Major shake-up ushered in for UK energy sector as Energy Act receives Royal Assent
The Energy Act 2023 has received royal assent and passed into Law. The Act represents a wide-ranging set of changes aimed at updating the legal framework for the UK's energy sector. It aims to drive policy goals of decarbonisation and increased system efficiency, while maintaining security of supply and affordable pricing.
The measures put into law by the Act are expected by Government to create significant savings for energy users, stimulate thousands of new jobs in the energy sector, and unlock private investment into UK energy assets.
The Act is wide ranging in scope, with changes that will impact across broad sections of the energy industry – including:
- New tender processes for offshore wind projects to increase competition and drive down the costs to consumers.
- A new merger regime for energy network companies to ensure active competition in the nation's energy infrastructure.
- Measures to drive forward the roll-out of smart meters and increase consumer engagement and confidence with new digital technologies and services in the energy industry.
- Regulation of heat networks under the oversight of Ofgem.
- Mechanisms to provide funding and a legal framework for the growing hydrogen industry in the UK.
- A licensing regime for the transport and storage of carbon dioxide to set a framework for the delivery of UK carbon capture and storage sites.
It also seeks to create regulatory certainty in other areas – an example being defining Energy Storage as a subset of generation in primary legislation – thereby aligning the regulatory position with the electricity licencing regime and helping alleviate regulatory uncertainty over the treatment of Energy Storage assets.
Joshua Partridge a Partner specialising in the energy sector observed:
"As the UK has moved towards a low-carbon energy future, the UK's legal and regulatory framework has at times lagged behind technological advancements. This has created uncertainties and potential barriers to investment and deployment of novel technologies and services.
"While focussed progress has been made in key areas in recent years, the Energy Act 2023 represents a more holistic and wide ranging set of changes to update the functioning of the UK's Energy industry. Hopefully it lays the foundations for true progress in the UK's drive towards a more sustainable, efficient and affordable energy system for all."
Trowers will be delving deeper into the Act in coming weeks with a series of articles focussing on specific measures it puts in place.