UK regulator Ofgem launches decarbonisation plan

Matthew Farmer 3 February 2020 (Last Updated February 4th, 2020 09:27)

The UK Government’s Office of Gas and Electricity Markets (Ofgem) has set out its plan to bring the country’s emissions to net zero.

UK regulator Ofgem launches decarbonisation plan
Better undersea power networks are part of Ofgems plans for net-zero carbon emissions. Photo by Theodor Vasile on Unsplash.

The UK Government’s Office of Gas and Electricity Markets (Ofgem) has set out its plan to bring the country’s emissions to net zero.

The Decarbonisation Action Plan details nine steps the agency will take to achieve the UK’s target of net zero emissions by 2050. These include setting up a regulatory fund and creating a more flexible electricity system to ensure consumers benefit from the transition.

Ofgem’s plan focusses on working around the potentially inconsistent electricity supply brought by the shift to renewables. It also reacts to increased power demand from electric vehicles and the uptake of smart meters.

The plan says network companies must invest in transmission and anticipate needs ahead of time. Ofgem expects some network capacity will be “ultimately not needed”, but recognises “some investment ahead of need will be necessary”.

The regulator also enforces price controls, which allow for uncertainty in some infrastructure investments by letting energy companies propose adjustments to the controls.

This “reopener” clause will be included in future controls, allowing adjustments to price controls to be made at any time. There would also be a network innovation fund, as well as other investment mechanisms.

Electric vehicles are expected to drive a greater need for power, but the plan says the energy storage capability of their batteries also presents opportunities for smart charging.

This would supply energy to the grid at peak times, helping to reduce spikes of demand. It could also allow cars to be charged at periods of low demand.

Ofgem also wants to use energy data to better track usage and spare capacity. Currently, it is running a £1.9m competition to improve use of data.

More choice, less greenwashing

One of the plan’s nine points promises better collaboration and planning in offshore energy transmission. It says current usage of individual power connections for offshore windfarms are unlikely to be “economical, sensible or acceptable for consumers and local communities”.

With upcoming windfarms planned further offshore than current ones, a better connected undersea network is expected to be more efficient. Ofgem says it will work with other bodies to remove barriers to collaboration and consider integrating international connection cables.

The agency also plans to make the transition net-zero a consumer choice, encouraging different products to allow consumers to choose more flexible services.

The plan says Ofgem “will undertake work to ensure that consumers are not misled” by “greenwashing”, where consumers are told a tariff is more environmentally friendly than it is.

Ofgem plans to use behavioural insights and tests to nudge consumers toward more economical tariffs. It also intends to use b data to inform a greater part of its strategy going forward, as the plan outlines changes in how the regulator itself will work.

Ofgem to review gas network

UK Government statistics show domestic heating to be responsible for 18% of national greenhouse gas emissions. Ofgem plans to examine the national gas piping network, but says in the report it will review the gas network “once there is more certainty around the future of heat generation and transmission.”

Ofgem chief executive Jonathan Brearley said in his foreword to the report: “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.”