The British government is driving this forward plans to set up a new public body to oversee the UK energy system as it continues to move away from fossil fuels, effectively renationalising key responsibilities that National Grid has held since its privatization in the 1990s.
The business department confirmed on Wednesday it would create a public “future system operator” who would take on primary responsibility for the management of Britain’s electricity system, which is currently being carried out by National Networkas well as some of his work in monitoring the gas network.
Kwasi Kwarteng, Business Secretary, described the overhaul as not only “vital” to reach 2050 in the UK Net Zero Emissions Target “but also for our national security and long-term energy independence.”
The proposals were released Thursday ahead of a broader energy security strategy that will set big targets for technologies including wind, solar, nuclear and hydrogen, and a commitment to boost oil and gas exploration in the North Sea. The plan comes as the prime minister seeks to boost domestic energy supplies following Russia’s invasion of Ukraine.
National Grids oversaw the power system long time criticized by some MPs and other energy companies for concerns about potential conflicts of interest.
In addition to its management functions, National Grid owns electricity and gas lines and cables in the UK and has in recent years developed a number of subsea cables to trade electricity with the rest of Europe.
Its job of balancing supply and demand and ensuring the stability of the electricity system has become increasingly difficult over the past decade as Britain has increased its share of weather-dependent renewable energy generation.
Jonathan Brearley, chief executive of energy regulator Ofgem, said a public body, operationally independent of government, is “able to take on a broader remit as the energy system becomes more complex and fully focused on consumer interests.” .
The new organization will be funded by energy bill payers. National Grid already offsets its cost of monitoring the system through a levy on utility bills.
As part of the deals, the UK Treasury must compensate National Grid for the delegation of powers, although a financial deal has yet to be confirmed. Analysts have previously valued the National Grid Electricity System Operator, the part of the company responsible for balancing supply and demand and avoiding blackouts, at around £300m.
An impact assessment published by the Department for Business, Energy and Industry Strategy on Wednesday found that setting up the facility would entail one-off costs of between £50million and £140million, although that does not include compensation costs.
National Grid had previously struggled to maintain its oversight role after a previous review in 2016. But its chief executive, John Pettigrew, said on Wednesday that creating a future system operator would “lay the groundwork for the regulatory reform needed to achieve a clean, fair and affordable energy transition.”
“We will continue to work closely with all relevant parties to ensure a smooth transition, subject to parliamentary approval and the completion of the transaction process,” Pettigrew said.
The amendments require primary law.
https://www.ft.com/content/1bec74ab-6781-4220-8752-f3b404e3dcd3 Great Britain wants to renationalize the supervision of the power grid