Ofgem sets out 9 points for net zero

Written by

Tim Greenhalgh

Posted on

February 5, 2020

Regulator Ofgem has set out a 9-point plan to ensure the UK’s energy networks will deliver net zero by 2050.

The nine actions, including support for decarbonising heat and transport, aim to balance the need for radical change with protection for bill payers.

To meet net zero, Ofgem underlines the need to resolve the great challenge of removing the carbon footprint made by the way homes and businesses are heated, with some estimates putting the figure as high as a third of total CO2 emissions.

The regulator points to the potential use of hydrogen boilers or clean electricity to power heat pumps with more customers connected to heat networks.

Electric vehicles

A low carbon energy system will also have to fully embrace electric vehicles and Ofgem is looking at how it can support the full roll out of EVs, with a commitment to publish an Electric Vehicle Strategy, which aims to ensure that 10 million electric vehicles are on UK roads within a decade.

The strategy will resolve issues over how the National Grid will develop to meet greatly increased demand. It is also looking at new business models, such as EV owners selling electricity back to the grid during peak demand.

At SaveMoneyCutCarbon, our focus is on providing the best and most effective energy-saving and carbon-cutting solutions for consumers. This includes our range of EV chargers and cables and we’re delighted that Ofgem is finally getting behind this transport revolution.

Millions more EVs, together with energy-saving products and solutions should make a sustainable difference to the total carbon emissions in the UK annually.

Offshore wind

Ofgem is also committed to working with government and stakeholders on a fully coordinated offshore network system so that the energy generated by the rapidly growing offshore wind sector can be delivered to customers more easily and cheaply. It wants to support a fourfold increase in offshore wind generation within ten years.

The regulator published its comprehensive climate action plan on Monday, following recent criticism from the CBI, the UK’s biggest business group and others that it was failing to address adequately the climate emergency.

Energy bills

The nine-point plan also includes plans to support tariffs that encourage homes to help balance the energy system, and a crackdown on “greenwash” energy deals.

Ofgem’s new chief executive, Jonathan Brearley said that that Ofgem plans to balance the tension between green investments and energy bills without a legal overhaul.

He said:

“We are taking an approach that recognises that our role protecting consumers includes achieving net zero. As low-carbon renewable energy grows and more transport goes electric, the energy system needs to be more flexible to respond to peaks and troughs in both supply and demand. Our new price controls for network companies will clear the path for this, providing the incentives for investment for the future.”

Ofgem will change the way it controls spending by energy companies, to encourage investment in low-carbon technologies within an eight-year spending plan. These companies may be able to change spending plans during set periods and so adapt green investment plans in response to the developing sector.

Nicola Shaw, the UK boss of National Grid, said:

“It’s critical that the regulator, government and industry are aligned to decarbonise the energy sector in the journey to net zero at the lowest cost to consumers, and we both welcome and share Ofgem’s commitment to achieving this.”

Last week, the National Audit Office criticised Ofgem for not being tough enough with price controls on energy networks, allowing them to make bigger than expected profits.

Announcing its new plan, the regulator admits there will need to be trade-offs between supporting ambitious green investments with the costs covered by consumers, and the need to protect bill payers from rising costs.

Gillian Guy, the chief executive of Citizens Advice, said:

“Ofgem has set out the right challenges, it now needs to deliver on them. If we don’t get the difficult decisions about the low-carbon transition right, it will ultimately be those who can least afford it who end up hardest hit.”

Ofgem’s 9-point action plan

  1. We will build adaptability into our price controls to ensure network companies invest efficiently and are able to adapt to changes in technology and infrastructure.
  2. We will set up a regulatory fund to unlock investment in innovative solutions to tackle climate change.
  3. We will explore, with government and industry, opportunities for greater coordination to enable rapid expansion of an offshore grid at lowest cost.
  4. We will harness our existing knowledge and expertise to help government and the industry develop cost-effective and low risk options to decarbonise heating.
  5. We are reviewing the way our energy systems are managed to ensure they are fit for a net-zero future.
  6. We will create a more flexible electricity system to ensure that consumers will benefit from the lowest cost transition to a reliable net-zero system.
  7. We will develop a regulatory strategy on electric vehicles to support roll out and maximise the benefits to consumers.
  8. We will support innovation and experimentation, particularly in the retail market, to create low carbon products and services that will directly benefit consumers.
  9. We will respond to the need to take big decisions facing a deeply uncertain future by becoming more adaptive in the way we work and in our regulatory approaches.

Read the full Ofgem Decarbonisation Programme Action Plan

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