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Government to nationalise key part of National Grid


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7th April 2022

Government to nationalise key part of National Grid
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New Government plans will nationalise to help Britain reach its targets for climate change. 

The job of keeping the UK’s electricity and gas flowing will be returned to public control by 2024. The plans come following a government announcement to nationalise a division of National Grid.

The utility company will sell its Electricity System Operator (ESO) arm to the government. It will then become part of a new Future System Operator (FSO).

Future System Operator


The Business Department confirmed it would create a publicly owned “future system operator”. This will take on the main responsibilities for managing Britain’s electricity system currently carried out by National Grid.

Kwasi Kwarteng, business secretary, described the overhaul as “vital” for reaching the UK’s 2050 net zero emissions target. He also said it was vital “to becoming energy independent in the long-term”.

Jonathan Brearley, chief executive of energy regulator Ofgem, said: "A fully independent system operator will help to transform Great Britain's energy system and cut customers' energy bills.

"Critically, the FSO will ensure that we will build a smart, efficient and flexible system that will mean that Britain moves to a secure, low-carbon and low-cost system.”

Net Zero

The government announced its plan for the UK to cut emissions to net zero by 2050 but the goal will require major change.

The government's Office for Budget Responsibility estimated the total investment of public and private money needed will be £1.4trn to 2050. However, it added this sum will be offset by more than £1trn in savings as a result.

The government did not say how much it would cost to renationalise the unit. It stated National Grid would be "appropriately compensated".

Subsea Cables

National Grid owns electricity and gas pipes and wires in Britain. In recent years it has been developing a number of subsea cables to trade power with the rest of Europe.

The net zero plan will need a lot of extra electricity as electric cars gradually replace their petrol and diesel predecessors.

National Grid boss John Pettigrew said: "We have been working closely with government, industry and the regulator to create a Future System Operator that enables long-term holistic thinking, drives progress towards net-zero, and lays the foundations for the regulatory reform necessary to deliver a clean, fair and affordable energy transition."

 

Jonathan Brearley, Chief executive of energy regulator Ofgem, said:

“A fully independent system operator will help to transform Great Britain's energy system and cut customers' energy bills.

"Critically, the FSO will ensure that we will build a smart, efficient and flexible system that will mean that Britain moves to a secure, low-carbon and low-cost system.”

 

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 In numbers:

» Net Zero emissions- planned target by 2050.

» £1.4trillion - expected investment to 2050.

» £1trillion - savings expected.

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