Britain’s future system operator – responsibilities across electricity and gas

An expert impartial ‘future system operator’ is proposed to drive Great Britain’s progress towards net zero by 2050.

As part of its plans for the move towards a net zero carbon economy by 2050, the UK government’s Department of Business, Energy and Industrial Strategy (BEIS) has released proposals for a new system operator.

The so-called ‘Future System Operator’ (FSO) is envisaged to take over the balancing and planning roles and functions of the current National Grid ESO on the electricity system and the planning and market strategy functions on the gas system from National Grid Gas.

The basis for the change, which had been recommended by the regulator Ofgem, is that with both the electricity and gas system operators currently part of National Grid and with the company having wider commercial interests in the energy system, there is a potential or perceived conflict of interest, although there is no evidence of this being acted upon.

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Moreover, with the two system operators legally separate from one another, coordination between the sector roles and functions – increasingly important as the need for sector coupling deepens – is challenged.

“We believe that an independent FSO with responsibilities in both the electricity and gas systems, would be better able to fulfil the potential of its expertise and position in the system,” the proposal document states.

It also is envisaged that the FSO could provide targeted advice on the energy system to government and it could play a greater role in for example the decarbonisation of heat and transport.

With the proposed roles and characteristics of the FSO set out, the document suggests two potential organisational options. One is a standalone privately owned model, independent of energy sector interests. The other is an independent corporate body model classified within the public sector, but with operational independence from government.

The document also proposes a phased implementation of the FSO, with it founded on the existing capabilities of National Grid ESO and National Grid Gas.

National Grid said in a statement that it welcomes the consultation and will continue to work closely with BEIS and Ofgem on the role of an FSO, the most appropriate ownership model and any future related sale.

“An industry structure that enables long-term, holistic 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 the clean energy transition in a timely, fair and affordable way.”

Comments are now being sought on the proposals, running until September 28.