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Shaping the future energy system

Blog

Eleanor Warburton: Director for Energy System Design and Development

Publication date: 27 May 2025
Industry sector: Distribution Network

In September 2024, we posted our first blog about changes in the strategic planning landscape in Great Britain (England, Scotland and Wales) and what this means for building the energy network of the future. A lot has happened since then.

Laying the foundations

In the last six months, the newly created National Energy System Operator (NESO) has offered advice to the government on a strategic energy plan for 2030. The Department for Energy Security and Net Zero (DESNZ) published their Clean Power 2030 Action Plan. This gives us clarity for what a clean, secure and affordable energy system for Great Britain will look like for this decade and the actions needed to get us there.

A few weeks ago, we made our decision on connections reform. Ensuring the right mix of generation and storage aligns with the government’s energy plan is a key condition for realising the government’s clean power ambitions.

The Strategic Spatial Energy Plan

These are the first steps on a much longer journey. The Clean Power Plan charts a path to 2030. It sets the foundation for the Strategic Spatial Energy Plan approach and defines the baseline for the first energy plan on a national level. This is the starting point from which the Strategic Spatial Energy Plan will optimise to 2050 and net zero.

NESO published the Strategic Spatial Energy Plan Methodology last week, which we and DESNZ have approved. The 2030 targets in the DESNZ clean power plan provide the main baseline. To give certainty to investors, the baseline also includes assets with secure regulatory funding, such as Ofgem-approved interconnectors in the recent third application window. From this baseline, NESO will explore multiple future pathways, offering expert system-led advice to the government.

As with all forecasts, we can expect uncertainty to increase over time. The Strategic Spatial Energy Plan will need to account for this uncertainty, identifying the infrastructure common to a range of future scenarios in the nearer term and wider, more differentiated options as it approaches 2050. As the Strategic Spatial Energy Plan is updated every three years, the differentiated future options will gradually be resolved in future iterations to reflect progress, future policy decisions and technological advances.

Regional planning

While work is underway to prepare the first energy plan for Britain, NESO is also producing a more spatially granular set of energy plans in the form of Regional Energy Strategic Plans. These will complement and be compatible with the national plan.

Regional Energy Strategic Plans will bring together critical parties in each region, including network companies, local government, heat providers and consumers. They will determine priorities to integrate into future iterations of the Strategic Spatial Energy Plan and set the direction for that region. Our recently published decision on the Regional Energy Strategic Plans Policy Framework sets the expectations for what each plan includes as well as NESO’s delivery and plan governance.

Regional Energy Strategic Plans will provide a strategic vision for the energy system needs in each region. This will set the direction of network investments and enable all parties to make informed decisions on energy and spatial planning with greater confidence.

NESO are now developing the methodology for Regional Energy Strategic Plans and a transitional plan output. As with the Strategic Spatial Energy Plan, we are working closely with NESO to bring these to life. We expect momentum to build through the year, and there will be opportunities for stakeholders to feed in, so look out for notices from NESO.

Building the network the country needs

We need a rapidly expanded network. National and regional energy plans are the basis on which we will keep Great Britain on track to build that network, in anticipation of need.

The Strategic Spatial Energy Plan will set the requirement for the Centralised Strategic Network Plan. We are working closely with NESO as they prepare the methodology for the first Centralised Strategic Network Plan for the next phase of network build from the mid-2030s onwards.

Our price control remains the regulatory mechanism for approving funding for network infrastructure (with RIIO-3 Draft Determinations due soon). We are adding a mechanism into the price controls that help speed up funding decisions for strategic projects identified in that network plan. This will be similar to the principles guiding our 2022 Accelerated Strategic Transmission Investment framework. We recognise the need to ensure networks can get on and build, so in March 2025 we introduced the Advanced Procurement Mechanism to allow earlier access to supply chain capacities to speed up networks’ procurement.

At a more local level, Regional Energy Strategic Plans will provide the energy plans to shape the next phase of distribution network upgrades. Regional Energy Strategic Plans will set the direction for how distribution networks plan, meaning companies will be required to bring forward investments to meet the strategic plan need. The price controls will fund these plans. This will be crucial to electrification transport and heating across the country, delivering the efficiency savings that electricity can bring when combined with flexible use.

Bringing the plans off paper and into infrastructure build

Beyond our price controls, we are reshaping the range of decisions to make it simpler and easier for energy infrastructure to be built in line with the strategic plans.

The government is considering how Strategic Spatial Energy Plan priorities will feed into the framework of planning systems across Great Britain. The seabed is a significant resource for energy as well as a range of other activities. The Crown Estates in England and Scotland are working with NESO to ensure the Strategic Spatial Energy Plan is informed about spatial constraints and uses.

These assessments and processes will help to identify suitable locations and facilitate access to them in line with strategic energy plans. By approving connections reform and moving to planned anticipatory network investment, we have ensured rapid access to the necessary network that aligns with the planned need.

By making it easy to build and connect in line with strategic plans, we are sending one type of locational signals to new projects. However, when making investments, price signals from the electricity market and transmission charges must also align and create the right incentives in support of the plan.

A decision by DESNZ on its Review of Electricity Market Arrangements in the summer will provide clarity on the future of the Great Britain electricity market. The reform options under consideration should provide the necessary investible markets necessary to deliver in line with the spatial plan.

Looking ahead

This is an exciting moment in the evolution in Great Britain’s energy system, and we can expect a busy summer ahead. Bringing shape and structure to strategic plans in a way that delivers clean and secure power and affordable energy for consumers, will continue to remain at the forefront of our efforts.