Today the government has announced their commitment to create a new Future System Operator to oversee the UK energy system.
The Future System Operator (FSO), to be launched once legislation is passed and timelines have been discussed with key parties, will look at the Great Britain’s energy system as a whole, integrating existing networks with emerging technologies such as hydrogen.
As a trusted and expert body at the centre of the gas and electricity systems, the FSO will take ‘a significant role’ in shaping the energy system and facilitating competition, overseeing new projects and integrating them with existing energy supplies.
Energy Minister Greg Hands commented on the announcement: “Russia’s appalling aggression in Ukraine amid escalating global gas prices has shown the vital importance of strategic change to the UK energy system.
“We need to boost our energy resilience, reduce our dependence on expensive imports and slash emissions. The FSO will do just that.”
The new Operator will:
- have a duty to facilitate net zero while maintaining security of supply, and an efficient, coordinated and economical system.
- take on all the main existing Electricity System Operator (ESO) roles and the longer-term elements of the Gas System Operator (GSO), enabling more coordinated, strategic and whole systems planning.
- be a public corporation, inside the public sector, but with operational independence from government.
- be funded by consumers through price control arrangements regulated by Ofgem, but with the operational freedom to manage and organise itself to effectively deliver its roles and objectives.
- have a duty to provide advice on request to government and Ofgem to inform key policy decisions.
- take an increasingly significant role in shaping the energy system, including driving competition across the energy sector.
Today’s announcement comes ahead of the forthcoming Energy Security Strategy to be published later this week, which will set out government approach to ensuring greater clean energy independence for Britain.
Jonathan Brearley, chief executive of Ofgem, commented: “A fully independent system operator will help to transform Great Britain’s energy system and cut customers’ energy bills.
“Critically, the FSO will ensure that we will build a smart, efficient and flexible system that will mean that Britain moves to a secure low carbon and low-cost system.
“We look forward to working with National Grid, government and the wider industry to implement this important change in the way the energy system is managed.”
Government, Ofgem, National Grid and the ESO have agreed a joint statement, which sets out their shared vision for the FSO and their commitment to working together to deliver it.
John Pettigrew, CEO of National Grid, added: “National Grid has a critical role to play in the decarbonisation of the economy to reach net zero, whilst continuing to ensure security of supply at the lowest cost to consumers.
“We have been working closely with government, industry and the regulator to create a Future System Operator that enables long-term holistic thinking, drives progress towards net zero, and lays the foundations for the regulatory reform necessary to deliver a clean, fair and affordable energy transition.
“We will continue to work closely with all relevant parties to ensure a smooth transition, subject to Parliamentary approval and conclusion of the transaction process.”
The new public body will be founded on the existing capabilities of the Electricity System Operator (ESO), and, where appropriate, National Grid Gas (NGG).
Fintan Slye, Executive Director, Electricity System Operator, commented: “We warmly welcome today’s announcement that the ESO will be at the heart of the system operator of the future.
“Building on our track record and skills as a world leading system operator, together with industry and government and regulators we will help deliver an affordable, reliable and clean transition for all.
“The ESO will continue working closely with all parties involved in the coming weeks and months to enable a smooth and successful transition.”