Ofgem’s Decarbonisation Plan: Supporting the transition towards a net-zero future

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Ofgem’s Decarbonisation Plan: Supporting the transition towards a net-zero future

Energy regulator Ofgem has a significant part to play in supporting and developing the path towards a net-zero future. On his very first day as the newly appointed chief executive, Jonathan Brearley announced Ofgem’s decarbonisation action plan, incorporating a series of action points to follow in order to achieve net-zero carbon emissions by 2050.

Brearley confirmed in the announcement that it is a privilege to start his new role at Ofgem by launching their action plan. The strategy consists of a set of steps that Ofgem intends to focus on over the next 18 months to ensure low-cost decarbonisation is effective. Brierley highlights in the report how critical it is for the regulator to implement the necessary measures to activate and support the decarbonisation of energy and play their role in ensuring the government can achieve its targets.

Brearley believes Britain has progressed considerably but needs to continue adapting and points to heat and transport markets as top priority areas. Brearley states that it is critical that the energy industry rises to the challenge of climate change and clearly shows how it will work with the Government and Ofgem in decarbonising the energy system at the lowest possible cost.

 

Ofgem Decarbonisation Action Plan 

Action 1: Creating Affordable Networks for Net Zero

Ofgem intends to ensure the network price control system is more adaptive and is capable of delivering the most efficient transition at the lowest price. The regulator will take a net-zero approach focusing on maintaining the need for investor confidence and being capable of adapting to changing technology and policies in the move to net zero.

Action 2: Innovation and Planning for the Long Term

Ofgem is focused on supporting innovation in networks and long term planning through funding and regulatory design. Ofgem will provide guidance to support investment plans and create an innovation fund with a sole focus on decarbonisation.

Action 3: A strategic approach to deliver low cost offshore systems

Ofgem is particularly interested in working with the government and industry to explore new options for offshore wind generation and support further expansion of offshore projects. The initial plan of action will include working with the Electricity System Operator (ESO) to prepare for the delivery of an options assessment for offshore transmission.

Action 4: Progressive plans for low-carbon heat

The regulator intends to support the government and industry to ensure the costs associated with heat decarbonisation are balanced between consumers and businesses. Ofgem plans to use their knowledge and skills to support the government in creating a series of affordable and low-risk options to decarbonise heating. 

Action 5: Ensuring system operators are prepared for a net-zero future

Ofgem is focused on ensuring the positions covering the planning and operation of our future energy systems are represented in the most effective manner. The regulator will deliver a strategic review of the management of energy systems and ensure they are adequate for a low carbon future.

Action 6: Supporting A Flexible Future

Ofgem is focused on ensuring electricity systems are flexible by rewarding flexibility and encouraging networks to tender for flexible services. The regulator will support further innovation in order to develop engaging techniques for all businesses and consumers to offer flexibility via demand-side management.

Action 7: Creating Affordable Electric Vehicle Market

Ofgem intends to create a core strategy for electric vehicles, incorporating government policies and new technologies. This will focus on eliminating certain regulations and removing any barriers to introducing new business models or EV focused services.

Action 8: Delivering Retail Innovation

Ofgem will launch a series of new energy service business models within the retail market as part of their transition focus. The regulator will explore innovative systems, with a particular aim to understand consumer behaviours, a key area to drive decarbonisation.

Action 9: Organisation Adaptation

Ofgem has confirmed it will become more adaptive in how they work and how they approach regulations. They will create a Net Zero Advisory Group to allow the regulator to maintain close connections with new policies and other potential developments. Ofgem will continue to work closely with industry to generate informed decisions and deliver structure guidance on how regulatory options will influence net-zero development.

 

Visit Ofgem for a comprehensive insight into Ofgem’s decarbonisation plan.

 

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