Ofgem sets out radical changes in decarbonisation action plan

Ofgem has unveiled a series of actions that it intends to take in its bid to help decarbonise the grid to meet the government’s 2050 net zero emissions goal.

Its Decarbonisation Action Plan, published on 3 February, set out nine actions in total to be taken over the next 18 months, with the regulator to begin implementing them in the spring by aiming to identify and address any regulatory hurdles. Its actions include designing cost effective networks for net zero, with the network price control regulatory regime made more adaptive to deliver the most effective transition at lowest cost, while encouraging further long-term planning, leadership and innovation in networks through regulatory design and funding. Elsewhere, it pledged to explore, with government and industry, options for a more coordinated offshore transmission system to connect offshore wind generation, achieving a rapid and economic expansion of the offshore network.

When it comes to making progress on low-carbon heat, Ofgem said it will support government and industry in ensuring there is a fair balance of costs in preparing for heat decarbonisation across different groups of consumers and firms – including between both current and future consumers. The regulator will look to prepare system operators for a net zero future by ensuring that roles and responsibilities to plan and operate a future energy system are adequately fulfilled, as well as pledging to support flexibility. Ofgem said it wants to enable a flexible future electricity system by ensuring markets adequately reward flexibility, including through its reforms to access, charging and half-hourly settlement.

On electric vehicles (EVs), the regulator will look to enable them at a low cost through development an EV regulatory strategy, one that takes into account developments in government policy and technologies, supporting roll out and maximising the consumer benefit. It will open up retail innovation to enable the new energy service business models needed to deliver the transition, and also pledged to adapt itself. Ofgem set out how it will become more adaptive in the way that it works as well as in its regulatory approach. This will include a Net Zero Advisory Group which, it explained, will allow it to keep in step with policy and other developments.