How the new UK Government is evolving the energy market

The UK Government have been swift to introduce new energy market reforms since their election win in July 2024. Over the next five years, they plan to accelerate decarbonisation of the UK grid, alongside introducing new reforms to help reduce energy bills and ensure fairness for all.

Let’s explore the key changes that the Government have already introduced in their first three months in office:

Great British Energy

In September, the Government begun the legislative process that will create Great British Energy - a state-owned power business, headquartered in Aberdeen. 

Chaired by Juergen Maier, Great British Energy will own, manage and operate clean power projects. It will be a company that will generate energy in its own right, working in partnership with the private sector. Great British Energy will also work closely with industry, local authorities, communities and other public sector organisations to help accelerate Britain’s pathway to energy independence.

Mission Control 

The Government has also announced the launch of Mission Control - a one-stop shop that will bring together a team of industry experts and officials to troubleshoot, negotiate and clear the way for energy projects.

Mission Control will be solely focused on achieving clean power by 2030, and will work with key energy companies and organisations - like the regulator Ofgem and the National Grid - to remove obstacles and identify and resolve issues as they arise. This will speed up the connection of new power infrastructure to the grid, and cleaner, cheaper power to people’s homes and businesses.  

Retail Energy

The Government has also begun consultations on new plans to enhance protections for consumers and businesses from unregulated, rogue energy brokers. By introducing new regulations for third-party services in the energy retail market, consumers and businesses will be able to get the best tariffs available, whilst promoting decarbonisation and clean energy. The proposals also plan to tackle hidden fees, and foster greater market competition and innovation.

Contracts for Difference (CfDs)

The sixth Allocation Round in the Contracts for Difference (CfDs) saw an increased budget of £1.5 billion being allocated to support the delivery of new, clean energy projects in the UK. £1.1 billion was allocated for offshore wind projects, an uplift of £300 million on the previous round. £185 million was allocated to established technologies, such as onshore wind and solar; and £270 million was allocated to emerging technologies, like floating offshire wind and tidal projects.

In addition, the Government also removed the ban on onshore wind, and consented to over 2GW of new solar projects.

New Energy System Operator (NESO)

There is currently no single body that’s responsible for overseeing the strategic planning and design of the UK’s electricity and gas networks. That’s why the Government has taken ownership of the New Energy System Operator (NESO), previously controlled by National Grid. Under the Government’s leadership, NESO will help connect new generation projects with the electricity grid, working alongside Great British Energy to deploy renewable energy.

NESO will be responsible for a number of new strategic plans:

• Strategic Spatial Energy Plan: This will set out a coordinated approach for Great Britain’s onshore and offshore energy infrastructure, to help cut grid connection waiting times and provide cost-effective energy generation. This advice will also cover how to spread new energy projects across the country in a way that will reduce the costs in transporting power to homes and businesses, which could in turn reduce energy costs.
• Future Energy Pathways report: This annual report will advise on how future energy demand and supply could be met by making changes to infrastructure, technology, innovation and consumer behaviour in line with net zero targets. It will build on the Future Energy Scenarios report that has been produced annually since 2011.
• Centralised Strategic Network Plan: This plan will provide a network blueprint for the country, mapping the demand and optimal locations for offshore and onshore transmission infrastructure to support a decarbonised energy grid. NESO will also work at a local level, with plans to deploy up to 13 regional energy system plans across the country over the next few years. These roles will work with local authorities and energy distribution networks to improve understanding of regional infrastructure needs, paving the way for new skilled jobs across the country.