MPs have passed what the government calls the “biggest piece of energy legislation in the UK’s history” with new rules designed to increase competition in the sector and incentivise low-carbon measures.
The Energy Act 2023 will introduce a new tender process for electricity networks that the Department for Energy Security and Net Zero (DESNZ) said will see consumers save up to £1bn off their energy bills by 2050.
A new regime for overseeing mergers in the energy sector will also be created in an effort to minimise the risk that they will have detrimental effects on consumers.
There are also new measures to prioritise safety for smart energy appliances that help consumers lower their energy usage at peak times.
Ofgem is being given an expanded remit to oversee heat networks, allowing the regulator to set rules on excessive pricing and improve the quality of service.
The Act includes new frameworks that incentivise the heating industry to invest in low-carbon heat pumps, and includes powers to deliver the smart meter roll-out by 2028, which could generate total bill savings to households of £5.6bn, DESNZ claims.
Energy security secretary Claire Coutinho said: “The Energy Act is the largest piece of energy legislation in a generation. It will boost investment in clean energy technologies and support thousands of skilled jobs across the country.
“It lays the foundations for greater UK energy independence, making us more secure against tyrants like Putin, and helps us to power Britain from Britain.
“The Act also supports our new approach to make sure that families don’t feel a disproportionate financial burden as we transition to net zero, and forms a central part of our efforts to keep people’s bills affordable in the long term.”
The Act also gives Ofgem a mandate to support the government’s net zero efforts including new powers to accelerate planning decisions, build infrastructure and bolster innovation in the sector.
In particular, the regulator will have a new remit to further the proliferation of hydrogen transport and storage by helping with market barriers, high upfront costs and a new licensing framework for CO2 transport and storage to help deliver the UK’s first carbon capture sites.
Ofgem CEO Jonathan Brearley said: “We welcome the Energy Act getting Royal Assent. It is the most significant energy legislation for a decade and a world first in giving us a legal mandate targeting net zero.
“It gives Ofgem the powers to drive through the energy transition – unlocking investment, accelerating planning and building the infrastructure the economy needs. This will give us security from volatile world gas markets and end our dependency on fossil fuels.”
Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.