The Energy Act 2023 received Royal Assent and was enacted on 26 October 2023. It is a hefty piece of legislation – 335 sections, 22 Schedules, 473 pages – described by the government as “the biggest piece of energy legislation in the UK’s history”.

In this initial post, I am not aiming to do more than to provide a road map through some of the key areas. In future posts I will probably come back to specific areas in more detail.

As originally introduced, the Explanatory Notes stated that –

“The aim of the Bill is to help increase the resilience and reliability of energy systems across the UK, support delivery of the UK’s climate change commitments and reform the UK’s energy system while minimising costs to consumers and protecting them from unfair pricing.

To enable this, the Bill is structured around three key pillars:

Leveraging investment in clean technologies.
Reforming the UK’s energy system and protecting consumers.
Maintaining the safety, security and resilience of the energy systems across the UK.”

The new Act will increase competition in onshore electricity networks with a new tender process. It will introduce a specific merger regime for energy networks under the Competition and Markets Authority. It has provisions to reinforce Energy Smart Appliances. Ofgem’s responsibilities will be expanded to cover heat networks. There are new frameworks for heat pumps and smart meters.

Ofgem will be required to take net zero targets into account in its decision taking. There are provisions for the regulation of hydrogen testing, a licensing scheme for CO2 transport and storage, and a first outline of fusion regulation. A new regulator the Independent System Operator and Planner, a.k.a. the Future System Operator, will be given responsibilities for the gas and electricity networks. There are some significant changes for civil nuclear operators.

Part 1

LICENSING OF CARBON DIOXIDE TRANSPORT AND STORAGE

This Part defines the principal objectives and principal duties of the Secretary of State and the economic regulator (Ofgem) for this area. It introduces a framework of licensing for Carbon Dioxide Transport and Storage, complete with a system of appeals to the Competition and Market Authority from decisions by the economic regulator.

It provides for competition, and for reporting requirements and taking account of a CCUS (Carbon Capture Usage and Storage) strategy and policy statement. There is a separate Special Administration Regime for transport and storage operators.

Part 2

CARBON DIOXIDE CAPTURE, STORAGE ETC AND HYDROGEN PRODUCTION, TRANSPORT AND STORAGE

Part 2 introduces a system of Revenue Support Contracts for Carbon Dioxide Capture, Storage and Hydrogen Production, Transport and Storage. It makes provision for revenue support counterparties, and for a hydrogen levy.

Chapter 2 provides for the Decommissioning of Carbon Storage Installations. Chapter 3 sets out the status of the Strategy and Policy Statement. Chapter 4 covers Carbon Dioxide Storage Licenses, and Chapter 5 Carbon Storage Information and Samples.

Part 3

LICENSING OF HYDROGEN PIPELINE PROJECTS

Part 3 modifies the existing regime for gas transporter licences to cover hydrogen pipeline projects.

Part 4

NEW TECHNOLOGY

Part 4, on New Technology, covers Low-carbon heat schemes, Hydrogen Grid Conversion Trials and powers to regulate Hydrogen, Fusion energy, and Renewable and sustainable fuel, including recycled carbon fuel and nuclear-derived fuel. There is a revenue certainty scheme for sustainable aviation fuel producers, and renewable liquid heating fuel obligations.

Part 5

INDEPENDENT SYSTEM OPERATOR AND PLANNER

Part 5 sets up and designates the new Independent System Operator and Planner (also called the Future System Operator). This body, regulated by licence by GEMA, is to be responsible for ‘planning the development of the electricity and gas transmission systems and operation of the electricity transmission system.’

Part 6

GOVERNANCE OF GAS AND ELECTRICITY INDUSTRY CODES

Part 6 revises the provisions for the governance of gas and electricity codes, and makes provision for code managers and code manager licences. These are technical reforms that will not set many pulses racing outside the industries themselves, where they will be recognised as significant.

Part 7

MARKET REFORM AND CONSUMER PROTECTION

Part 7 introduces revisions (in section 202) to the principal objectives of the Secretary of State and the Gas and Electricity Markets Authority (GEMA) which is the supervisory body for the gas and electricity regulator Ofgem. Ofgem is to be given new oversight of codes and markets with revised duties on consumers and competition. The duties will now require both the Secretary of State and Ofgem to take specific account of the Net Zero targets in the Climate Change Act 2008.

This Part also contains provision on multi-purpose interconnectors, support for energy-intensive industry and electricity storage.

Part 8

HEAT NETWORKS

Part 8 sets out a regulatory framework for heat networks, and provides for regulations about Heat Network Zones and a Heat Network Zone Authority.

Part 9

ENERGY SMART APPLICANCES AND LOAD CONTROL

Part 9 will overhaul the regulations applying to Energy Smart Appliances and load control. It will also allow for the licensing of load control. It is expected to set requirements for electric heating appliances and electric vehicle (EV) charge points.

Part 10

ENERGY PERFORMANCE OF PREMISES

Part 10 updates and revises powers to make regulations about the energy performance of premises. These are expected to link energy performance more directly to the UK target for net zero greenhouse gas emissions by 2050.

Part 11

ENERGY SAVINGS OPPORTUNITY SCHEMES

Part 11 allows for the establishment and application of Energy Savings Opportunities Schemes, with the assessment, scheme regulation and financial assistance to scheme administrators and participants.

Part 12

CORE FUEL SECTOR RESILIENCE

Part 12 defines “core fuel sector activity” and introduces powers to direct core fuel sector participants and to regulate this part of the energy market. This is aimed at regulation and ensuring fuel supply resilience for crude-oil based fuel and renewable transport fuels.

Part 13

OFFSHORE WIND ELECTRICITY GENERATION, OIL AND GAS

Part 13 defines “relevant offshore wind activity” and makes provision for strategic compensation for adverse environmental effects.

It also introduces revised arrangements for responding to marine oil pollution and for reducing effects of offshore oil and gas activities on marine habitats.

Part 14

CIVIL NUCLEAR SECTOR

Part 14 introduces changes to the Nuclear Installations Act 1965 (NIA 1965). For civil nuclear sites there are relevant changes to decommissioning, and significant powers to implement the Convention on Supplementary Compensation for Nuclear Damage.

The Explanatory Notes for the Bill as originally introduced make it clear that the intention is to extend the NIA1965 regime and regulation by the Office for Nuclear Regulation (ONR) to any nuclear sites located wholly or partly in or under the territorial sea, in case that applies in future to any Geological Disposal Facility for radioactive waste. Decommissioning of sites is to be brought into line with the delicensing and ending of nuclear third-party liability applicable elsewhere, to enable earlier delicensing. Fusion would be regulated separately from and outside the regime of the NIA 1965.

The part establishes a new body, Great British Nuclear, with revised objects (section 319) and makes financial and governance provisions for its establishment.