Ofgem to be legally obliged to push for ‘net zero’

Britain’s energy regulator will be legally required to help with the push towards net zero carbon emissions, under plans designed to help boost the rollout of new low-carbon electricity sources.

The government has introduced an amendment to the “energy bill” updating Ofgem’s remit to reflect the UK’s legally binding 2050 net zero target, introduced in 2019. 

The move is aimed at enabling Ofgem to foster the huge overhaul needed to meet the target, amid concerns that its current remit is holding back the development of new wind turbines, cables and other measures.

Jonathan Brearley, chief executive of Ofgem, said consumers were “best protected by building a low-carbon, low-cost energy system”. 

He added: “The mandate sends a clear message: we must end our historic dependency on fossil fuels and stop our exposure to volatile global markets.”

Ofgem’s core role is to protect consumers in England, Scotland and Wales, regulating businesses ranging from household energy suppliers to the owners of electricity cables. 

It does this through measures including price controls determining how much investment cost is added on to consumer bills. 

Under current legislation, Ofgem’s role includes a general remit to cut greenhouse gas emissions in energy supply. 

Chris Skidmore, a Tory MP and former UK energy minister, has argued that the current remit has led to a “focus on prices and competition that leads to short-term considerations with negative longer-term impacts”. 

Under the amendment, this remit will be toughened to include supporting the net zero target specifically. 

The move rebalances Ofgem’s priorities towards encouraging investment in new green infrastructure, which could push up consumer bills.

It could also help Ofgem to develop flexible retail markets to help cope with more electricity generation coming from intermittent wind and solar sources, among other measures.

The move to incorporate the net zero mandate was recommended in April in a report by the government’s first “offshore wind champion” Tim Pick. 

He argued that constraints on electricity grids were becoming a “significant brake on wider economic activity” and were slowing down the rollout of offshore wind farms. 

Ministers initially rejected the move, arguing that it was not necessary. However, in April, Grant Shapps, the energy secretary, said the government would “carefully consider” the recommendations published by Pick.

Confirming the move, Andrew Bowie, minister for nuclear and networks, said on Tuesday: “Ofgem’s principal objective is to protect the interests of existing and future consumers.

“The regulator’s remit must also adapt so it is empowered to build the energy system of the future.”

The bill is currently moving through parliament and the measures could come into force by September.