FSO will take ‘whole-systems’ approach to integration of green energy technologies such as renewables, hydrogen, and CCUS, government confirms
The government has confirmed plans to set up a new public body to oversee the transition of Britain’s energy system towards net zero emissions, as more green technologies such as renewables, batteries, electric vehicles (EVs), hydrogen, and carbon capture systems come online over the coming years.
Plans to establish a new Future System Operator (FSO) tasked with taking a whole-system view of Britain’s energy system were announced this morning, with the move aimed at better integrating existing energy networks with emerging clean technologies, the government said.
The FSO will take over many of the responsibilities currently undertaken by the private sector via the National Grid Energy System Operator (ESO), and potentially also some of the capabilities of National Gas Grid “where appropriate”, according to the Department for Business, Energy and Industrial Strategy (BEIS).
The reforms follow a consultation last year over proposals to create a new energy system operator separate from National Grid plc with responsibility for both the electricity and gas grids.
Once legislation has passed and timelines have been discussed with stakeholders in the energy sector, the FSO will work with energy suppliers and networks to balance the UK’s electricity systems and ensure continued energy resilience for households and businesses, the government said.
Moreover, the body is tasked with providing strategic oversight and long-term planning for the UK gas system, although real-time operation of the gas grid is set to remain under the remit of the National Gas Grid, the government said.
As such, the FSO is expected to play a major role in shaping the energy system of the future through facilitating competition, overseeing new green energy projects and technologies, and integrating them with existing energy supplies for homes and businesses.
Jonathan Brearley, chief executive of the energy regulator Ofgem, said establishing a fully independent system operator would 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,” he said. “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.”
Decarbonising the gas and electricity grid remains one of the country’s most urgent net zero challenges, and the issue has been thrust further up the political agenda this year due to soaring fossil fuel prices and energy security concerns in the wake of Russia’s invasion of Ukraine.
The government is widely expected to publish its hotly anticipated Energy Security Strategy within the next 24 hours, setting out how it intends to wean the UK off Russian oil and gas. Hopes are high that the stragegy could provide a major boost for clean energy development and energy efficiency programmes, which can serve to drive down bills, energy imports, and carbon emissions.
However, widespread media reports indicate there are significant differences between BEIS, Number 10, and the Treasury over the role of energy efficiency, onshore wind, and nuclear power in the Strategy with details still yet to be finalised.
Energy Minister Greg Hands confirmed the Energy Security Strategy would be published later this week, but argued today’s plans to establish the FSO would further help to boost Britain’s energy independence.
“Russia’s appalling aggression in Ukraine amid escalating global gas prices has shown the vital importance of strategic change to the UK energy system,” he said. “We need to boost our energy resilience, reduce our dependence on expensive imports and slash emissions. The FSO will do just that.”
The government said the FSO would take a “whole-system approach” to coordinating and planning the energy network, taking into consideration electricity, gas and other emerging markets such as carbon capture, usage and storage (CCUS) as well as offshore wind markets.
It will also have a duty to provide independent advice and technical input to the government and Ofgem in order to form policy decisions, it explained.
Fintan Slye, executive director at National Grid ESO, welcomed today’s announcement, and said the firm would “continue working closely with all parties involved in the coming weeks and months to enable a smooth transition”.
David Smith, chief executive of trade body the Energy Networks Association (ENA), also welcomed the move. “We all know that net zero is a major step-change for the entire energy industry and we are glad that the government has been able to give this clear direction on the Future System Operator,” he said. “Coordination and cooperation across electricity and gas transmission and distribution networks, as well as all other players in the energy sector will allow us to make even greater strides towards decarbonising effectively and efficiently.”