The Energy Act 2023 (the “Act”) came into force on 26 October 2023. The UK government described the Act as the biggest piece of energy legislation in UK history. Whilst there may be an element of hyperbole to that description, it is certainly true that it represents an important step in creating the legislative framework for an energy system which is suitable for a net zero world.
The Act focuses on a number of areas relevant to the energy sector, in particular:
- the storage, transport and capture of carbon and the decommissioning of carbon storage installations as well as the possibility of regulations relating to revenue support contracts being introduced by the Secretary of State in relation to the transport, capture and storage of carbon;
- the storage, transport and production of hydrogen as well as the possibility of regulations relating to revenue support contracts being introduced by the Secretary of State in relation to the foregoing;
- the establishment of a future systems operator which will have control over the electricity system and gas system. The intention being to create a single body which has whole system oversight of the power network in Great Britain which should enable better co-ordination and systemic planning of the energy network as increasingly electricity and gas become intertwined in the UK’s electricity, heating and transport;
- granting power to the Secretary of State to institute regulations in respect of heat networks and designated heat network zones; and
- competition within the electricity and gas markets to better serve the ultimate consumer.
Despite the wide-reaching nature of the legislation and the many different sub-sectors it touches upon, its focus can be distilled down into three key areas: energy security, supporting the delivery of net zero and protecting consumers.
Whilst there is a lot of detail in the Act, one aspect that is particularly interesting for the transition to net zero is the role the future systems operator will play. Against the backdrop of the wider issues that have been identified relating to:
- the ability of the transmission network to deal with the unprecedented demand for connections to the network; and
- the current first come first served approach to connections which resulted in the recent Connection Action Plan,
it will be interesting to see how the creation of the future system operator, with its remit of whole energy system oversight, will impact and improve the planning and operation of the whole system.
Ultimately, if the networks are unable to cope with the increasingly decentralised intermittent supply and rising demand due to the de-carbonisation of heating and transport, then it will be difficult to meet all three of the Act’s aims.
