We are responsible for monitoring developments in the electricity market and market arrangements where it is economic and efficient to do so.
We also undertake work in respect of ensuring secure electricity suppliers, as well as monitoring and investigating activities which may harm competition. This may include leading the industry in a holistic review of the arrangements through the Significant Code Review process.
As System Operator for Britain’s electricity system, it is also important that National Grid has appropriate commercial incentives to operate its system in an economic and efficient manner. To achieve this we aim to develop incentive schemes that provide National Grid with an appropriate balance of risk and reward that is in the interests of customers, who ultimately pay for the costs of system operation.
The System Operator incentive schemes form part of our overall work to regulate monopolies effectively and maintain market efficiency.
We work to ensure that market arrangements are fit for purpose. To that end we have a role in facilitating changes to those arrangements if those changes are in the interests of consumers. We may carry out reviews of aspects of the electricity market arrangements to achieve this. An example of such a review is the Electricity Balancing Significant Code Review.
We also have a number of important roles in relation to the Electricity Market Reform (EMR) programme. It is estimated that over the next decade, GB will need around £100 billion of capital investment in its electricity infrastructure to accommodate projected future increases in electricity demand and to replace ageing power stations. EMR is a government policy to incentivise investment in secure, low-carbon electricity, improve the security of Great Britain’s electricity supply, and improve affordability for consumers.
The Energy Act 2013 introduced a number of mechanisms. In particular:
- A Capacity Market (CM), which will help ensure security of electricity supply at the least cost to the consumer.
- Contracts for Difference (CfD), which will provide long-term revenue stabilisation for new low carbon initiatives.
Both will be administered by delivery partners of the Department of Energy and Climate Change (DECC). This includes National Grid Electricity Transmission plc (NGET) as the EMR Delivery Body.
In addition to extending our existing regulatory duties, DECC has given us new EMR roles including: