Ofgem proposes reforms for UK shift to cleaner energy


United Kingdom – To lessen Britain’s reliance on pricey gas imports and hasten the shift to cleaner, more reliable, and more affordable domestic energy sources, Ofgem has proposed a number of potential reforms.

This reflects an economic world in which renewable options are more frequently the more affordable option. A crucial step toward achieving net zero emissions by 2050, the UK Government promised in October of last year to decarbonize all electricity generation by 2035, subject to security of supply. After Russia invaded Ukraine, it subsequently released the British Energy Security Strategy. The strategy outlines more ambitious plans, such as installing up to 50GW of offshore wind by 2030 and tripling solar power by 2035, to lessen reliance on pricey gas imports.

However, the market, regulatory, and institutional structures that currently exist are not designed to operate a net zero power system in the most economical manner. The “Net Zero Britain” discussion paper released today outlines a number of options for implementing the net zero transition over the ensuing years in order to meet government goals at the least expensive possible for consumers. It will take time to develop and implement some reforms. The majority of important choices rest with the government, which is also in charge of reviewing the rules governing the electricity market. The Government and Ofgem will collaborate closely to support reform that is in the best interests of energy consumers.

Crucial reforms

Two crucial reform areas are noted in the discussion paper. The first is the development of a new independent Future System Operator at the national level and the potential implementation of a model very similar at the local level for strategic planning of the energy system.

The second is potential changes to the wholesale market for electricity, such as limiting the ability of natural gas to set prices, which could be accomplished by dividing the market, and by using pricing signals to run the system more effectively and save consumers billions of pounds in total on their energy bills.

Using pricing signals might entail shifting from national to regional or local level pricing for wholesale electricity. To make sure that any changes could be advantageous to all consumers, Ofgem is carrying out additional research on the advantages and viability of this as one of several options.

By 2050, these reforms might make it possible for customers to save more than £10 billion annually thanks to a smart, adaptable system. In order to help us focus our efforts, the report also lays out a suggested framework for consumer interests. Working with consumer advocacy organizations and other parties will help us refine this framework.