7th November 2023
The Energy Act is a significant step forward for the UK’s energy future. It aims to ensure that the UK has a secure, affordable, and clean energy system to meet the needs of the future.
The legislation has several key objectives, including:
Commenting on the new Act, Jonathan Brearley, Ofgem CEO, stated: “We welcome the Energy Act getting Royal Assent. It is the most significant energy legislation for a decade and a world-first in giving us a legal mandate targeting net zero. It gives Ofgem the powers to drive through the energy transition – unlocking investment, accelerating planning, and building the infrastructure the economy needs. This will give us security from volatile world gas markets and end our dependency on fossil fuels”.
In relation to the Energy Savings Opportunity Scheme (ESOS), the Act, as we had anticipated, makes provision to reduce the de minimis site audit requirement from 10% to 5%. In addition, there is a new requirement to include an overall energy intensity ratio in ESOS reports and the reporting of carbon as well as energy savings. Unfortunately, the other changes to ESOS will not be clarified until new guidance is published in the next few months, so ESOS submissions cannot currently be finalised but the implementation of identified energy-saving opportunities is to be encouraged and facilitated.
As the world gears towards a net-zero future, the UK’s energy sector needs longer-term certainty to stay competitive globally and garner investment. The Energy Act marks a significant step forward in building a modern energy system that meets evolving demands on the sector. It introduces innovative business models, enhances customer protections, and lays the groundwork for sustained investment across the energy sector. While further efforts are needed to implement the frameworks enabled by this Act fully, it serves as a solid foundation for the future of the UK’s energy market.
Some of the key specific measures included in the Energy Act:
The Energy Act may be a complex piece of legislation, but it is clear that it has the potential to make a major impact on the UK’s energy future. It is now up to the government, Ofgem, and the energy industry to implement the Act effectively and to ensure that it delivers on its objectives. We will leave others to judge whether the more liberal regime regarding oil and gas exploration licenses announced in the King’s Speech is compatible with the net zero intent addressed in the Energy Act.
Key benefits for businesses
Your business can prepare for this new law by reviewing your energy strategy and identifying areas where you can improve efficiency and reduce costs, seeking out government support schemes to help with energy efficiency and renewable energy projects, and staying informed of the latest developments in the Energy Act and related regulations.