With geopolitical challenges, fluctuating prices, and policy changes impacting energy security alongside the push to decarbonise, it's clear the UK energy industry has been in its fair share of turbulent waters in recent years.

But despite these challenges, it's not all doom and gloom - with three major shifts coming into view that have the potential to move the challenging landscape identified in our recent 2024 energy outlook survey report. These changes signify opportunities for resilience and innovation, steering the UK towards a more sustainable future.

1. NESO - the new top dog

The Energy Act 2023 is a real revolution in the energy world leading the transformation of the energy sector in the UK. The Act creates a new fully independent system operator and planner (the future system operator or FSO) to transition to the future net zero energy system while reducing relevant costs.

This operator finally got a name in January - the National Energy System Operator (NESO). The public corporation will be an independent expert organisation supporting transparency and fairness in the industry. NESO will be responsible for coordination across the whole energy system while taking into account the links between energy vectors and the wider network.

NESO will likely be fully operational this summer, with a colossal recruitment process in progress, along with setting up the corresponding policies, relationships, and structures needed to tackle these goals – all in the next six months.

Bringing NESO to life is the crucial component that will enable the following two major and interrelated shifts: the Strategic Spatial Energy Plan and the Regional Energy Strategic Planners.

2. Tidying up energy infrastructure with a strategic spatial energy plan

Following UK Electricity Network Commissioner Nick Winser's report on Accelerating electricity transmission network deployment the Government last year gave the green light to all fifteen recommendations to shorten the construction of grid infrastructure from fourteen to seven years. While all the recommendations are important, I believe the introduction of a Strategic Spatial Energy Plan (SSEP) is of particular significance.

The SSEP will be a holistic integrated plan bringing together power production and transmission. It will identify in advance what individual projects are needed, including when and where. While the first iteration of the plan will cover only onshore and offshore generation assets and hydrogen, the SSEP will eventually evolve to a whole energy system plan.

As Winser explains in his report: 

“A SSEP will forecast the supply and demand characteristics and their likely whereabouts. It will also be an opportunity to explore the characteristics and potential effect of digitalisation of the energy system which will be such a critical component of the transformation.”

While strategic or special spatial plans are familiar in parts of Europe, this is a first for the UK. The SSEP will accelerate planning and licensing of assets with a view to letting renewable energy projects connect to the grid quicker.

Not only will the SSEP take a rounded view of national infrastructure needs in a cost-efficient way, but it will assess early in the process where we need to build new infrastructure as well as what the impact will be on communities and on the environment. The SSEP as a strategic plan will go through an onshore and offshore strategic environmental impact assessment, and plan-level Habitats Regulation Assessment. These procedures will let industry and government engage with the public early before any final decisions on individual projects, with a view to reducing objections and corresponding proceedings. The SSEP will go further and consider the best way to involve communities, so they are heard throughout the process of producing the plan. This is going to give the industry a head start, and support them to avoid unnecessary costs associated with adapting new infrastructure designs and potential compensation measures.

Public opposition has resulted in years of delays in the past - you only need to look at the proposed power line between the Highlands and Central Scotland that took a decade to build to see that. With oversight of potential problems, early intervention, and thorough consultation ahead of the case-by-case basis, the SSEP is going to reduce some of the lengthy – watching paint dry - delays in planning and consenting.

3. Local problems need local solutions

No two places in the UK are the same, from diverse dense cities to rural peaks with limited infrastructure, energy solutions need to hold a mirror up to this landscape. And while the SSEP addresses energy infrastructure at national/transmission level in a top-down approach, the introduction of the Regional Energy Strategic Planners (RESPs) goes the other way around at local/distribution bottom-up level. NESO will also deliver this role.

Ofgem's decision last November envisages in practice that NESO together with local stakeholders will produce local spatial energy plans bringing the missing consistency and coherence in regional energy infrastructure. Creating localised, democratic, holistic, and strategic thinking is the name of the game with RESPs – these planners will understand what resources and infrastructure is already available in an area which will kick-start future planning decisions.

Ofgem's decision provides for the creation of ten to thirteen RESP regions with the borders of each nation being respected. This makes sense as each area has different needs, geography, and existing infrastructure which need to be considered. While coastal areas could access offshore wind or tidal energy generation, other regions may have energy from waste (EFW) facilities which could be connected to heat networks. Areas will be empowered to take a contextual approach to planning, this will also support the UK join up the dots with other pieces of infrastructure like the EV charging network, heat pumps, and more. To achieve this, a governance mechanism of the process will ensure democratic accountability in line with several good governance principles: trust, transparency, adaptability, accessibility, representation to name a few.

While the details of how RESPs will interact with the SSEP are still under consideration, there is little doubt that the two plans are part of the wider strategic planning function of the NESO. This is a great beginning for a coherent, coordinated, and holistic design of the UK's present and future energy system.

These three big shifts, with NESO leading the way, actions to produce the first SSEP already underway, and the introductions of RESPs, I believe will shape the UK energy industry in the next decade. They open some rewarding opportunities for innovators in the sector, and I’m looking forward to supporting those movers and shakers make things happen.