National Grid to be stripped of role operating UK’s electricity networks
19th July 2021 | Commercial Energy
In 2017, Ofgem gave National Grid two years to separate its functions involved in operating the electricity system. This led to the creation of the National Grid Electricity System Operator (ESO) in 2019, although it was still owned outright by National Grid.
However, in January Ofgem recommended creating a new body entirely free from National Grid that would lead the transformation of the UK’s electricity system to its long term goal of carbon-free power. It was also concerned that the relationship between National Grid and its subsidiary ESO could create conflicts of interest.
It seems the Government has now taken that recommendation on board and will, according to The Times, unveil a consultation outlining the creation of a “Future System Operator”. The body would manage the UK’s electricity system, and a new governance framework would also be put in place.
The Government is thought to be making the change in order to ramp up plans to try and meet climate change goals and increase competition in low-carbon markets so that the transition has only a minimal impact on UK consumers.
Ofgem believes its proposals could save consumers between £400m to £4.8bn between next year and 2050.
Despite the change to the electricity network, it is likely that the proposals will keep the responsibility of running Britain’s gas systems with National Grid.
“National Grid said the group would work closely with the business department and Ofgem on the role of a future system operator and any related sale,” The Times reported.
According to an analysis earlier this month, the UK ranks sixth in the world for the share of electricity it produces from clean wind and solar power.
Denmark was the top country, generating 61 per cent of its electricity from the two renewable sources, followed by Uruguay on 44 per cent.
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