Ofgem will explore with government and stakeholders ....... A more coordinated approach

Rewiring Britain for a net zero future: Ofgem publishes Decarbonisation Action Plan

3rd February 2020 Press Release

  • Building a system that supports the growth of renewables and ten million electric vehicles on our roads by 2030
  • Support development of an offshore grid to enable a four-fold increase in offshore wind generation by 2030
  • Set up an innovation fund focused on unlocking investment in innovative solutions to tackle climate change

On his first day in office, Ofgem’s new chief executive Jonathan Brearley has launched Ofgem’s Decarbonisation Action Plan.

Chief executive Jonathan Brearley said:

“Britain has come a long way. It has decarbonised faster than any other major economy, but we must go further, particularly on heat and transport. We are taking an approach that recognises that our role protecting consumers includes achieving net zero.

“As low-carbon renewable energy grows and more transport goes electric, the energy system needs to be more flexible to respond to peaks and troughs in both supply and demand. Our new price controls for network companies will clear the path for this, providing the incentives for investment for the future.

“It is now vital that the energy industry rises to the challenge and demonstrates how it will work with the Government and Ofgem to decarbonise Britain’s energy system at lowest cost.”

The plan sets out nine actions. These will ensure energy networks are ready to deliver net zero, support Government to tackle the difficult question of how to decarbonise heat and transport and encourage innovation to provide new low carbon products and services for consumers. The plan recognises that there are trade-offs to overcome, such as fairly spreading the cost of a low carbon energy system between today’s and tomorrow’s consumers.

Ofgem will look at how it can support the roll out of electric vehicles and will publish an Electric Vehicle Strategy. This will address how the grid needs to evolve to meet increased demand. It will also look at new business models, such as electric vehicle owners selling electricity back to the grid during peak times. This is good news for consumers, who will be able to reduce carbon emissions while saving money on their bills.

To meet net zero, Britain will see changes to the way homes and businesses are heated. This might include using hydrogen boilers or electricity to power heat pumps, and may see more customers connected to heat networks. Ofgem will use its expertise to work closely with government as it develops its strategy to decarbonise heat.

To bolster the UK’s vibrant offshore wind sector, Ofgem will explore with government and stakeholders how offshore networks could best enable the rapid growth of offshore wind power. A more coordinated approach will make it easier and cheaper for the electricity that offshore wind generates to reach consumers.

Notes

  1. See our Decarbonisation Action Plan.
  2. Our network price control framework (RIIO) already encourages and enables companies to invest in the energy networks ahead of need. Ofgem will develop additional guidance ahead of the next price controls (RIIO-2) to help network companies provide well-justified investment cases for consideration. RIIO-2 will provide greater support for anticipatory investment where they provide value for money.
  3. National Grid’s Future Energy Scenarios 2019 predicts there will be 10 million EVs on the road in GB by 2030.
  4. Ofgem provides innovation funding through its RIIO-1 price controls. As part of the Network Innovation Competition up to £20 million is available for gas innovation and up to £70 million is available for electricity innovation per year. Up to £61 million is also available each year to find smaller research and development demonstration projects through the Network Innovation Allowance.
  5. Within Ofgem’s Strategic Narrative: 2019-2023 the organisation set out three core priorities to: enable competitions and innovation; protect consumers; and decarbonise at lowest cost.

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