Laws have been passed in the UK to help unlock £100bn of private investment in energy infrastructure, accelerate development of offshore wind and bring more competition to networks.
The UK Energy Act 2023, which has received Royal Assent, will deliver a more efficient energy system in the long term, helping to keep costs low.
It will do this by increasing competition in Britain’s onshore electricity networks, through a new tender process – reducing costs for network operation and development.
This new model is expected to save consumers up to £1bn off their energy bills by 2050.
A specific merger regime for power networks will also be created under the Competition and Markets Authority.
This will minimise the risk of mergers between energy network companies having detrimental effects on consumers and is estimated to save households up to £420m.
Energy Security Secretary Claire Coutinho said: “The Energy Act is the largest piece of energy legislation in a generation. It will boost investment in clean energy technologies and support thousands of skilled jobs across the country.
“The Act also supports our new approach to make sure that families don’t feel a disproportionate financial burden as we transition to net zero, and forms a central part of our efforts to keep people’s bills affordable in the long-term.”
She added the Act will help the government deliver net zero by 2050 in a pragmatic, proportionate and realistic way. It updates Ofgem’s remit so it considers net zero targets as part of its everyday decisions and facilitates the first large village hydrogen heating trial – providing crucial evidence on the technology’s role in decarbonising heat.
Establishing a new independent body – the Future System Operator – will ensure consumers can access a secure and decarbonised energy supply, key to enhancing the country’s energy security.
The FSO will be responsible for systems in the gas and electricity network developing efficiently and keeping consumer bills low.
Chief Executive of trade body Energy UK Emma Pinchbeck said: “As the world shifts its focus towards net zero, the energy sector needs long-term certainty to remain internationally competitive and attract private investment.
“This critical piece of legislation is a welcome step in delivering that confidence by establishing new business models, improved customer protections, and frameworks for investment across the energy sector.
“The broad-ranging measures in this Act are part of a collaborative effort between government, industry, business and consumer groups to deliver a modern energy system fit for the changing needs of the 21st century energy market.
“More work remains to establish frameworks that these powers enable, but this Act will be the foundation upon which the new energy system will be built.”
Ofgem chief executive Jonathan Brearley said the Act gives Ofgem the powers to drive through the energy transition – unlocking investment, accelerating planning and building the infrastructure the economy needs.
He said: “Consumers have faced a huge number of challenges in recent years, with high energy prices and cost-of-living pressures.
“The Act will give extra protection for existing and future customers, while powering the journey to net zero at the lowest possible cost to households and businesses.”