An updated, multi-year strategy, out to 2030
Recent challenges facing energy consumers and the sector have seen Ofgem adapt our focus at pace to meet pressing issues. With the immediate challenges facing consumers and longer-term changes needed to reach net zero, it is vital that Ofgem has a clear and coherent strategy across its short, medium, and long-term work.
We are proposing to refresh our current strategic framework (see below), to respond to these challenges. We plan to set out them our alongside Ofgem’s proposed priorities in an updated multi-year Strategy, to be published in 2024.
In our proposed Forward Work Programme (the ‘FWP’) that was published on 14 December 2023, we set out our developing thinking for the structure for our refreshed strategy. In the FWP, we have grouped our regulatory work and core activities into three proposed strategic priorities, and have set out areas where we need to focus our resources in the coming years. They are:
1. Shaping a retail market that works for consumers:
- drive up standards
- ensure fair prices
- promote competition and investability
- support innovative and evolving markets.
2. Enabling infrastructure for net zero:
- establish strategic planning
- facilitate low carbon generation
- expand electricity networks
- ensure high service standards at reasonable cost
- ensure resilient supplies
- enable the future of the gas grid.
3. Establishing an efficient, flexible energy system:
- deliver effective and efficient market incentives and signals
- ensure the enabling systems are in place.
Our refreshed strategy will also highlight to value that the environmental and social schemes that we deliver for government continue to deliver for:
- the transition towards decarbonisation of domestic and non-domestic electricity generation
- the adoption of renewable heat solutions, and to
- support vulnerable consumers and energy efficiency measures.
Responding to our consultation
As part of our FWP consultation, we welcome responses that relate to our refreshed strategy.
You can respond to this consultation by emailing your submission to FWP@Ofgem.gov.uk by 17:00, Friday, 9 February 2024. Unless you ask us not to, we will publish your submission on our website.
Ofgem’s current, strategic framework
In December 2022, Ofgem identified six strategic priorities for our regulatory work – three short-term and three longer-term – which are set out below. Within the six, we outlined twenty priority projects and programmes focussed (short-term) on addressing current market conditions, and (longer-term) enabling a low-cost transition to a net zero energy system. Details of the twenty priority projects and programmes can be found in our 2023/24 Forward Work Programme.
Ensuring prices are fair
With sustained gas price volatility driving-up energy costs, Ofgem will work with government, acting fast to protect consumers, to help ensure that prices are fair across the energy value chain.
Creating resilience across the energy sector
Price volatility, geopolitical threats to European energy security and global competition have increased the need for resilience across the sector. We will strengthen security of supply standards and further implement changes to deliver a reformed retail market, so that it can better withstand market shocks.
Monitoring and enforcing quality and standards
Recently, performance standards have been found to be lacking across parts of the sector. We will continue to monitor and enforce key consumer standards and protections, while implementing new standards where our remit expands. We expect the sector to go further to support consumers, especially for the most vulnerable.
Facilitating infrastructure investment
Decarbonisation of energy will require a new range of technologies across the system, with shifting demand for electricity, gas and other energy sources. Ofgem will act as an enabler for infrastructure investment at pace, to facilitate a rapid, cost-effective transition to net zero.
Developing and delivering market reforms
A renewables-dominated power system requires development and delivery of market reforms to help ensure it is optimised, including enabling greater flexibility.
Reforming governance arrangements
The transition requires a more strategically planned energy system and reforms to existing governance arrangements and institutions.