Just ten months after National Grid ESO became a legally separate entity (on 1 April 2019) Ofgem has set out the terms of reference for a planned review of the electricity system operator that could see fundamental change.

The regulator has brought forward the review from 2020/21, because of governemt’s new ‘Net Zero’ target – and because the August blackout “underlined the importance of having a proactive System Operator that is able to adapt to the complex and changing world it operates in”, Ofgem said.

Ofgem has also expanded the scope of the review to include a full assessment of both gas and electricity system operation. It aims to publish a report for government within weeks, with a road map for change.

Ofgem said it would identify alternative options for System Operation arrangements, including  a review of models overseas and in  other relevant sectors.

The review will:

• Set out the roles, functions and capabilities System Operators will need to perform to respond to the challenges of the net zero target at least cost to consumers.
• Review the effectiveness of current arrangements for System Operation including functions, ownership and governance and assess the case for change.
• If appropriate, identify a range of alternative options to current arrangements, including combined gas and electricity models, by reviewing international models and relevant learning from other sectors.
• Provide an assessment of the suitability of the options identified and, if appropriate, routes for implementation.
• Explore the potential risks and benefits of key options and what, if any, incremental steps may be required were they to be implemented.

See more details here

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