Ofgem Consultation: Future of local energy institutions and governance

As the energy system undergoes the transition to net zero, we will see accelerated decarbonisation and decentralisation of generation and demand. Accommodating the transformation of the ways we generate electricity, heat our homes and power our vehicles will require changes to how the energy system is planned and operated at the sub-national level.

To deliver this transition effectively, it is imperative that key energy system functions are performed by institutions with the competence, appropriate skillset and incentives to drive net zero at least cost, and that there is clear accountability and coordination. These changes are in flight at the national level, and must also be reflected at the local level.

In April 2022, we launched a review into the effectiveness of institutional and governance arrangements at a sub-national level to support delivery of net zero at least cost, and the case for alternative approaches. The responses to the Call for Input and subsequent workshops engagement validated our understanding of the issues and demonstrated a strong case for change to governance arrangements.

This consultation is the next step in that review. It provides an initial appraisal of our proposals and explores the next level of detail on key choices for design and implementation. We are seeking input and views from stakeholders on:

  • the proposed future institutional and governance arrangements and the extent to which our proposals are proportionate and targeted to the most pertinent issues.
  • the key design and implementation choices.
  • data respondents may have which will inform our full impact assessment of these reforms.

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