Department for Energy Security & Net Zero

Ofgem rules require all energy suppliers and network operators to provide and maintain a Priority Service Register, which is a free support service available to people in vulnerable situations. Wherever possible, PSR customers should receive advanced notice of scheduled power cuts and given priority support in emergencies, and nominee schemes so that friends and family can be contacted and act on behalf of the householder.

The setting of tariffs is a commercial matter for each energy supplier. However, in setting the level of the Default Tariff Cap Ofgem include an allowance for servicing consumer debt. This allowance is intended to enable suppliers to recover reasonable costs incurred for servicing consumer debt and ensure that suppliers can offer consumers an appropriate level of support in managing their debts, whilst ensuring the retail energy market remains resilient.

As set out in the accompanying note to the Budget Notice[1], the reference prices we use for the CfD budget are an output from the Department’s main power model and are characteristic of decarbonisation pathways that are net-zero consistent. Wholesale electricity prices are driven by many factors including electricity demand profiles, the plants that generate to meet this demand, as well as fuel price assumptions and carbon price assumptions. Changes in reference prices between rounds depend on the assumptions used in power modelling and the delivery years for each allocation round.

[1] The accompanying note to the Budget Notice can be found here:

https://www.gov.uk/government/publications/contracts-for-difference-cfd-allocation-round-6-statutory-notices

Suppliers have so far carried out 150,000 assessments to make sure those impacted get the compensation they deserve. Of these cases, around 2,500 customers were identified as needing compensation - and around 60% of those have received it, with payments planned for another 1,000 customers. We expect suppliers to work and day and night to issue these remaining payments - there is no excuse for delay. While this is a matter for Ofgem, I have spoken to Ofgem about their responsibilities and the need for suppliers to speed up payments. I will continue to monitor this very closely.

Agreeing contracts with major suppliers like Framatome means that the Sizewell C project can agree pricing and confirm manufacturing slots within the supply chain. This will help maintain the project’s schedule and manage overall costs, supporting Sizewell C’s value for money.

The value of these contracts is commercially sensitive, and the timing of payments under these contracts will be subject to Notices to Proceed that will be issued by Sizewell C Limited.

National Grid ESO (NG ESO) is currently assessing applications to Allocation Round 6 of the Contracts for Difference scheme. Later this year, the Secretary of State will have an opportunity to review the budget following receipt of the formal valuation of applications from NG ESO.

The reference prices we use for the Contracts for Difference budget are an output from the Department’s main power model and are characteristic of decarbonisation pathways that are net-zero consistent.

Budgets are set based on a wide range of factors such as an assessment of the pipeline of projects that could participate in the auction, rather than being a pre-determined monetary constraint. If reference prices were higher or lower, the budget would change accordingly, and approximately the same capacity would likely be successful in the auction.

Assessing the impact of new projects connecting to the electricity grid, such as data centres, and designing the network to do so, is the responsibility of licensed electricity network companies, regulated independently by Ofgem.

The table below sets out shares for oil, gas and nuclear consistent with a pathway to meeting the UK’s 6th Carbon Budget.

Beyond 2035, oil and gas use will need to continue to decline but will remain an important part of the energy mix and even when reaching net zero in 2050 oil and gas (combined) could still provide around a quarter of the UK's energy needs. The Government has set out an ambition for nuclear energy to provide up to around a quarter of the UK’s electricity needs by 2050 which would represent around 12% of expected total energy demand.

The Department does not hold historic data of annual transmission network build. As stated in the Electricity Networks Strategic Framework, in 2021 there were approximately 20,000km of onshore high voltage transmission cables in the UK.

In 2023, the UK did not import any gas from Russia. The last import of gas from Russia to the UK was in March 2022 (Energy Trends Table 4.4).

The UK is the third biggest contributor of climate finance to Brazil, with more than £400 million committed. The UK’s contribution supports initiatives under the Green and Inclusive Growth partnership to help Brazil’s economic transition to net zero, reduce deforestation rates and support Brazil’s ambition to develop a bioeconomy which values standing forest and supports local communities’ livelihoods. At COP 28 the UK signed a legal agreement with the Amazon Fund and an initial disbursement is planned for 2024.

The Department does not estimate the future size of the transmission network. The Electricity System Operator, along with Transmission Operators and Ofgem, is responsible for the development of the network. The ESO is required to publish annual recommendations for which transmission network reinforcement projects should receive investment, but this does not include data on the length of projects. The latest recommendations, published in the 'Beyond 2030' report, cover network needs up to the mid-2030s. The report is available on the ESO's website.

The Celtic Freeport consortium, which includes Neath Port Talbot County Council, is currently preparing a business case and establishing robust governance arrangements, alongside the necessary corporate and legal structures, to allow for the formal designation of the Freeport by the Welsh and UK Governments in 2024. We are not aware of any planning applications for offshore wind from Celtic Freeport.

The Electricity generation costs 2023 report published by the Department for Energy Security and Net Zero sets out the assumptions for a hydrogen-fired Combined Cycle Hydrogen Turbine (CCHT) power plant commissioned between 2025-2030. The cost of the electricity was stated as £111/MWh for a baseload CCHT commissioning in 2025 and £108/MWh for 2030.

Hydrogen to Power is an emerging technology and as such all figures are subject to change. We will continue to monitor and update cost estimates based on new evidence as it becomes available. https://www.gov.uk/government/publications/electricity-generation-costs-2023.

UK gas demand and imports of gas into the UK as liquified natural gas (LNG) in each of the last 20 years are published in Energy Trends Table 4.1.

LNG imports as a proportion of gas demand for each of the last 20 years can be derived from these data. Caution should be taken when inferring that imported LNG met demand due to the interconnected nature of gas pipeline infrastructure (e.g. LNG would be mixed with other gas in the network some of which is then exported).

UK gas demand and imports of gas into the UK as liquified natural gas (LNG) in each of the last 20 years are published in Energy Trends Table 4.1.

LNG imports as a proportion of gas demand for each of the last 20 years can be derived from these data. Caution should be taken when inferring that imported LNG met demand due to the interconnected nature of gas pipeline infrastructure (e.g. LNG would be mixed with other gas in the network some of which is then exported).

Total demand and peak demand figures corresponding to the latest scenarios published in Annex O of the Energy and Emission Projections^[1] are:

[1] https://www.gov.uk/government/publications/energy-and-emissions-projections-2021-to-2040

Based on data from BloombergNEF, total investment into UK offshore wind, onshore wind and solar PV was £143bn over 2009-2023 (converted to real 2023 prices, nearest £bn). For these technologies, a record £19bn was in 2023, helping the renewable share of total UK electricity generation increase from 7% in 2010 to nearly 50% in 2023.

In the UK, renewables receive levy-funded support through legacy schemes (Renewables Obligation [RO] and Feed-in Tariffs [FiTs]), and our Contracts for Difference (CfD) mechanism. The OBR regularly publish estimates of levy spend for the prior financial year across the RO and CfD schemes, and Ofgem publishes estimates for FiTs, aggregated for all renewables. For the CfD scheme only, the LCCC publish data at a technology and plant level.

Based on data from BloombergNEF, total investment into UK offshore wind, onshore wind and solar PV was £143bn over 2009-2023 (converted to real 2023 prices, nearest £bn). For these technologies, a record £19bn was in 2023, helping the renewable share of total UK electricity generation increase from 7% in 2010 to nearly 50% in 2023.

In the UK, renewables receive levy-funded support through legacy schemes (Renewables Obligation [RO] and Feed-in Tariffs [FiTs]), and our Contracts for Difference (CfD) mechanism. The OBR regularly publish estimates of levy spend for the prior financial year across the RO and CfD schemes, and Ofgem publishes estimates for FiTs, aggregated for all renewables. For the CfD scheme only, the LCCC publish data at a technology and plant level.

The Department engages regularly with renewable electricity developers across a range of technologies, including floating offshore wind and tidal. The parameters for Allocation Round 6 include a budget of £105 million for Pot 2. My Rt hon Friend the Secretary of State will have the opportunity to review the budget once eligibility checks and appeals are complete.

National Grid (ESO) is currently assessing applications to Allocation Round 6 of the Contracts for Difference scheme. Once all applications have been reviewed and any appeals processes completed, my Rt hon Friend the Secretary of State will have the opportunity to consider revising the budget.

Ofgem is an independent regulator and accountable directly to Parliament. While DESNZ has close links to Ofgem we do not regulate or fund them. However, information on payments to suppliers, including consultancies, can be found at: https://www.ofgem.gov.uk/about-us/corporate-publications/expenses-and-contracts-data?sort=publication_date and Ofgem’s annual report and accounts is at: https://www.ofgem.gov.uk/publications/ofgem-annual-report-and-accounts-2022-2023

Energy prices have fallen significantly since last winter, and the Q2 2024 price cap has fallen by nearly 60% since Q1 2023 when the price cap peaked.

The Government’s cost-of-living support package between 2022 to 2025 is worth £108 billion, or £3,800 per household on average, one of the largest support packages in Europe.

In addition, the Government continues to provide support through the Warm Home Discount, which provides eligible low-income households with an annual £150 rebate off their energy bill every winter.

Carer’s Allowance is also available to provide a measure of financial support to those not able to work full time due to their caring responsibilities. The rate of Carer’s Allowance is £81.90 a week. In addition to Carer’s Allowance, carers on low incomes can claim income-related benefits, such as Universal Credit and Pension Credit.

The Government published its response to the consultation on amendments to the Boiler Upgrade Scheme (BUS) in March. We will be making a series of changes including: removing insulation requirements; increasing the capacity limit for shared ground loops from 45kW to 300kW; expanding the definition of biomass boilers to include those with a cooking function and introducing flexibility to allow for the potential future differentiation of grant levels for off grid properties.

The Department publishes its levelised costs of electricity for a generic plant in the Generation Costs Report, most recently in 2023 (https://www.gov.uk/government/collections/energy-generation-cost-projections). These provide forecasts for 2025 to 2040. Gas CCGT is 114 £/MWh for 2025 and offshore wind is 44 £/MWh for 2025 (2021 price base). Levelised costs use a forecast of gas prices over the lifetime of a plant based on the latest published gas price forecasts at the time of publication (https://www.gov.uk/government/publications/fossil-fuel-price-assumptions-2019).

The grade breakdown of current staff based in the Aberdeen office is as follows:

Suppliers have so far carried out 150,000 assessments to make sure those impacted get the compensation they deserve. Of these cases, around 2,500 customers were identified as needing compensation - and around 60% of those have received it, with payments planned for another 1,000 customers. We expect suppliers to work day and night to issue these remaining payments - there is no excuse for delay. While this is a matter for Ofgem, I have spoken to Ofgem about their responsibilities and the need for suppliers to speed up payments. I will continue to monitor this very closely.

Suppliers have so far carried out 150,000 assessments to make sure those impacted get the compensation they deserve. Of these cases, around 2,500 customers were identified as needing compensation - and around 60% of those have received it, with payments planned for another 1,000 customers. We expect suppliers to work day and night to issue these remaining payments - there is no excuse for delay. While this is a matter for Ofgem, I have spoken to Ofgem about their responsibilities and the need for suppliers to speed up payments. I will continue to monitor this very closely.

Suppliers have so far carried out 150,000 assessments to make sure those impacted get the compensation they deserve. Of these cases, around 2,500 customers were identified as needing compensation - and around 60% of those have received it, with payments planned for another 1,000 customers. We expect suppliers to work day and night to issue these remaining payments - there is no excuse for delay. While this is a matter for Ofgem, I have spoken to Ofgem about their responsibilities and the need for suppliers to speed up payments. I will continue to monitor this very closely.

Government has progressed the CCUS cluster sequencing process, selecting the first 4 clusters to meet the 2030 ambition.

Projects submitted applications for HyNet expansion in March. These will be assessed, with shortlisted projects announced from Autumn 2024.

Following agreement of Heads of Terms with the Transport and Storage company in December 2023, Government is considering the best timing for launching an East Coast Cluster expansion process, beginning with assessment of store readiness.

The Track-2 December update set out Government’s proposed ‘anchor’ and ‘buildout’ approach. Government has continued engagement with Acorn and Viking, and will provide further guidance in due course.

The Government has set out an ambition to establish four CCUS clusters that will capture 20-30 Mtpa of carbon dioxide per year by 2030. In 2023, the Chancellor announced the availability of up to £20 billion for investment in the early development of CCUS. This unprecedented investment will help meet the government’s climate commitments.

The CCUS Vision stated that by the mid 2030s, the amount of CO₂ annually stored may need to increase to at least 50 megatonnes per annum (Mtpa). To achieve this, it is likely that the CCUS sector will need to increase the annual amount of CO₂ stored by at least 6 Mtpa each year from 2031.

In October 2021, the government announced in the Net Zero Strategy its ambition to capture and store 20-30 MtCO2 per year by 2030, with 10Mt of this capacity to be delivered by Track-2 clusters.

The Net Zero Strategy outlines an ambition to deploy 5MtCO2/year of engineered removals by 2030. The UK Government remains committed to meeting these ambitions.

The Government is supporting heat pump manufacturers through the Heat Pump Investment Accelerator Competition, which will provide up to £30m in grant funding for manufacturers to create new, or expand or repurpose existing, factories to produce heat pumps and key components. The Competition is expected to create capacity for up to 270,000 heat pumps a year and support up to 1,000 jobs.

Heat pump manufacturers can also take advantage of other incentives offered by Government for industry as a whole, such as investment zones which can provide direct and indirect support such as a range of tax reliefs.

The Non-Domestic and Domestic Renewable Heat Incentive schemes are closed to new applications. Therefore, the Government does not plan to make such an assessment, given that new applications can no longer be made to the schemes.

The Department does not hold information on households declining a smart meter installation.

Members of the public dissatisfied with the service provided by network companies can follow the established complaints procedure overseen by Ofgem. Under the procedure, they should escalate the issue within the network company first, with subsequent referral to the Energy Ombudsman or Ofgem if required. Details on the procedure are available on all network companies' and Ofgem's websites.

The setting of standing charges is a commercial matter for individual suppliers, within the context of Ofgem regulating aspects of standing charges. This includes setting a cap as part of the overall default tariff cap, thus ensuring millions of households pay a fair price for their energy.

Ofgem launched a call for input on standing charges, looking into how they are applied to energy bills and what alternatives could be considered, which closed in January 2024. I am supportive of Ofgem’s decision to gather evidence on the current standing charge model and will seek updates in due course. Moreover, my Rt Hon Friend the Secretary of State and I wrote a joint letter to Ofgem in March highlighting the Government’s expectation that standing charges should be kept as low as possible.

The Net Zero Council is co-chaired by myself and CEO of the Co-operative Group, Shirine Khoury-Haq. Minutes of its meetings can be found on gov.uk at https://www.gov.uk/government/groups/net-zero-council

Ministers and officials have regular discussions with 10 Downing Street on a range of issues across our departmental responsibilities, including net zero.

A public engagement working group has been convened under the Net Zero Council, meeting an ask from businesses for consumer-facing information on net zero to support their own engagement. The group is chaired by Council member Chris Hulatt, Co-founder of Octopus Investments, and includes representatives from key business sectors, behaviour change experts and public engagement specialists. The group is working with trade bodies to develop resources to support businesses to communicate effectively on the net zero transition, and advising the UK Government as it delivers on the public engagement commitments set out in Powering Up Britain: Net Zero Growth Plan.

Delivery of net zero relies on strong business action. The Council supported the re-launch of the UK Business Climate Hub, which provides information and resources to SMEs. The Hub highlights the benefits of reducing carbon emissions, setting out the opportunities offered by net zero and empowering businesses to act. The Council remains committed to further developing the UK Business Climate Hub.

The Council is also supporting SMEs through its Public Engagement workstream, which is developing resources to support businesses when communicating with staff, customers and supply chains on both the broader net zero transition and decarbonisation within their sector.

The Net Zero Council developed guidelines to help businesses create tailored action plans to reduce emissions across their sector. These were published last year and provide a robust, credible and consistent set of criteria for business sector roadmaps.

Industry-led roadmaps have been developed in line with this guidance for priority sectors of the economy, with input from both industry associations and sector-wide bodies.

Net zero business sector roadmap guidelines were published in August 2023, providing a robust, credible and consistent set of criteria to support businesses in developing tailored action plans to reduce emissions.

Industry representatives have led the development of roadmaps in priority sectors, which have been discussed by the Council to catalyse action across the economy and identify dependencies across sectors. This workstream is coordinated on behalf of the Council by the Broadway Initiative, who are exploring options for publication following the conclusion of the Council’s review.

The setting of the energy price cap rates each quarter is a matter for Ofgem.

Ofgem has published a breakdown of the price cap: https://www.ofgem.gov.uk/energy-price-cap