The Energy Bill, introduced on 6 July 2022, received Royal Assent on 26 October 2023. This creates a further important step toward legislating for the energy system of the future, and goes some way to catch up with policy and technology to create price and energy security.
The Bill will create support and frameworks, which are anticipated to release up to £100bn of funding for the UK’s future low carbon energy system. It will also give Ofgem additional powers to support the acceleration of the energy transition.
The Act introduces a licensing framework which will be used to deliver the UK’s first carbon capture, utilisation and storage (CCUS) sites.
Ofgem will now have the powers to set rules on excessive pricing and improve the quality of service.
In addition, it will allow government to target “low hanging fruit”; geographical areas where heat networks provide the lowest cost solution for heating. In any such zone, new buildings, large public sector, large (mainly non-domestic) buildings and other domestic buildings that are already communally heated, will be required to connect to a heat network.
By introducing a revenue support similar to the contract of differences (CFD), providing licensing of hydrogen pipeline and further regulating technologies involved in hydrogen grid conversion trials, the Act provides a framework for the propulsion of hydrogen into our energy mix.
The Act provides for the establishment of a Future System Operator (FSO). This is an independent body appointed to oversee the future development of the UK’s gas and electricity networks, building on the existing capabilities of the Electricity System Operator (ESO). The body does this by providing advice to Government of Ofgem, including the implementation of newer solutions such as hydrogen and CCUS. The purpose of the operator is to help drive net zero through working with other relevant parties.
We will provide further updates in due course. For more information, please contact the energy and resource management team.