Energy regulator Ofgem has published its Decarbonisation Programme action plan, designed to help the UK achieve its net zero carbon emissions target by 2050.
The plan marks the beginning of Jonathan Brearley's tenure as Ofgem chief executive and provides a clear recognition of the challenges ahead for the UK energy sector, including future electricity demand if, as expected, electric vehicle use grows from 230,000 today to 46 million by 2050.
As energy regulator, Ofgem reinforces its responsibility to protect consumers from price rises yet recognises that an energy transition will lead to short term additional costs. But as the reduction in costs of offshore wind demonstrates, in the long-term low carbon energy can be cheaper than traditional fossil fuels.
Furthermore, Ofgem proposes a new adaptive approach to its regulatory practices, enabling it to be agile in the face of governmental policy, technological developments and consultation with consumers.
The decarbonisation plan includes nine actions:
- Make price controls more adaptable to help firms invest in clean energy.
- Set up a regulatory fund to help invest in climate-change solutions.
- Explore ways to create a “lowest cost” offshore grid to support wind power.
- Work with government and industry to decarbonise heating.
- Make UK energy systems fit for a net-zero future.
- Create a more flexible electricity system to help move towards net zero.
- Develop a regulatory strategy to help get 10m electric cars on the road by 2030.
- Support energy firms to create low-carbon products and services for consumers.
- Change its regulatory approach and take “big decisions” on decarbonisation faster.
The plan is clear that many of the most cost-effective pathways to net zero are still uncertain, and consequently the investment needs are unclear. Yet technology will play a key role in decarbonisation, enabling the flexibility required of the energy sector, engaging consumers, and promoting innovation in the market.
techUK’s Smart Energy and Utilities Lead, Teodora Kaneva says:
“We welcome Ofgem’s Decarbonisation Plan with great excitement. techUK would also like to welcome Jonathan Brearley to his new post, wishing him every success in a very challenging but extremely invigorating role.
We strongly agree that technology has a key role to play in the transition to net zero and welcome the ambition for accelerating the flexibility market, investing in innovation and experimentation and heat policy.
Emerging technology has a vital role in both the energy and heat transition. The plan must therefore encourage more digitalisation and the creation of digital strategies across the sector, underpinned by a coherent data strategy.
For example, we believe that by removing regulatory barriers for market demand flexibility services, the uptake for smart and flexible technologies will accelerate. In turn, system running costs will become lower. Ofgem must ensure that these changes also result in direct incentives for consumers.
It is a crucial time for the Energy System and we look forward to working with Ofgem to help deliver its ambitious vision.”