The UK government is launching new public body to oversee the energy network, supporting new technology and building security of supply, and ensuring clean energy gets to the homes and businesses that need it across the country.
The Future System Operator (FSO) aims to boost security and resilience of UK energy supplies and support transition to Net Zero emissions.
The proposal follows consultation with industry which backed the creation of a new public body.
FSO will be launched once legislation is passed and timelines have been discussed with key parties.
It will look at Great Britain’s energy system as a whole, integrating existing networks with emerging technologies, such as hydrogen.
The FSO will be founded on the existing capabilities of the Electricity System Operator (ESO), and, where appropriate, National Grid Gas (NGG).
It will work with energy suppliers and networks to balance the UK’s electricity systems and ensure continued energy resilience and security of supply for households and businesses.
FSO will also provide strategic oversight of the UK gas system by taking on longer-term planning in respect of gas, but not real-time operation, which will remain with NGG.
The government said FSO will take a “significant role” in shaping the energy system and facilitating competition, overseeing new projects and integrating them with existing energy supplies.
The operator will take a whole-system approach to coordinating and planning the network, looking across electricity, gas and other emerging markets such as carbon capture usage and storage, as well as offshore wind networks.
The FSO will also have a duty to provide independent advice and technical input to the government and industry regulator, Ofgem, to inform key strategic policy decisions.
The government also announced that energy regulator Ofgem has a new strategic function overseeing energy companies’ governance codes.
This decision is expected to result in a long-term net benefit for industry and consumers, by ensuring that the detailed technical and commercial rules which guide energy providers keep pace with our Net Zero ambitions and deliver for UK consumers.
UK Energy Minister Greg Hands said: “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.
“Government, Ofgem, National Grid and the ESO have agreed a joint statement published alongside this announcement, which sets out their shared vision for the FSO and their commitment to working together to deliver it.”
Ofgem chief executive Jonathan Brearley said: “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.”
ESO executive director Fintan Slye said: “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.”
Responding to the news, Scottish Renewables director of policy Morag Watson said: “We welcome today’s announcement that the UK Government will launch the Future Systems Operation (FSO) to oversee the energy network, supporting new technology and building security of supply.
“Scottish Renewables has consistently advocated for the creation of a publicly-owned body to oversee our energy network, with operational independence from government, and today’s announcement of the FSO is a welcome step forward.
“As net-zero progresses and our energy system becomes increasingly more electrified, the need for new functions will emerge and the FSO will play a key role in delivering this.
“The establishment of the FSO should also help to ensure that a legally binding duty to support the delivery of net-zero is achieved.”