UK: Energy Independence Bill introduced to Parliament

The Energy Independence Bill has been introduced in the House of Commons, setting out the next steps in the government’s plan to ensure a secure, resilient and homegrown energy system. For energy market participants and investors, there are wide-ranging measures aimed at removing barriers to building more clean power generation and grid infrastructure in the UK.

Key proposals in the Bill include:

• Reformed national pricing: new, temporary powers for the Secretary of State and Ofgem to modify electricity licences and industry codes. Such modifications may relate to the reform of arrangements for network charging, the balancing system or electricity trading and are aimed at facilitating the delivery of the various levers to implement reformed national pricing.
• Transmission of electricity: a new procedure allowing the Secretary of State to grant, vary or revoke onshore and offshore transmission licence exemptions by ministerial direction, rather than by statutory instrument. The aim is to speed up the exemption process for onshore transmission licences, in particular to facilitate alternative delivery models (such as CATOs) while maintaining consultation and regulatory oversight.
• H2P: the legislative framework to drive forward hydrogen-to-power as one of only a small number of technologies capable of providing low-carbon dispatchable generation. The policy expectation is that projects are initially selected through an allocation round, followed by bilateral contract negotiations. Over time, the Bill provides flexibility for the introduction of a more competitive process, such as an auction, and standard contract terms similar to those used in existing CfD allocation rounds.
• OFTO Generator Commissioning Clause: offshore wind developers and OFTOs are given greater certainty about the time within which transmission assets need to be transferred by linking the start date of the 27-month period to the beginning of Ofgem’s tender exercise, rather than the issue by NESO of a completion notice.
• Strategy and growth: a new goal of supporting economic growth, including investment and innovation in the GB energy market, is placed alongside consumer protection and net zero as principal regulatory objectives. Enhanced provisions relating to NESO’s adherence to government strategy and policy align with the increasing move towards centralisation of system planning and operation.

Among other things, the Bill also:

• sets out the framework for the Warm Homes Plan, key to reducing consumer energy bills and increasing uptake of clean technology such as heat pumps;
• improves planning and consenting processes to facilitate grid upgrades;
• removes the North Sea Transition Authority’s power to grant new oil and gas licences and requires it to take into account not only economic value but also net zero and the impact of the energy transition on those affected; and
• requires operators of new onshore wind and solar projects over 5 MW to enter into a legally binding local community benefit agreement.

Please get in touch if you would like to discuss how the Bill impacts your business.