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  • hammaad saghir

Industry calls for the government to expedite granting Ofgem net zero responsibility

An EXCLUSIVE group of 44 influential players in the energy and investment sectors have urged governments to take prompt action in light of the immense challenge of constructing a net zero grid.

Forty influential figures from the UK's energy and investment fields have called on the government to act swiftly to confer upon Ofgem a legal requirement to back the transition to net zero, given the enormity of the mission that lies ahead of Britain's energy regulator as it endeavors to produce a virtually carbon-free grid.

Last month, 44 senior leaders from organizations like Centrica, SSE, Kensa Group, and Royal London Asset Management sent a letter to the government praising their decision to give Ofgem a mandate to help with the transition to net zero as part of the Energy Bill, which is progressing through Parliament.

The government officially confirmed last month that the watchdog Ofgem would be mandated to facilitate and promote the transition to net zero, following persistent demand from industry participants, legislators, and Ofgem itself.

Experts have expressed alarm that obstructions in the UK's progress on clean energy and grid infrastructure are preventing the government's ambitious targets for renewable power, such as 50GW of offshore wind by 2030 and 70GW of solar capacity by 2035. To counter this, many view the establishment of a net zero remit as a vital step forward.

Industry stakeholders have voiced worries that the existing regulations, power grid, and planning process are impeding the government's efforts to create a zero-emission power system by 2035. This goal could become even more demanding if Labour is elected and carry out its pledge to bring the target forward to 2030.

Until now, Ofgem has been legally obligated to protect customers' interests by minimizing greenhouse gas emissions in the electricity and gas supply. However, the recently approved amendment establishes a distinct legal responsibility for the regulator to assist in achieving the UK's 2050 goal of net zero emissions and the temporary carbon budgets.

In a communication delivered in the latter part of last month to Grant Shapps, Secretary for Energy Security and Net Zero, a group of industry representatives argued that for Ofgem to have such a mandate would be of utmost importance to hasten grid connections for renewables which currently experience "immense postponements" that can potentially imperil the UK's capacity to optimize the utilization of renewable energy production that is presently available.

The letter strongly requests the government to not only accept the new role of the watchdog but also to quickly take steps to "guarantee that Ofgem has the capability, assets, and technical knowledge to carry out its renewed responsibility" to help tackle "the combined problems of the climate emergency, the rising cost of living, and energy security."

The letter further urges the government to expedite the completion of its Strategy and Policy Statement for the regulator, which is currently open for public consultation.

The letter has been signed by representatives from E.ON, ScottishRenewables, and Good Energy, as well as prominent investors like Federated Hermes, Church of England Pensions Board, Phoenix Group, Nationwide Building Society, and Canada Life UK.

The letter's signatures include the Aldersgate Group, a green business association, the Energy Institute, Thermal Storage UK, the Heat Pump Federation, the Heat Pump Association, and the Energy Saving Trust.

In its efforts to achieve net zero, Ofgem's implementation of its mandate will be crucial in unlocking the necessary investment for a low-cost, low-carbon energy system, the statement reads. The new regulatory system needs to be established immediately for the best results.

In response to the shift toward net zero, Ofgem has expressed approval, noting that it signals that our reliance on fossil fuels must end.

The Department for Energy Security and Net Zero (DESNZ) declined to specify when the regulator's mandate would be revised and whether it would offer extra support and resources to assist Ofgem in meeting its new legal obligation.

Nevertheless, a representative from the Department underscored that "the regulator's authority needs to be developed to create the energy system of the future."

DESNZ commented that they have made it clear for Ofgem to keep its concentration on its current mission of guarding customers while simultaneously striving to reach net zero emissions. DESNZ anticipates that modernization will result in cleaner, more affordable, and more secure energy for Great Britain and boost the economy through a generation's most important energy legislation.

Growing apprehension has arisen due to the government's attitude towards building onshore wind farms, as media outlets recently declared that alterations to the current planning regulations - which have been prohibiting the construction of onshore turbines in England since 2015 - are improbable.

For some months now, the government has been discussing the potential of changing planning regulations to allow more wind projects to be constructed in England. This followed a backbench revolt of 'pro-growth' Conservative MPs last year. Nevertheless, according to a The Observer article yesterday, Prime Minister Rishi Sunak is reportedly anxious about upsetting Tory members who are against turbines near their constituencies and thus appears to favor only minimal modifications to the current planning rules.

In the last two years, only two onshore wind turbines have been erected in England due to the existing regulations that allow for any new initiatives to be halted at the drop of a hat when there is an objection. This is because even Ukraine, a country that has been rocked by war, has managed to construct more wind farms in 2022.


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