changing.
Fairness principle
Ofgem references fairness as a principle in their ethical approach, and in an information session suggested that AI governance could adopt definitions of fairness that already exist in energy sector regulation. As mentioned in IB1’s May 2024 AI consultation response, we strongly advocate for the adoption of a broader concept of social sustainability in defining fairness. This must conceptualise people in a manner beyond their economic roles and should also be capable of viewing people in terms of groups. This approach is vital to assessing a more holistic range of AI impacts beyond the individualised economic sphere. The approach can also be actioned in AI governance to ensure that governance is co-designed through processes which are adequately representative of different stakeholders or stakeholder groups, ensuring that the approach is collective rather than ‘done to’ from the top down.
2. Do you agree with the scope of our AI guidance regarding the current and potential stakeholders involved in the deployment of AI in the energy sector?
IB1 encourages cross-sector collaboration and learning wherever possible. We recommend engaging with cross sector (i.e. water, transportation, local authorities, etc) and working with citizen advocacy groups to learn from best practices, ensure guidance is consistent for cross sector use cases (hydrogen, electric vehicles, electrifying public transport, etc), and understands the impact of AI guidance on different socio-economic stakeholder groups.
3. Do you agree that the governance measures and policies we expect stakeholders to have in place across the AI life cycle ensure effective oversight of AI procurement and deployment?
As described in IB1’s AI positioning statement, IB1 supports a hybrid governance model, combining robust oversight with decentralised data sharing, including smart contracts and digital identity solutions. We recommend more guidance/information on how Ofgem will exercise any oversight/review on how AI is used within licensees is inline with the described expectations. This aligns with the UK government’s AI Opportunities Action Plan, which prioritises secure infrastructure, ethical AI adoption, and regulatory assurance. Decentralised governance models for AI can prevent regulatory capture, ensure transparency, and maintain public trust in AI-enabled services.
4. Do you agree with how we expect stakeholders to identify, evaluate and mitigate the risks associated with the use of AI in the energy sector?
Currently, there is a lack of attention to the data foundations and their transparency and accountability. This is key for use of AI within the energy sector. IB1 would also encourage interoperability to be considered to have confidence in the performance of AI in the broader system.
5. Do you agree with the competencies we expect stakeholders to have in place, so that AI opportunities can be realised and any associated challenges appropriately understood and mitigated?
IB1 agrees that AI’s potential to unlock financial, energy, and property data must be balanced with privacy, security, and ethical considerations. IB1 advocates for AI models that:
- Respect consumer consent and data sovereignty, using decentralised identity frameworks
- Support open standards to ensure interoperability between AI-driven systems
- Embed transparency and explainability to mitigate AI biases and prevent regulatory fragmentation
We support organisations having relevant expertise to encompass the above bullet points to ensure organisations’ solutions meet safe, secure, fair and sustainable AI.
6. Ofgem must have due regard to certain equality aims under section 149 of the Equalities Act 2010. Does our guidance raise any adverse equality impact concerns, for example, for vulnerable or digitally excluded consumers?
As stated in question 2, IB1 recommend engaging with cross sector (i.e. water, transportation, local authorities, etc) and working with citizen advocacy groups to learn from best practices, ensure guidance is consistent for cross sector use cases (hydrogen, electric vehicles, electrifying public transport, etc), and understands the impact of AI guidance on different socio-economic stakeholder groups.
AI must be designed to mitigate bias and discrimination, ensuring fair access to economic opportunities, financial services, and public resources. We support governance which is co-designed through processes which are adequately representative of different stakeholders or stakeholder groups, ensuring that the approach is collective rather than ‘done to’ from the top down.
7. Are there any issues that are not covered by our AI guidance document?
IB1 advocates strongly for two additional areas of inclusion.
- We suggest Ofgem’s work on AI governance to integrate with developments in data governance, both within the energy sector and in the cross-economic space (e.g. Smart Data Roadmap, approaches to consent or permission).
We believe it is important for data governance to establish principles, structures, roles and responsibilities, agreed upon by market participants, that enable accurate and timely data sharing at a market-wide scale. As mentioned in the IB1’s May 2024 AI consultation response, we recommend that the data ecosystem, and integration with the data governance landscape be acknowledged.
- We suggest that Ofgem codifies the relationship and responsibilities of the AI governance landscape in support of the UK’s net zero and climate targets.
We acknowledge and appreciate Ofgem’s commitment to encouraging innovation while helping the UK to meet its net zero target and other associated targets. As mentioned in the IB1’s May 2024 AI consultation response, IB1 recommends that the developing AI governance landscape codifies a requirement for AI use in the energy sector to demonstrably contribute to the UK’s net zero targets and for this requirement to be open to monitoring and audit. Without codification of this principle there is a risk that AI systems are established to optimise non-environmental goals, while creating negative environmental impacts.
IB1 acknowledges the risk of AI systems generating increases in energy and water demand. Both the impacts and the demand profile of AI use should be subject to scrutiny and appropriately governed to ensure they contribute meaningfully to the UK’s net zero targets.
IB1 also offers one more general comment. Both the AI landscape and the underlying data landscape are highly fluid and increasingly driven by cross-sectoral actors, data flows, use cases, value chains, and supply chains. IB1 suggests that the exact scope of AI regulation in the energy sector, and its integration with cross-economic developments in the data and digital governance spheres, requires further discussion which must involve an appropriately broad range of stakeholder engagement. IB1 advises adding clear guidance and timeframes as to when Ofgem will be reviewing AI policy determinations in light of AI landscape changing.