Energy Act becomes law
The Energy Act 2023 has received Royal Assent, becoming the blueprint for the delivery of net zero and aiming to strengthen energy security at the same time.
The Act will help the Government deliver net zero by 2050 through updating Ofgem’s remit so that it considers net zero targets as part of its everyday decisions. It is also introducing a licensing framework for CO2 transport and storage to help deliver the UK’s first carbon capture sites – supporting up to 50,000 jobs by 2030.
The Future System Operator, a new independent body, has also been established to ensure consumers can access a secure and decarbonised energy supply. The FSO will be responsible for systems in the gas and electricity network developing efficiently and keeping consumer bills low.
A new tender process for onshore electricity networks has been introduced in order to reduce costs for operation and development, with the hope it will save consumers as much as £1bn off their energy bills by 2050, the government claims. A specific merger regime for energy networks will also be created under the Competition and Markets Authority.
Additional safety measures on transitioning to smart energy products are also being introduced alongside an expansion of Ofgem’s remit to heat networks, assisting in the more to low-carbon heat pumps.
Energy Security Secretary Claire Coutinho said: “The Energy Act is the largest piece of energy legislation in a generation. It will boost investment in clean energy technologies and support thousands of skilled jobs across the country.
“It lays the foundations for greater UK energy independence, making us more secure against tyrants like Putin, and helps us to power Britain from Britain.
Minister for Nuclear and Networks Andrew Bowie said: “The Government has listened to industry and modernised our energy legislation, creating the framework for further green growth.”
Emma Pinchbeck, Chief Executive of trade body Energy UK, said: “This critical piece of legislation is a welcome step in delivering that confidence by establishing new business models, improved customer protections, and frameworks for investment across the energy sector.
“The broad-ranging measures in this Act are part of a collaborative effort between Government, industry, business and consumer groups to deliver a modern energy system fit for the changing needs of the 21st century energy market. More work remains to establish frameworks that these powers enable, but this Act will be the foundation upon which the new energy system will be built.”
Ofgem CEO Jonathan Brearley said: “It is the most significant energy legislation for a decade and a world-first in giving us a legal mandate targeting Net Zero. It gives Ofgem the powers to drive through the energy transition – unlocking investment, accelerating planning and building the infrastructure the economy needs. This will give us security from volatile world gas markets and end our dependency on fossil fuels.
Clare Jackson, CEO of Hydrogen UK, said: “The passing of the Bill has been a priority for the hydrogen industry as it will lay the foundations for the UK’s future hydrogen economy, by creating provisions for a Hydrogen Production Business Model, and Hydrogen Transport & Storage Business Models.”
John Pettigrew, CEO of National Grid, said: “This is a crucial next step in delivering a secure, affordable and clean energy future, establishing the needed policy and governance foundations to deliver on the UK’s net zero ambitions.
“In particular, establishing a Future System Operator will be critical in delivering strategic, whole system energy planning and oversight as we continue to transform our energy infrastructure. “Only by working together as an industry, with the regulator and government, can we hope to achieve an energy transition that delivers for everyone and an energy system that is clean, fair and affordable for all.”
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