Blog Post

Ofgem wants a new independent body to lead the way to Net Zero

Richard Simmonds • January 26, 2021

Energy regulator Ofgem has announced plans to make dramatic changes to the UK energy market by stripping the National Grid of its role of managing the electricity system and create a brand-new body tasked with leading the UK to net-zero by 2050.

The biggest shake-up for a hundred years

The proposed new body would be wholly separate from the National Grid. It would run the nation's electricity system, which Ofgem believes would result in the massive surge towards renewable energy required to hit climate targets.


National Grid has managed the electricity system since the UK's energy system was privatised in 1990. Ofgem reasons that a new body would save consumers the sum of £0.4-£4.8 billion between 2022 and 2050.


Aside from potentially saving consumers money, Ofgem believes that by making the new body utterly separate from the National Grid, there will be no clashes of interest that could slow down the net-zero drive.


Critics, however, have warned that the introduction of a brand-new body would actually raise energy prices due to the costs required of setting it up and staffing it, as well as worries over increased layers of bureaucracy. They also say that the reasoning of avoiding conflicts of interest is irrelevant due to already existing rules introduced in 2019 that were designed to avoid that.


The new body's responsibilities would include planning the new grid infrastructure needed to support the net-zero push as well as taking an active role in providing independent advice to the government on how best to achieve it is now enshrined in law target of net zero emissions by the middle of the century.


Kwasi Kwarteng, the Business and Energy Secretary, said: "I welcome Ofgem's contribution to the debate over the future structure of our energy system and will consider its recommendations thoroughly."



Also read: Lack of investment could lead to Blackouts warns National Grid CEO


Full separation

Ofgem suggests full separation to ensure that future decisions on how the energy system should be managed are taken to ensure that consumers' interests are at the forefront of any decision making.


"The energy system needs to go undergo the biggest transformation in over a century to meet Britain's ambitious climate goals. Ofgem recommends creating an independent body to help deliver the fundamental changes in how we use energy. This would help bring forward green economic growth, accelerate our journey towards net-zero and save consumers money on their energy bills," said Ofgem chief executive Jonathan Brearley.


Also read: Ofgem considering Energy Bill hike to help ease pressure on Energy Suppliers

National Grid happy to separate?

Some analysts are predicting that National Grid might be happy to give up its current role as the electricity systems operator as it only brings in a small portion of its revenues.


A National Grid spokesperson said, "National Grid will work closely with government and with Ofgem over the coming months."

Further Reading

Contact Us

More articles

Latest News

White label
By Richard Simmonds November 24, 2021
We take a look at white labelling and why it could be a good source of revenue for your business.
dim bulb
By Richard Simmonds November 23, 2021
The ongoing energy crisis has claimed its biggest victim as the UK’s seventh largest energy supplier, Bulb announced that it has entered administration.
investigate
By Richard Simmonds November 22, 2021
Two of the UK’s largest energy supply companies could be investigated by Ofgem and possibly face fines of up to 10% of their revenue after being accused of breaching price cap rules by overcharging customers by hundreds of pounds.
More Posts
Share by: