On 1 October, Elexon will become independent of National Grid ESO’s ownership and will operate under a ‘federated model’ ownership arrangement.
The news comes as the government issued notice it will take ownership of the energy system operator (ESO), establishing a new, publicly-owned National Energy System Operator (NESO).
Elexon is the code administrator and central systems delivery body for the Balancing and Settlement Code (BSC), which sets rules for trading electricity and ensuring stability of supply.
Under the new ownership arrangement, new generation and supply licence conditions will come into force that require the 13 largest BSC parties—the 13 largest energy companies, each with over 2% of Elexon’s funding share—to each take an ownership stake in Elexon, which will continue to operate with an independent board.
The future of Elexon
The news follows the UK government’s announcement of intent to establish the NESO—at the time referred to as the Future Systems Operator (FSO)—and the government and Ofgem’s holding of a consultation on the future of Elexon.
The decision aligns with the conclusions drawn at the consultation, which also found that public ownership of Elexon could remain as a ‘temporary fallback option’.
Using powers under the Energy Act 2023, the government has published notices of the decision, which will transfer Elexon’s shares and modify the BSC, Elexon’s Articles of Association and generation and supply licences.
At the time of the consultation, Elexon said there was “widespread support” among BSC stakeholders for retaining the industry ownership model.
Elexon is also responsible for driving alignment between local and national flexibility markets, acting as a market facilitator and overseeing flexible energy use across GB’s local energy networks to ensure the right governance and solutions are in place.
Last week (12 September) the Energy Networks Association (ENA) appointed Elexon as the new chair of ENA’s Open Networks Challenge Group, building on the legacy of the Open Networks programme to enable flexibility in the UK’s energy system.
With the announcement of the change in ownership, Elexon said: “We will continue to operate as an independent and impartial company, serving at the heart of the industry building a path to net zero, delivering customer excellence and value for money on behalf of the whole industry.”
The NESO will launch on 1 October and will be chaired by former E.ON CEO Dr Paul Golby.
It will oversee the strategic planning and design of the UK’s electricity and gas networks, breaking down the silos, which currently exist because the two systems are managed separately. Further, it will look to expand renewable generation, storage and other emerging technologies, such as carbon capture usage and storage, mapping out the UK’s future energy networks.
