New U.K. energy body to take over key national grid tasks

Wind turbines on the Brecon hills near Cwmllynfell in South Wales, UK. Source: iStock/leighcol

The U.K. will create a new authority to oversee the nation’s energy system as it transitions to more low-carbon supplies, taking away some key tasks from National Grid plc, including safeguarding security of supply. 

The Future System Operator will work to secure Britain’s energy security while also cutting emissions in the coming decades, according to a statement. It will shift management of the energy network to what the government calls a “whole system” approach, integrating the oversight of power, gas and new technologies including hydrogen and carbon capture. 

Last year’s energy crisis and the record prices and volatility caused by Russia’s war in Ukraine have increased focus on energy markets and security, including in the U.K. Individual nations as well as the European Union are drawing up plans on how to obtain more diverse supplies. 

“Russia’s appalling aggression in Ukraine amid escalating global gas prices has shown the vital importance of strategic change to the U.K. energy system,” Energy Minister Greg Hands said. “We need to boost our energy resilience, reduce our dependence on expensive imports and slash emissions.”

The new authority will be based on the existing functions of National Grid’s Electricity System Operator - which keeps power supply and demand in balance - and, in some cases, National Grid Gas. The government will compensate the company for assets that are transferred to the new entity, according to the U.K.’s response to a consultation. 

“We will continue to work closely with all relevant parties to ensure a smooth transition,” National Grid Chief Executive Officer John Pettigrew said in a statement. 

There is no set date for the operator to begin its work, but it will require legislation to be passed and could be established by 2024. 

The Future System Operator will operate as a public corporation that has operational independence from the government and is license and regulated by Ofgem, according to the consultation response. The government plans to implement the new body in phases to ensure a smooth transition.   

© 2022 Bloomberg L.P.

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