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National Grid to lose national electricity role

Electricity pylons

The National Grid, which has maintained Great Britain’s electricity network for more than three decades, is to be replaced in its role of balancing supply with demand by an independent operator under new government plans. What’s behind the move?

National Grid will be replaced

After more than thirty years serving as the energy system operator for England, Scotland and Wales, it was recently announced that National Grid plc would be replaced in one of its major roles under new government plans to make Britain’s electricity supply “fit for the future”.

The action is to be taken on the advice of the energy regulator Ofgem, which has said that allowing National Grid plc to keep its role in balancing the electricity grid would create a “conflict of interests” because it also owns the network.

Jonathan Brearley, the chief executive of Ofgem, explained this further by giving an example. “Imagine you have 10 million electric cars on the system,” he said. “You could manage this in two ways:

One way is to build a much bigger and higher capacity network. Equally you could have a smarter and more efficient system that begins to shift the times that those different cars charge, which could be a lot cheaper overall for customers. Asking a company which builds networks to make that kind of trade-off is the sort of thing we’re concerned about in the future.

It’s a strong argument and, to be clear, the decision wouldn’t mean that National Grid plc will cease to exist. The company would still own and maintain the electricity network, but it would no longer play a role in balancing the supply and demand of Britain’s energy. Instead, a new operator would make recommendations to Ofgem and the government on helping the UK reach its net zero emissions goal while saving consumers up to £4.8 billion between 2022 and 2050.

Plans part of wider energy overhaul

world in hands

The plans to replace the National Grid in this role are part of a wider strategy to integrate green technologies such as electric cars and smart appliances into the UK’s energy system. It’s believed that this could save a total of around £10 billion by 2050 and create up to 10,000 jobs, according to government estimates.

Above all, it seems that electric cars are at the heart of this new legislation, with new regulations intended to make it easier for them to export electricity from their batteries back to the grid or to their owners’ homes when they want to. They could also push for large-scale, long-duration batteries that will help store renewable energy for when renewable generation levels are low.

Acting chief executive of Citizens Advice Alistair Cromwell has spoken in support of this new legislation, particularly the replacement of National Grid plc, saying that the move is in consumers’ interest:

This should lead to lower bills and an efficient transition to net zero. But the new independent system operator - as advocated by Ofgem - needs to have the right structure, responsibilities and capabilities to enable it to make the best decisions for all of us.

National Grid itself also came out in cautious support of the announcement, with a spokesperson saying that it would “work closely” with Ofgem and the government during the transition but added that “significant further work” would be necessary to determine the structure of the organisation that would replace it.

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