If it is to deliver, GB’s National Energy System Operator must quickly form new relationships across the energy sectors and with regional stakeholders. Julian Leslie, director of strategic energy planning, spoke to Janet Wood about the challenge

From Summer 2024, GB’s energy sector will have a new ‘guiding mind’ in the National Energy System Operator (NESO). In replacing the electricity system operator it will have to ensure that the energy system is fit for a much expanded role in a ‘Net Zero’ economy, delivering a ‘whole energy system’ for the future encompassing not just electricity but gas, and potentially heat, hydrogen and carbon dioxide.
Julian Leslie is the new body’s director of strategic energy planning. He says, “once you have this independent body you really can be the glue that sits at the heart of the whole energy transition”. NESO’s decisions will be independent of government (and free of any perception around NGESO as a National Grid subsidiary that it would favour new networks over a market solution).
He says “because we do not make money from doing one thing over another … the decisions we make will be in the best interests of the priorities of the government and the priorities of the regulator and protecting consumer value.” The company will be regulated on being efficient and on delivering its outcomes but as a ‘not for profit’ it will not have financial incentives and “we are still working through the fine detail of what that regulatory relationship will be like.” But he thinks it will be more responsive, “if we can see an opportunity to accelerate decarbonisation or save consumers money, we should be able to make a business case that shows that benefit and undertake the work.”
The NESO will be responsible for the real-time operation of the electricity system, as it is today, but not of the gas system because it has a different risk profile and the implication on the HSE safety case if we were to split the owner and maintainer of the asset in the gas network from the real-time system operation”. However NESO will be the long term network planner for gas transmission and it will be designing new markets for gas, hydrogen and other vectors.
I ask whether NESO can be truly agnostic on energy vectors, given it is evolving from the electricity ESO.

We don’t want to be an electricity business with a bit of gas stuck on the side

Leslie says, “It’s one of the key things we are conscious of. We don’t want to be an electricity business with a bit of gas stuck on the side.” He says that input is necessary, so when different futures for the system are modelled “you can see by the modelling the impact that decision has on the electricity networks, the methane network, on the potential hydrogen networks of the future. So we are really baking that in from day one.”

Stakeholder engagement
Leslie says, “Timescales are tight” for NESO’s first deliverables. “We have committed that the first whole energy system network transmission network plan will be delivered at the end of 2026. Working back, we need to have a Strategic Spatial Energy Plan (SSEP) in place by mid 2025, … so that work really starts now.”
He expects that a commission from government for the SSEP will start to have some indication of policy decisions around GB’s future energy networks and, for example, the scale of large nuclear, hydrogen of offshore wind. He says, “We can use that to build a range of potential network options, thinking about environmental, community cost and deliverability issues”. Following the SSEP “we need to do Strategic Environmental Assessment [SEA], so there will be a national consultation on the SSEP, then following the results and the conclusion of all that we will publish the first SSEP, which will be endorsed by government at some point in 2025.”
Late last year the new company was also given responsibility to set up and work through Regional Energy System Planners (RESPs) and there is less clarity over the next steps for the these. “Ofgem are very clear that this was initial thoughts and that most of the design process hadn’t been done. They wanted to do it in collaboration with us, but also other network operators and local authorities, metro mayors, etc. We are very much in that detailed design phase with the regulator bringing in stakeholder views to understand how this process could and should be shaped”. But he is conscious that the electricity distribution network operators (DNOs) will be considering plans for the price control period from 2027 – and gas distribution networks (GDNs) are writing business plans now.
These groups will have to be public-facing and Leslie says “we need to grow that capability” because at the moment there are very few people who can talk knowledgeably about what the whole of the new NESO is doing. He says, “If we are in one region talking about a regional energy plan, we’ll also need to be talking about the spatial plan along with the recommendations to build a new substations and lines.” Along with the RESPs responsibilities, the NESO’s strategic market position has to be made clear to all the stakeholders.

Regional plans
Leslie says, “The regional energy system plan won’t be a full set of regional plans but it will be providing a lot of the inputs into that next [DNO] price control. So we need to have a common set of input assumptions, and a common set of outcomes that we are looking to achieve by region that the DNOs can feed into their price control submission”. Leslie says, these type of whole-system planning roles “don’t exist in GB, therefore we have the opportunity to build them on a whole energy system basis from the ground up”.

“The regional energy system plan won’t be a full set of regional plans but it will be providing a lot of the inputs into that next [DNO] price control”

Another of the NESO’s new roles is the Resilience and Emergency Management (R&EM) – a co-ordinating role across the energy vectors to ensure security of supply. Leslie explains, “in the past there was a separate ‘Winter Outlook’ [consultation] for both the gas and electricity networks, NGESO will need to look at availability of generation, the price and availability of gas and other security elements. R&EM “is bringing all of that together, so we know we will meet security of supply in all the elements across all the vectors.”
I suggest resilience in gas and electricity present different challenges, such as maintaining pressure in the gas network against declining use. Leslie says the NESO will be “thinking about what investments you need in the long term such that you can operate the system under all conditions. As we pick up the gas planning and network development roles, this will be a key outcome of those plans to ensure that the gas network remains as reliable as it is today under all future conditions.”

Other changes in gas network use may include transporting hydrogen: “and how long a tail does methane have in this process?”

“How long a tail does methane have?”

Leslie talks about the whole system again: “One of our big questions as NESO about the gas transmission network is can you start to repurpose some of those big pipelines for the transport of hydrogen or the transport of carbon dioxide.” If it can be technically achieved, NESO’s role will be to determine the economic benefit compared with other options. Similarly, is it better to pipe hydrogen or transport electricity and produce hydrogen close to where it is needed?

New roles at the NESO
The new organisation clearly needs gas specialists. Leslie’s team will nearly double, adding 100 people to deliver strategic spatial energy planning and the regional energy system planning. But Leslie says, “We also need – as we haven’t before – the environmental and stakeholder personnel. SEA is a public consultation with the nation and to make the plan that we finally deliver acceptable to the public they want to be brought on the journey and communities have to have their voice heard.”
The same is true of RESPs. There are existing Local Area Energy Plans (LAEPs) designed by elected authorities in each region “and we have to respect decarbonisation strategies and whatever else is out there. So a lot of this is about collating data and information that is already there. We are working now on a strategy that will build GIS capability that can suck in all this regional locational-specific information and present it back to the analysts and engineers and whoever needs to look at it to see how all this stuff starts to fit together.”
That has to be digital-first, because there will be around 13 regions across Britain all of which will pull in data from councils, developers, energy networks and other sources. Leslie says, NESO will not duplicate work but instead – at the regional level especially – add co-ordination and collaboration, along with common input assumptions and the common output assumptions as to what the region is trying to achieve. He cites as an example a GDN investing in fully hydrogen for domestic heating in the same area a DNO is investing for full electric heat, where that doubling of investment is not required.
The RESPs’ other function will be to read back forth between and regional and national plans and feed back areas of over or under investment. Leslie says the NESO may be able to tell one region it can slow down, for example on CCS, because another will deliver national targets. “No-one is doing that centralised co-ordination today, to bring all that together.” He adds, “Once we are in it it will be a continuous cycle of updating, and reflecting back up and down, but obviously doing the first one will be a challenge.”
The NESO will soon start to recruit for RESPs and Leslie says “I want this to be regional people in the regions working for NESO”. He wants quickly to have two or three people in each region building relationships, for example with Mayors. He cites his experience with one industrial cluster where “there is no co-ordination, and no-one has any decision-making authority” to direct energy network expansion – a power he hopes the RESP will have. He suggests that as with transmission, where the SO makes a recommendation to build and the regulator makes the allowances available, he hopes the RESP over time “can start to make some of those investment decisions” if it sees a network’s plan makes economic sense and it fits in with the broader strategy for the region.
He is not yet sure where decisions would be made: “There has to be regional decisions made by regional people, but sat in that broader framework and consistent with the national plan.”

“I want this to be regional people in the regions working for NESO”

The RESPs’ relationships with local stakeholders will clearly be crucial and Leslie says “We don’t want to have the GDN in the door one day, DNO the next, then us the next day asking what the plans are. We need to be efficient with this because there are so many stakeholders with so many drivers.”
He insists NESO will not duplicate anything already happening, “And if it is a predominantly electrification thing and the DNO is already has a great relationship with whoever is there, like an industrial park, we will rely on that.”
Via RESPs, NESO could be talking to a very large number if stakeholders. Where does it draw the line? “That’s something we need to continue to work on. At a minimum level you could work with the DNOs, GDNs…. and it is ‘job done’. But that isn’t going to give you the whole value so where do you go from there? How do we get our own knowledge?” He believes that will become clear over time “because we will grow, we’ll see the people engage with us more as they see the benefits.”
He says, “We are not going to be doing street level planning. But we can and we will be saying ‘based on what we know …’. In mid Wales there are no gas pipes and there are not going to be any. The decision is already made – it will be electrification – so the only question is over what time period and what is the level of generation that will connect”. Similarly, what does it mean that Leeds wants to be a hydrogen city, and does a city like London need district heat and heat pumps? He says, “it’s about understanding the implications”.”
He says, “At the moment regions are frustrated because they have big plans but not the means to make it happen because they don’t control the funding, the prioritisation of the network companies.” In future, he hopes “the RESP can say it agrees with the need for an investment and ask Ofgem to do what is necessary to allow it to be built”.
Can the NESO deliver this? It has to, says Leslie. “This can only be successful if it makes a difference.”