Last week (26 October) saw the Energy Act 2023, the “biggest piece of energy legislation in the UK’s history”, become law and the energy industry has reacted warmly to its introduction.
The Act includes a number of major changes aimed at creating a more efficient energy system that can uphold the growing number of electrified technologies being added as the nation moves towards impending net zero targets.
Ofgem and the establishment of the Future System Operator
One of the notable changes comes in the form of new powers and responsibilities for energy regulator Ofgem, who has now also been appointed the regulator for heat networks.
Its expanded responsibilities also include a net zero duty, the intention to establish a Future System Operator (FSO) and Independent System Operator, Ofgem being appointed the new regulator for heat networks in GB, new business models for hydrogen transport and storage, and more.
Commenting on the Act, Jonathan Brearley, Ofgem CEO, said: “We welcome the Energy Act getting Royal Assent. It is the most significant energy legislation for a decade and a world-first in giving us a legal mandate targeting net zero.
“It gives Ofgem the powers to drive through the energy transition – unlocking investment, accelerating planning and building the infrastructure the economy needs. This will give us security from volatile world gas markets and end our dependency on fossil fuels.
“Consumers have faced a huge number of challenges in recent years, with high energy prices and cost-of-living pressures. The Act will give extra protection for existing and future customers, while powering the journey to net zero at the lowest possible cost to households and businesses.
“We’re now working closely with government, consumers and sector to implement the legislation in full.”
The legal establishment of the FSO is also a particular highlight for John Pettigrew, CEO of National Grid, who argued that the new organisation “will be critical” in the transformation of energy infrastructure.
“We welcome the passing of the Energy Act into legislation. This is a crucial next step in delivering a secure, affordable and clean energy future, establishing the needed policy and governance foundations to deliver on the UK’s net zero ambitions,” Pettigrew said.
“In particular, establishing a FSO 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.”
Low-carbon technology and hydrogen support
The Association for Renewable Energy and Clean Technology (REA) expressed their “delight” that the Energy Act 2023 received Royal Assent. The organisation stated that the landmark legislation will transform the UK’s energy system by strengthening energy security, supporting the delivery of net zero and helping make household bills more affordable in the long-term.
Speaking on behalf of the REA, Frank Gordon, director of policy at the REA, said: “While there is much more to be done, the Energy Act 2023 is major piece of enabling legislation for our sector and the REA warmly welcomes today’s confirmation as law. Our congratulations to the teams in DESNZ and Parliament. The Act provides certainty for investors in both hydrogen and bioenergy with carbon capture and storage (BECCS) – both technologies identified by the Climate Change Committee (CCC) as critical to reaching net zero.
“The REA and industry partners collectively called for this Bill to be reintroduced since last summer when its progress through parliament was delayed by the political uncertainty in Westminster. This previous stalled legislation stifled investment and certainty; therefore the Bill receiving Royal Assent is indeed great news for the sector.
“While we know that the entire energy transition still faces significant challenges which are currently delaying the roll out of low-carbon technologies across all sectors, today’s news will be a catalyst for much needed action.”
As briefly discussed by Gordon, hydrogen has been granted a boost via the creation of the Hydrogen Production Business Model and the Hydrogen Transport and Storage Business Models which could prove to be a defining moment for the low-carbon technology’s adoption – a stance backed by Clare Jackson, CEO of Hydrogen UK.
“The news is warmly welcomed by the UK’s low carbon hydrogen industry, and adjacent sectors who rely on hydrogen for their own decarbonisation journey,” said Jackson.
“The passing of the Bill has been a priority for the hydrogen industry as it will lay the foundations for the UK’s future hydrogen economy, by creating provisions for a Hydrogen Production Business Model, and Hydrogen Transport and Storage Business Models.
“This firmly indicates to the global hydrogen economy and international investors that the UK is serious about its net zero future, and the role hydrogen can play in it.”
The Energy Networks Association (ENA) believe that the passing of the Act is an “important step” towards building the energy system of the future. Lawrence Slade, chief executive of the ENA, was particularly drawn to the support for the FSO and hydrogen economy.
“News that the Energy Act 2023 has achieved Royal Assent is an important step towards building the energy system of the future. As the first piece of dedicated energy legislation in over a decade and the biggest piece of energy legislation in the UK’s history becomes law, we are pleased that industry came together to speak as one voice on the challenges and opportunities we face in delivering power sector decarbonisation by 2035 and net zero by 2050,” Slade said.
“Though barriers still remain, notably in our planning system, network operators are continuing to work closely with government and regulator to find effective solutions that will enable us to go further and faster.
“We welcome the real progress the Act provides towards the creation of the FSO and the development of the UK’s hydrogen economy.”