The Future System Operator (FSO) will be tasked with establishing a series of Regional Energy Strategic Planners (RESPs) across Great Britain, Ofgem has confirmed.
Working with local government and networks, the bodies will create strategic plans setting out how energy systems in each region should be developed to meet national net zero targets, whilst also taking into account local needs and resources.
There will be between 10 and 13 in total – one in Wales, one or two in Scotland and eight to 10 in England. In the case of England, Ofgem said the regions could be aligned with sub-national transport bodies.
The creation of RESPs was proposed in a consultation in March in which Ofgem referred to them as Regional System Planners. The regulator said the new name better reflects their intended function.
Each body will develop a strategic regional energy plan that is “spatial in nature, cross-vector in scope and sets the direction for infrastructure investments – particularly in network capacity”.
Ofgem added: “This should ensure investment is made when and where it is needed, in anticipation of future requirements, and support the delivery of decarbonisation at all levels of the energy system.”
As such, the regulator said the role will include arbitration and conflict resolution where are trade-offs between vectors such as electricity and gas.
Proposed boundaries in England
Network companies will remain responsible for detailed network planning, but this must align with the regional plans, which will inform Ofgem’s funding decisions when setting price controls. The formalisation of these arrangements will be consulted upon as part of the development of the RIIO ED3 price controls.
The regulator said it recognises there are “varying levels of capacity and expertise” across local authorities, “with some areas having highly developed local energy plans, others in the initial stages or with limited activity”. The RESPs will therefore support local authorities in providing input to the development of regional plans, for example, by furnishing them with tools and data. They will also help other local actors to participate in the process.
Ofgem has also decided to proceed with another of its proposals from the March consultation – the creation of a “market facilitator” to lead, coordinate and monitor the development of local and national flexibility markets.
Among the other things, the market facilitator will make decisions on common rules, standards and processes, which distribution network operators (DNOs) and the FSO will be required to adopt to align arrangements between markets.
It will monitor their adoption to ensure they are implemented on time and as intended, and report back to Ofgem so it can determine whether any compliance or enforcement actions are necessary. It will also assess how they work in practice to identify any issues and inform further decisions.
The market facilitator will additionally monitor developments across policy, regulation, innovation and energy markets to identify challenges, opportunities and risks that may require intervention. It will provide advice to the government and Ofgem on necessary policy or regulatory changes.
Ofgem said it is still of the opinion that the FSO, which is due to be established next year, is best placed to fulfil this role, although Elexon also remains a credible option. The regulator said it will make a final decision on this matter in early 2024. It is aiming for the market facilitator to go live by late 2025/early 2026, or sooner if possible.
Later this month, Ofgem chief executive Jonathan Brearley will meet with metro mayors across England to discuss local and regional energy planning, including the role of RESPs. Commenting on the latest announcement, Brearley said: “The creation of the Future System Operator gives us a once in generation opportunity to design the energy system we need to get us to net zero.
“We’re already working on future energy network planning on a national level and creating Regional Energy Strategic Planners means this can also now happen at a regional level.”