The UK’s Energy Act: A Roadmap to a Sustainable Future

The recent Royal Assent of the Energy Act is a pivotal moment for the UK’s energy sector, setting the foundations for a new era of sustainable energy policy and infrastructure. This legislation is the most consequential in a decade, setting a precedent with a legal mandate for Ofgem to target net zero emissions—a world-first initiative. 

Empowering Ofgem for a Net Zero Future 

The Act empowers Ofgem with new statutory ‘net zero duty,’ enabling the regulator to drive the energy transition by tapping into investment, accelerating planning decisions, and building the necessary infrastructure. This move is designed to provide the UK with security from volatile global gas markets and reduce dependency on fossil fuels. Jonathan Brearley, CEO of Ofgem, welcomed the Act, saying it has potential to catalyse the energy transition and provide the economic support needed for a sustainable future. 

Innovations and Amendments in the Energy Act 

Key provisions in the Act include: 

  • New Offshore Wind Project Tenders: The Act introduces new tender processes aimed at increasing competition and reducing the costs of offshore wind power. 
  • Energy Network Company Mergers: A new merger regime will ensure active competition and robust infrastructure. 
  • Regulation of Heat Networks: Under Ofgem’s oversight, heat networks will operate more fairly and efficiently. 
  • Support for the Hydrogen Industry: The Act provides a legal framework and funding mechanisms for hydrogen as a low-carbon energy source. 
  • Carbon Dioxide Transport and Storage: A licensing regime will facilitate the development of carbon capture and storage sites in the UK. 

Moreover, the Act modifies the Energy Savings Opportunity Scheme (ESOS). By introducing new reporting requirements for energy intensity ratios and carbon savings. 

Strategic Implications for Businesses 

The Energy Act creates a conducive environment for investment in the low-carbon energy sector, including renewables, nuclear power, and energy storage. It aims to make the UK’s energy system more efficient and competitive, potentially leading to lower energy costs for businesses. The Act additionally provides regulatory certainty, offering a vision of the UK’s energy policy landscape for the foreseeable future. 

Businesses are advised to prepare for the new law by: 

  • Reviewing their energy strategies to identify efficiency improvements and cost reductions. 
  • Exploring government support schemes for energy efficiency and renewable energy projects. 
  • Staying abreast of developments in the Energy Act and related regulations. 

What should you do next? 

At NGP, we understand that the energy market is notoriously sensitive to governments’ strategic changes and policy proposals. Our expertise and market intelligence have helped thousands of businesses navigate the energy market, giving budget certainty and a plan to move forward. 

Our dedicated team of experts keeps a close eye on the evolving energy landscape and new policy positions, providing businesses with the market intelligence and real-time data they need to make informed purchasing decisions by analysing the leading market factors. 

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