(Alliance News) - UK energy regulator Ofgem on Monday said it recommends the creation of an independent body and full separation of the running of the electricity system from National Grid PLC.
Ofgem said the separation would "help lead the path to net zero at the lowest cost to consumers". The body would be fully separated from National Grid, which has managed the UK energy system since it was privatised.
Ofgem said the independent body would help charge electric vehicles and allow for "a huge increase in renewable power while maintaining secure energy supplies."
In December, the UK government committed to consult on reviewing energy system management and acknowledged that any further responsibilities might necessitate further independence from National Grid.
Ofgem estimated that the independent body could save customers GBP400 million to GBP4.8 billion between 2022 and 2050.
New responsibilities for the body would include a more active role in the planning and designing of new grid infrastructure, as well as providing the government with advice on how to hit its net zero emissions target by 2050.
"This body, or independent system operator, would be fully separated from National Grid, which also owns the electricity transmission network, to avoid any perceived or real potential conflict of interest," Ofgem explained.
This follows the 2019 creation of a legally separate function within national Gird to manage the electricity system and help avoid such conflict.
However, with the "scale of the net zero challenge" Ofgem has recommended that the government go further and consider full separation, making sure that energy system management decisions "are taken in the interest of customers, helping to keep costs at low as possible".
Jonathan Brearley, chief executive of Ofgem, said: "The energy system needs to go undergo the biggest transformation in over a century to meet Britain's ambitious climate goals.
"Ofgem is recommending the creation of an independent body to help deliver the fundamental changes in how we use energy. This would help bring forward green economic growth, accelerate our journey towards net zero and save consumers money on their energy bills."
National Grid noted the Ofgem report on Monday.
"An industry structure that enables long-term thinking and allows the [Electricity System Operator] to take on new roles as part of the energy transition is an important step in the market and regulatory reform necessary to deliver net zero. Significant further work is needed to determine the detail of that structure," the company said.
It "will continue to work closely with government and with Ofgem over the coming months".
Shares in National Grid were up 0.6% at 881.20 pence in London on Monday morning.
By Anna Farley; annafarley@alliancenews.com
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