The Energy Act 2023 is a historic piece of legislation in the UK. The aiming of The Energy Act is to transform the energy system for a sustainable future. It received Royal Assent on 26 October 2023, and is designed to enhance energy security, promote net-zero emissions, and ensure long-term affordability for households. It’s expected to save consumers up to £1 billion off their energy bills by 2050.

Key inclusions in the Energy Act include:

Net-zero remit for Ofgem

The act includes a provision for regulator Ofgem to have a net-zero remit. This means Ofgem is mandated to consider the goal of achieving net-zero emissions in its regulatory decisions, aligning with the UK’s climate targets.

Heat transition

Ofgem is now the official regulator for heat networks in the UK. This is a crucial development as heat networks serve around 0.5 million buildings and will play a pivotal role in reducing fossil fuel boiler use.

Carbon Capture and Storage (CCS)

While not the principal purpose of the act, it outlines important steps for scaling up carbon capture and storage technologies.

Hydrogen

The act introduces measures to fast-track the introduction of a business model for hydrogen transport and storage. The government targets 10GW of domestic hydrogen production capacity, with at least 5GW being renewable, by 2030.

Nuclear energy

The act aims to increase the UK’s nuclear capacity to up to 24GW by 2050, utilizing a combination of large projects and Small Modular Reactors (SMRs). It grants power to designate a new publicly owned company, great British nuclear, to oversee the government’s involvement in nuclear projects.

Aviation fuel

The act supports the UK’s jet-zero strategy, targeting net-zero emissions for domestic flights by 2040 and international flights by 2050. It introduces mechanisms for Sustainable Aviation Fuel (SAF) producers to ensure a reduction in emissions.

Community energy

While there was a push to include clauses supporting community-owned renewable energy projects, the act ultimately does not provide new support for community energy initiatives.

Cost efficiency

The act emphasizes cost efficiency, introducing measures to increase competition in onshore electricity networks. This is expected to save consumers up to £1 billion on energy bills by 2050.

Merger regime for energy networks

A specific regime will be established to regulate mergers between energy network companies, safeguarding consumers and potentially saving households up to £420 million over the next decade.

Energy smart appliances

The act encourages the use of energy smart appliances with a focus on safety. This move is expected to reduce system costs by up to £10 billion annually by 2050.

Expansion of Ofgem’s remit

Ofgem’s authority now extends to cover heat networks, allowing for better pricing and service quality for approximately 0.5 million consumers.

Consumer protections and frameworks

The act introduces new consumer protections and frameworks, incentivizing the heating industry to invest in low-carbon heat pumps and supporting the smart meter rollout by 2028.

Conclusion

Overall, the Energy Act 2023 marks a significant milestone in the UK’s efforts to transition to a more sustainable and resilient energy system, with measures spanning across various key areas of the energy sector.