The Energy Act has received Royal Assent, passing into law, becoming what marks the “biggest piece of energy legislation in the UK’s history” in the process.
Laying the foundations for a cheaper, cleaner and more secure energy system, the Energy Act is expected to unlock as much as £100bn in private investment in energy infrastructure, while also scaling up jobs and supporting growth. It contains a whole host of measures that aim to strengthen energy security, support the delivery of net zero and ensure that household bills are affordable over the long-term.
These include the establishment of a new independent body in the shape of the Future System Operator (FSO) which will ensure consumers are able to access a secure and decarbonised energy supply. The FSO’s main responsibility will be overseeing the efficient development of systems in the gas and electricity network and keeping bills for consumers at low levels.
Elsewhere, it updates Ofgem’s remit, meaning it now needs to consider net zero targets in all its decisions; facilitates the first large village hydrogen heating trial; creates provisions for a Hydrogen Production Business Model and Hydrogen Transport and Storage Business Models; introduces a licensing framework for CO2 transport and storage, helping to deliver the UK’s first carbon capture sites; and legislates for fusion regulation.
It also aims to increase competition in Britain’s onshore electricity networks through a new tender process. This will cut costs for network operation and development and could save consumers £1bn a year off their energy bills by 2050.
Further measures include the introduction of a specific merger regime for energy networks under the Competition Markets Authority, minimising the risk of mergers between energy network companies negatively impacting consumers, as well as new measures for Energy Smart Appliances. These prioritise safety and aim to give consumers the confidence to make the shift over to using smart products. A smart electricity system was noted as having the potential to cut system costs by £10bn a year by 2050.
National Grid CEO, John Pettigrew, described the passing of the legislation as a “crucial next step” when it comes to delivering a secure, affordable and clean energy future.
Pettigrew continued: “In particular, establishing a Future System Operator will be critical in delivering strategic, whole system energy planning and oversight as we continue to transform our energy infrastructure. Only by working together as an industry, with the regulator and government, can we hope to achieve an energy transition that delivers for everyone and an energy system that is clean, fair and affordable for all.”
