Delivering the future energy network

A blog by Eleanor Warburton Director for Energy System Design and Development

The scale of energy infrastructure needed to decarbonise the electricity system, and indeed the entire energy economy, is now an order of magnitude above that delivered in recent decades.??

At the 2024 Energy UK annual conference, Ofgem’s CEO Jonathan Brearley discussed the importance of strategic planning in delivering a pathway to a net zero energy system that reflects the government’s ambitious targets and will protect consumers from volatile gas prices.?

As more electric vehicles and other such assets come online, we need to have the systems in place to ensure that clean, affordable and secure electricity is flowing through the system. Strategic plans will identify what generation and network assets will be required, when and, most importantly, where.??

But plans alone are not enough; they must be deliverable and delivered. Ofgem must continue our fundamental shift in how we shape and regulate network investment. Markets will continue to lead and deliver generation and flexibility infrastructure but in a world in which all investors can see how their investment sits within that strategic plan and the consequent expansion of network and connections.?

Energy system planning: what to expect?

The Great British (England, Scotland and Wales) energy system is experiencing exciting change as it transitions towards a more strategically planned system. These changes will provide clarity to everyone – investors, network companies, customers – on the assets that need to be built and where they should be located to have a secure, stable system and meet net zero goals, while focusing on consumers. ?

The Department for Energy Security and Net Zero (DESNZ) will soon commission the about-to-be formed National Energy System Operator to prepare Great Britain’s first ever Strategic Spatial Energy Plan, which will set a longer-term pathway to net zero energy by 2050. DESNZ asked the Electricity System Operator (ESO) last month to provide advice to the government this autumn on delivering clean power by 2030 as these two energy system plans will set the pathways for a net zero energy system, first to 2030 and then towards 2050. In turn they will inform the development of the first Centralised Strategic Network Plan and Regional Energy Strategic Plans.?

As regulator of the energy network, Ofgem will be using these plans to drive the development of the energy networks while keeping the interests of consumers in mind. Our priorities in doing so are therefore to drive an approach which is robust and cost effective and properly reflects the government’s commitments to decarbonise the economy and our duty to promote economic growth.?

Network planning towards 2030 and beyond?

Our immediate focus is to deliver at pace the specific network plans, regulatory changes and funding needed to provide certainty to industry to get on and deliver.?

Last month, we published National Energy System Operator’s licence conditions to provide regulatory clarity on obligations and timescales for delivery for the Strategic Spatial Energy Plan and the Centralised Strategic Network Plan. These outline Ofgem’s role in approving the methodologies for developing both these plans, as well as the Centralised Strategic Network Plan itself. ?

In advance of the full Centralised Strategic Network Plan being delivered, we agreed that the ESO will deliver an update to its transitional Centralised Strategic Network Plan, called “Beyond 2030” published earlier this year, which lays out the transmission network needed to connect the generation assets expected by 2035. We expect this update by January 2026 to consider the implications of ESO’s 2030 advice and be based on sufficiently mature projects.?

To enable this maturing of projects and to ensure that we waste no time in building the network, we need to decarbonise the electricity system. We have consulted on providing funding to network companies to develop these projects through 2025. We are also working up an ‘Advanced Procurement Mechanism’ to help network companies mitigate supply chain issues and allow them to place orders as early as possible to reduce risks to delivery.?

Looking beyond 2030?

The Strategic Spatial Energy Plan will spatially map out the energy assets necessary to meet 2050, building on the 2030 plan. We will assess and approve the methodology for this early next year, with the full plan due in 2026.??

In parallel, the National Energy System Operator will develop the methodology and begin the development of the full Centralised Strategic Network Plan, a gas and electricity transmission network plan out to 2050.?The first full Centralised Strategic Network Plan will then be delivered by the end of 2027, taking the Strategic Spatial Energy Plan as a key input, and will set out the transmission network plan for onshore and offshore electricity, as well as gas and hydrogen transmission up to 2050. We will push Centralised Strategic Network Plan-recommended projects through the next transmission owners price control ( RIIO-3).

The Strategic Spatial Energy Plan will also interact with and inform Regional Energy Strategic Plans – and vice versa – acting as the blueprint to align top-down and bottom-up net zero planning and ensuring energy planning alignment and delivery at a regional scale. Ofgem introduced Regional Energy Strategic Plans into the planning agenda in November last year, and we’re currently consulting on the finer details of how we will develop and implement these plans. Regional Energy Strategic Plans will be produced across regions of Great Britain and will ensure regional priorities and spatial plans integrate into energy system planning to ensure investment is made when and where it is needed whilst making the most of local potential to meet system needs.?

Connections reform?

Strategic planning and connections reform are closely related. Generators need certainty that the locations the Strategic Spatial Energy Plan identifies as the most optimal will have the necessary network infrastructure to enable them to connect and the right processes to ensure that the right technologies are prioritised for connection.?

As we set out in our open letter , we need to go further to achieve a slimmed down queue of viable, progressing projects aligned to Great Britain’s strategic need. This means a connections process that can take into account what strategic plans tell us about what technologies should connect, when, and where. The queue now contains over 725 gigawatts, three to four times more than we need under 2050 forecasts. We need to reduce this to a slimmer queue of the right projects in the right places to meet out net zero goals.

The future connections process will raise the standards across the connecting parties, who are increasingly expected to have robustly developed, viable projects with real commitment behind them. Equally, National Energy System Operator and network companies should offer connection contracts that are timely and reliable. We will therefore shortly consult on recommendations for improvements to the connections regulatory framework for all parties, in our connections ‘end to end’ review, ensuring the regulatory framework keeps pace with connections process reform in line with our 2023 Connections Action Plan. It is critical that the regulations drive the behaviours and outcomes we need to see to improve customer service and speed up connections.??

Looking ahead?

Ofgem, the government and National Energy System Operator are working together closely to shape a strategic view of the energy system with coherent action across all our areas of ownership.?

However, setting out the plans is just step one. Ofgem has already made a fundamental shift in how we use strategic planning to regulate networks across a period of huge expansion and change. Industry will see that shift develop across all of our remit over the remainder of this decade and beyond.??

In the meantime, if you are interested in more detail, you can read more about our work on our news and blogs pages.?

Originally published here https://ofgem.gov.uk/blog/delivering-future-energy-network