Ofgem has announced its Decarbonisation Action Plan to help Britain achieve its climate goals and clean up the economy.
The UK’s energy regulator has set out nine actions to support the UK government’s target of reaching net zero on greenhouse gas emissions by 2050.
The scheme aims to support the development of renewable technologies, encourage the adoption of electric vehicles and bring down electricity costs.
Launching the plan on his first day in office, Ofgem’s new CEO Jonathan Brearley noted the progress Britain has made so far in decarbonising the economy, but said it must “go further, particularly on heat and transport”.
“We are taking an approach that recognises that our role protecting consumers includes achieving net zero,” he added.
“As low-carbon renewable energy grows and more transport goes electric, the energy system needs to be more flexible to respond to peaks and troughs in both supply and demand.
“Our new price controls for network companies will clear the path for this, providing the incentives for investment for the future.”
What is the Ofgem Decarbonisation Action Plan?
In June last year, former prime minister Theresa May ramped up the UK’s climate ambitions when she bound by law a target of reaching net-zero emissions by 2050 – from the previous goal of 80% compared with 1990 figures.
Britain has so far reduced CO2 by 40% over the past 30 years and produced more of its power from renewables for the first time in 2019 – delivering 48.5% of the country’s electricity.
The first point in Ofgem’s plan is to devise price controls that will set network companies’ spending for the next five years, while also encouraging them to invest in the “infrastructure necessary to decarbonise, such as strengthening the electricity grid for electric vehicles”.
Although it recognises the necessary investment to reach net zero is so far unclear, a regulatory fund is being set up to invest in emerging technologies to combat climate change.
The UK has been scaling-up its renewables capacity over the past couple of years, as they continue to increase in popularity.
The Centre for Alternative Technology (CAT), a climate change research lab in Wales, believes clean energy technologies could help the country reach its goals without relying on the promise of future carbon capture innovations.
Ofgem said it will work with the government and wind industry to explore approaches that could enable an expansion of the offshore network at the lowest possible cost – and hopes to make it easier and cheaper for electricity generated to reach the shore.
The regulator admitted a transformation is needed in how homes and transport are heated, with only 5% of the energy used to heat the UK’s homes coming from low-carbon sources.
To combat this, it plans to decarbonise the industry by looking into developing hydrogen networks and the electrification of heating.
The scheme aims to ensure energy systems are flexible to ensure smoother peaks in electricity demand.
It hopes to encourage people to charge electric vehicles when there is more supply in the system, which would reduce power needs and cut the cost of energy bills.
Ofgem said it will review the way the electricity system operator’s role, currently carried out by National Grid ESO, ensures the framework enables Britain to meet its net zero target in a cost-effective manner.
The regulator believes the UK will have to increase the adoption of electric vehicles – taking the current total of 230,000 to 39 million by 2050.
It will launch an electric vehicle strategy with the hope of having 10 million electric vehicles on the country’s streets by 2030.
The plan also aims to support energy companies in developing low-carbon products that will provide better services to their customers.
To ensure the decarbonisation process is taken as quickly as possible, Ofgem claimed it will take “big decisions” and change its regulatory approach — with the nine actions noted to be taken across the next 18 months.
