Ofgem has published a consultation which proposes that a more independent system operator within National Grid will boost competition and innovation.
The UK energy regulator said greater separation will allow the new company to play a more proactive role in managing a more flexible electricity system.
In order to achieve its objectives, the new system operator will work with local electricity distribution network operators in managing electricity flows across grids.
As an independent system operator, the new entity will have distinct offices, directors and employees from other National Grid electricity subsidiary companies.
The National Grid welcomed the move and stated that an independent electricty operator can deliver value to customer.
The proposed new company will take up additional responsibilities of promoting smart solutions in place of traditional network investment to tackle rising demand of electricity during peak hours.
Ofgem chief executive Dermot Nolan said: “We need a more flexible energy system so that we can make the transition to a lower carbon future. A more flexible system will also ensure customers get the most out of new smart technologies.
“As the system changes, it’s important that all the monopoly networks adapt. Having a legally separate system operator will allow it to take on a more proactive role in managing the system and working with others, while mitigating any conflicts of interest.”
UK Business and Energy Secretary Greg Clark said: “Separating our system operator will give greater confidence to investors that Great Britain offers a level playing field for companies wanting to be part of our clean, secure and flexible energy system – keeping costs as low as possible for our homes and businesses.”
National Grid CEO John Pettigrew said: “We believe National Grid is best placed to deliver the role of System Operator, especially during a time when the energy landscape is changing rapidly.The Government and Ofgem have recognised our vast experience and expertise in balancing the electricity system and ensuring the market runs efficiently.
“We share the same priorities towards keeping customer bills down, increasing certainty, enabling greener energy, and security of supply. We will be working closely with key stakeholders to achieve these objectives while further evolving the independence of the system operator role within National Grid.”
Image: Ofgem to create separate national electricity system operator in the UK. Photo: Courtesy of dan/FreeDigitalPhotos.net.
