Publication of Statutory Consultation and National Energy System Operator Licences Jointly With Ofgem

Monday 2nd September 2024 Written Statements

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

Our nation stands at a pivotal moment in our energy and net zero journey. As we navigate the challenges of energy security and the urgent need for a sustainable future, I am proud to announce the publication of the joint Government-Ofgem response to the statutory consultation on national energy system operator licences and other impacted licences.

NESO will be a trailblazing, independent entity, serving as a trusted voice at the core of our energy sector. It will spearhead strategic planning for our energy systems and networks, manage the electricity system with precision and play a crucial role in achieving our overarching energy strategy and objectives.

NESO’s independence from commercial interests and operational control of the Government will enable it to provide unbiased, expert advice on critical decisions that will shape our energy landscape for decades to come, including our “clean power by 2030” target.

As we move forward, NESO’s role will be instrumental in achieving our net zero and energy security goals. By fostering innovation, enhancing system resilience, and promoting transparency, NESO will help navigate the complexities of our evolving energy system. We are enormously grateful for the valuable input from industry stakeholders, whose insights have been integral to shaping the future of NESO.

NESO will be regulated by Ofgem through two new licences, and this consultation response marks a significant milestone in establishing NESO’s regulatory regime. The final step will be for the Secretary of State to grant NESO these licences under the powers conferred by the Energy Act 2023. The Department for Energy Security and Net Zero and Ofgem are aiming to establish NESO this year.

Our response addresses thematically the feedback raised by stakeholders to the consultation on the contents of these licences published in March 2024. The key themes include NESO transparency and industry feedback, incentives and performance, energy resilience and critical national infrastructure, network planning, NESO transitional service agreements, future roles, uniform network code arrangements, and NESO’s advisory role. Alongside this response document, we are also publishing updated versions of NESO’s licences.

The establishment of NESO is intended to apply only to England, Scotland, and Wales. Energy is generally devolved in Northern Ireland. I will place copies of the statutory consultation response on national energy system operator licences in the House Libraries.

[HCWS57]