Decarbonisation of the power sector

Business and Trade Committee Closed Inquiry
Opened: 20 May 2022 Closed: 18 Jul 2023 Parliament page
The Business, Energy and Industrial Strategy (BEIS) Committee has launched an inquiry into the Government’s plans to decarbonise the UK’s power supply sector. The inquiry will scrutinise proposals unveiled in the Government’s Energy Security Strategy earlier this year, and the heavy emphasis it placed on scaling up the supply of … Read more
44 Recommendations
21 Conclusions
1 Report
5 Oral sessions
14 Letters
5 Events
Activity timeline 26 events
14 Jul
2023
Report published
28 Apr
2023
Report published
25 Apr
2023
Correspondence
25 Apr
2023
Correspondence
21 Mar
2023
Oral evidence
21 Mar
2023
Correspondence
21 Mar
2023
Formal meeting (oral evidence session) · Room 8, Palace of Westminster
7 Mar
2023
Oral evidence
7 Mar
2023
Formal meeting (oral evidence session) · Room 8, Palace of Westminster
7 Feb
2023
Correspondence
7 Feb
2023
Correspondence
7 Feb
2023
Correspondence
Oral evidence sessions 5 sessions
21 Mar 2023
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Adam Bell · Stonehaven Adam Berman · Energy UK Laura Sandys CBE · Energy Digitalisation Taskforce Rachel Fletcher · Octopus Energy
7 Mar 2023
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Akshay Kaul · Ofgem Alice Delahunty · National Grid Electricity Transmission Basil Scarsella · UK Power Networks (UKPN) Chris Burchell · Scottish and Southern Electricity Networks (SSEN) Distribution Claire Dykta · National Grid Electricity System Operator (ESO) Kayte O’Neill · National Grid Electricity System Operator (ESO) Lawrence Slade · Energy Networks Association (ENA) Rebecca Barnett · Ofgem
24 Jan 2023
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Dame Sue Ion Dr Jonathan Radcliffe · University of Birmingham Dr Paul Dorfman · Nuclear Consulting Group (NCG) and Associate Fellow, Science Policy Research Unit (SPRU), Sussex Energy Group, University of Sussex Lincoln Hill · Nuclear Industry Association Merlin Hyman · Regen (Electricity Storage Network) Nick Lawson · Ocean Wall Sarah Honan · The Association for Decentralised Energy Will Mezzullo · Centrica
22 Nov 2022
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Catherine Raw · SSE Thermal Dr Daniel Quiggin · Chatham House Dr Nina Skorupska CBE · REA Matthew Williamson · British Petroleum (bp) Olivia Powis · The Carbon Capture and Storage Association Phil MacDonald · Ember Sandy Hore-Ruthven · Severn Wye Energy Agency Will Gardiner · Drax
1 Nov 2022
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Chris Hewett · Solar Energy UK Dan McGrail · Renewable UK Dr David Joffe · Climate Change Committee Guy Newey · Energy Systems Catapult James Richardson · National Infrastructure Commission Richard Arnold · Marine Energy Council Robert Buckley · Cornwall Insight Tom Glover · RWE Generation
Title HC No. Published Items Response
Eleventh Report - Decarbonisation of the power sector HC 283 28 Apr 2023 65 Responded
Recommendations & Conclusions
15 results
Clear
1 Conclusion Accepted
Eleventh Report - Decarbonisation …
Intensify government's unrelenting drive to deliver "Powering Up Britain" decarbonisation plans.
To deliver the Government’s target to decarbonise the power system by 2035, the UK needs to deploy low-carbon technologies at a faster rate than has been achieved historically. A whole host of regulatory and policy barriers continue to impede the … Read more
Government Response
The government will report annually on its delivery of power sector decarbonisation and strengthen its portfolio management approach to provide a 'whole system' view and manage uncertainties.
Department for Business and Trade
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2 Conclusion Accepted
Eleventh Report - Decarbonisation …
Empower the Department for Energy Security and Net Zero to coordinate stakeholders and accelerate delivery.
The level of coordination and pace of delivery needed requires the Government to operate in a different way than it has in the past. We welcome the creation of the new Department for Energy Security and Net Zero, but that … Read more
Government Response
The government outlines its overall energy strategy for 2035, referencing existing plans like the Net Zero Strategy and Energy Security Plan. It describes the overall goal and existing strategies but does not detail how the new Department for Energy Security and Net Zero will specifically operate differently to coordinate stakeholders and accelerate delivery as recommended.
Department for Business and Trade
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7 Recommendation Accepted
Eleventh Report - Decarbonisation …
Introduce tailored capital allowance regime responses to attract investment in low-carbon energy projects.
The UK has become less attractive to energy investors. The UK is in a global race against larger markets to attract capital to decarbonise the economy. The US and EU have introduced a series of long-term tax incentives for clean … Read more
Government Response
The government launched the Floating Offshore Wind Manufacturing Investment Scheme (FLOWMIS), worth up to £160 million, on March 30, 2023, to provide grant funding and leverage private investment in port infrastructure.
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41 Conclusion Accepted
Eleventh Report - Decarbonisation …
Inadequate grid network capacity and connection delays are hampering low-carbon power delivery.
A lack of network capacity and delays to securing grid connections are together hampering the delivery of low-carbon power and driving potential investments overseas. For too long, transmission and distribution network owners have been able to delay or avoid the … Read more
Government Response
The Electricity System Operator (ESO) acknowledges the need for investment in its systems and details its ongoing Open Balancing Program to modernise balancing capabilities and IT platforms, aiming to increase flexibility and market participation for a net-zero electricity system. This describes internal ESO work rather than directly addressing systemic network capacity issues or Ofgem's investment approach.
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42 Conclusion Accepted
Eleventh Report - Decarbonisation …
Accelerate investment in future grid capacity ahead of need to prevent generation curtailment costs.
We join many other organisations from across the sector in calling on Ministers, Ofgem and network owners to help recover lost ground by accelerating investment in future grid capacity now ahead of need. The increasing costs associated with turning off … Read more
Government Response
The government details how Ofgem's RIIO-ED2 price control, which commenced in April 2023, along with measures like LV monitoring capacity and the DSO incentive, aim to unlock network capacity and support smart technologies. This response outlines existing or recently implemented policies rather than new commitments to accelerate grid investment ahead of need.
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47 Recommendation Accepted
Eleventh Report - Decarbonisation …
Require Ofgem to ensure RIIO-ED2 mechanisms enable distribution network investment for low-carbon rollout.
We recommend that when a need for investment in the distribution network becomes clear, Ofgem ensures the uncertainty mechanisms included in the RIIO-ED2 framework are applied efficiently. Should these prove inadequate to respond to a rapid roll-out of low-carbon technologies, … Read more
Government Response
Ofgem states that its RIIO-ED2 framework already provides effective uncertainty mechanisms, including a Reopener mechanism, and an ability to accelerate investment for rapid low-carbon technology rollout, thus addressing the recommendation through existing provisions.
Department for Business and Trade
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49 Recommendation Accepted
Eleventh Report - Decarbonisation …
Network owners continue to be overly rewarded through current regulatory settlements.
Regulatory settlements for network owners must deliver value for money for consumers. Despite improvements from Ofgem in tackling excessive profits made by these companies in previous price control frameworks, we are concerned that network owners continue to be overly rewarded. … Read more
Government Response
The government states that Ofgem's current price controls (RIIO-ED2 and RIIO-T2) already include stringent efficiency targets, lower allowed returns, and mechanisms to share outperformance with consumers, addressing concerns about value for money and excessive profits. They also highlight funding for data and digitalisation to improve network visibility.
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54 Recommendation Accepted
Eleventh Report - Decarbonisation …
Mandate Ofgem to pressure the ENA and DNOs for faster Open Networks Programme implementation.
At present, flexibility markets are disjointed and difficult to navigate, impeding the participation of small assetsand reducing the value of distributed flexibility. While Ofgem should be commended for its proposals for a single digital flexibility platform, this should not distract … Read more
Government Response
Ofgem strongly agrees with the need for faster progress, stating it is driving DSO capabilities through incentives and working closely with the ENA and DNOs to ensure the Open Networks programme is delivered at pace.
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56 Recommendation Accepted
Eleventh Report - Decarbonisation …
Mandate Ofgem to intervene on DNO visibility standards and monitor 'Flexibility First' adherence.
In future, data and visibility will be key to ascertaining whether network reinforcement or an alternative, such as procuring flexibility services, would be most cost effective for consumers. But there has been insufficient investment in monitoring capability at low voltages … Read more
Government Response
Ofgem agrees with the recommendation, stating it has approved £167.54m for Distribution Network Operators (DNOs) to roll out Low Voltage (LV) network monitoring. Ofgem also clarifies that its DSO incentive framework within RIIO-ED2 includes evaluation criteria and a new smart optimisation output to monitor DNO performance in developing flexibility and using smart solutions.
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58 Recommendation Accepted
Eleventh Report - Decarbonisation …
Ensure wholesale electricity market reforms avoid an investment hiatus, protecting the 2035 target.
We agree that the wholesale electricity market arrangements need reform to help decarbonise power in a way that secures supply and ensures the system can function efficiently, including more locational signals. In principle, we find the argument for locational pricing … Read more
Government Response
The government confirms it is actively reviewing electricity market arrangements (REMA), with a second consultation due in Autumn 2023. It has updated its assessment criteria to include "Investor Confidence" and explicitly commits to ensuring that renewable generation investment is not unduly affected by any reforms.
Department for Business and Trade
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59 Recommendation Accepted
Eleventh Report - Decarbonisation …
Provide a clear pathway on wholesale market arrangements evolution by Government before end 2023.
We recommend that the Government provides before the end of 2023 a clear pathway on how wholesale market arrangements will evolve following its consultation. There are a number of constructive steps that the Government could make to the existing market … Read more
Government Response
The government aims to publish a second consultation on the Review of Electricity Market Arrangements (REMA) in Autumn 2023. This consultation will set out a direction of travel and next steps for the evolution of wholesale market arrangements.
Department for Business and Trade
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60 Recommendation Accepted
Eleventh Report - Decarbonisation …
Add explicit net zero duty to Ofgem's remit and publish updated Strategy and Policy Statement.
Even though we urged the Government to publish its already very delayed Strategy and Policy Statement for Ofgem back in July 2022, it has still not materialised. We recommend that an explicit duty to deliver on the statutory net zero … Read more
Government Response
The government published its consultation on the Strategy and Policy Statement for Energy Policy in May 2023 and is content to amend Ofgem's existing duty to explicitly reference the net zero targets from the Climate Change Act 2008.
Department for Business and Trade
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61 Conclusion Accepted
Eleventh Report - Decarbonisation …
Future System Operator's roles, responsibilities, and powers lack clarity.
The Future System Operator (FSO) is expected to provide strategic oversight of the planning and coordination of the power system, but there is a still a lack of clarity over its specific roles, responsibilities and powers, as well as how … Read more
Government Response
The government outlines that the FSO will have necessary powers via the Energy Bill, with Ofgem regulating its functions, performance, and funding. It commits to creating and publishing a framework agreement to clarify roles between ministers, Ofgem, and the FSO, with the FSO aiming to be operational in 2024.
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62 Recommendation Accepted
Eleventh Report - Decarbonisation …
Grant Future System Operator sufficient powers and resources, including clear net zero directive.
The Future System Operator (FSO) should be granted sufficient powers and resources to effectively plan and co-ordinate the transformation of the electricity system. The FSO should be given a clear net zero directive within its governance arrangements. In response to … Read more
Government Response
The government confirms the FSO will have a net zero objective enshrined in the Energy Bill, aims for the FSO to be operational in 2024, and will publish a framework outlining institutional responsibilities between Ministers, Ofgem, and the FSO. It also notes the select committee will be able to invite FSO leadership to sessions.
Department for Business and Trade
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63 Conclusion Accepted
Eleventh Report - Decarbonisation …
Policy and regulatory barriers impede power sector decarbonisation by 2035 target.
While huge strides have been made by the Government and industry over the last decade to tackle emissions in the power sector, the UK must continue to accelerate its shift away from fossil fuels to clean energy. However, a suite … Read more
Government Response
The government acknowledges the benefit of a more overarching approach and commits to annual reporting on decarbonisation delivery. It will also strengthen its portfolio management to adopt a "whole system" view across its delivery work.
Department for Business and Trade
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Government Response AI assessment · 65 of 44 classified
Accepted 15
Accepted in Part 2
Acknowledged 5
Deferred 43
Total 44 recs + 21 conclusions
Correspondence 14 letters
25 Apr 2023 To committee Letter from TotalEnergies relating to the decarbonisation of the power sector inquiry, 19 December 2022
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25 Apr 2023 To committee Letter from Shell UK relating to the inquiry on the Decarbonisation of the power sector, 06 March 2023
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21 Mar 2023 To committee Letter from UK Power Networks relating to network losses, 14 March 2023
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7 Feb 2023 To committee Letter from Chair of Equinor relating to the Decarbonisation of the power sector inquiry, 08 December 2022
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7 Feb 2023 To committee Letter from BP relating to the Decarbonisation of the power sector inquiry, 20 December 2022
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7 Feb 2023 To committee Letter from Harbour Energy relating to the Decarbonisation of the power sector inquiry, 05 December 2022
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10 Jan 2023 To committee Letter from REA relating to evidence session on biomass in the power sector, 8 December 2022
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6 Dec 2022 To committee Letter from the Chair to Shell regarding decarbonisation of the power sector, 29 November 2022
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6 Dec 2022 To committee Letter from the Chair to Equinor regarding decarbonisation of the power sector 29 November 2022
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6 Dec 2022 To committee Letter from the Chair to Harbour Energy regarding decarbonisation of the power sector, 29 November 2022
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6 Dec 2022 To committee Letter from the Chair to Total Energies regarding decarbonisation of the power sector, 29 November 2022
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6 Dec 2022 To committee Letter from the Chair to BP regarding decarbonisation of the power sector 28.11.22
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17 Oct 2022 From committee Letter to the Secretary of State for Business, Energy and Industrial Strategy relating to regulation of energy markets, dated 16 October 2022
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13 Oct 2022 From committee Letter to the Secretary of State for Business, Energy and Industrial Strategy regarding the proposed Cost-Plus Revenue Limit and the voluntary Contract for Difference (CfD) scheme within the new Energy Prices Bill dated 13 October 2022
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