Planning for a cheaper, greener, more secure energy system
Interim Director of Infrastructure and Security of Supply
This remains a very tough time for households across Britain, struggling to pay for the energy they need because of very high energy prices set in global markets.
In the short and medium term, we are working closely with government, the industry and consumer groups to do everything we can to protect the most vulnerable customers. However, we also remain focused on the long term.
Government has ambitious plans for renewable energy, and one of Ofgem’s roles is to ensure we have effective systems in place that can provide affordable, green, homegrown power to homes and businesses at the lowest possible cost to consumers.
Without reform, the electricity system, markets and grid will become an obstacle, not an enabler, to net zero. It is imperative and urgent that generation and network capacity are closely planned and coordinated to deliver the investment needed to meet net zero targets for 2035 (a net zero clean power system) and 2050 (a net zero economy) and ensure the system can become truly smart and flexible.
We are investing billions of pounds to transition away from our high dependence on imported fossil fuels and deliver a homegrown, cleaner, cheaper, and more secure energy system, protecting not only the security of our supply, but ensuring we greatly reduce the vulnerability of our energy bills to volatile international energy prices.
To make this transition, we need a rapid and well-planned transformation of our energy systems and markets. This includes changing our physical and digital energy infrastructure at a pace not seen for decades.
So today Ofgem is beginning consultations on a series of proposals, from how distribution networks are planned, sited, and managed, through to how consumers can earn money from using energy in a more flexible way.
Local participation will become increasingly important to balance the grid as the country moves towards greener, more sustainable energy, with changes to the way people fuel their vehicles and heat their homes happening on a street-by-street, town-by-town basis, and a growth of local generation of power.
That is why we are inviting input on far-reaching proposals on how all forms of energy are planned, traded and operated from all those involved at a local level: from network operators and local planning representatives to councils, town planners, and developers.
We are also bringing forward proposals to create new independent regional system planners to make it easier for sustainable energy generators to get their energy onto the grid and into people’s homes and businesses.
This is aimed at tightening up coordination and accountability, so that our communities can be more quickly and effectively plugged into flexible green power.
As we increase the amount of our power which is generated intermittently, like wind and solar, and accelerate the roll out of electric vehicles and heat pumps, greatly increasing electricity demand, developing a more flexible energy system will be essential.
So in parallel to this, we are publishing an ambitious long-term vision to unlock the value of flexibility. This could include the development of a shared digital infrastructure that would bring together energy markets, buyers and sellers in a common marketplace for the trading of energy.
Ultimately, this means that our energy system will look very different from the one we know today.
New innovations will give consumers more control to save money through access to better data and regularly updated prices, allowing them to harness the smart features of modern consumer goods to access cheap abundant renewable electricity when there is more wind or sun, and use their flexibility to change demand when it is still and overcast. This will mean lower bills, reduced strain on the grid, and help to enable the transition to net zero.
Ofgem is working closely with government in designing a market that best realises these benefits, while also ensuring vulnerable or low-income customers who will find it more difficult to participate are not penalised.
But for many of us, there is a real opportunity to rethink our engagement with energy, buying, selling, and choosing what energy we use for the services we need.
These proposals will not provide immediate relief to consumers struggling to afford the energy they need today. But by planning better for the future now, we can change the game for Britain’s energy security and climate change ambitions, bringing cheaper, greener and more secure power in the years to come. This task is now vital and urgent, and there is not a moment to lose.