The upcoming National Energy System Operator (NESO) has faced criticism from the Association for Decentralised Energy (ADE) for its outdated practices.
The ADE argues that these methods, inherited from the previous Electricity System Operator (ESO), are slowing the UK’s shift to clean energy by 2030.
The ADE’s report highlights that NESO’s approach favours large energy generators over smaller, flexible technologies.
This could limit the adoption of low carbon solutions and result in costs of £14.1 billion annually by 2040.
The current market setup does not fully account for consumer behaviour or demand-side flexibility, potentially leading to higher costs and a slower transition to cleaner energy, according to the report.
Caroline Bragg, Chief Executive Officer of the ADE, said: “This report lays bare the uncomfortable truth: NESO is not just behind schedule; entrenched practices are undermining the very future it is supposed to protect.
“Parliament, government and Ofgem must act swiftly to overhaul NESO’s operational framework.
“Among the key recommendations are a formal parliamentary inquiry into NESO’s performance to ensure it can deliver clean power by 2030.
“Government needs to give clear directives for NESO to inspire cultural transformation and draw attention to consumer-driven demand-side participation.”
A Department for Energy Security and Net Zero told Energy Live News: “The NESO will play a crucial role in preparing the UK to reach clean power by 2030, including considering opportunities to embrace new technology, reducing demand and benefiting consumers.
“A new regulatory framework overseen by Ofgem will hold this new public organisation accountable while ensuring it can form a culture of transparency and leadership within the industry.”
An ESO spokesperson said told Energy Live News: “The ESO is committed to opening up markets and maximising competition for the benefit of consumers as we drive towards more flexibility in our energy system.
“Transforming Great Britain’s complex energy system and embracing the power of flexibility of all shapes and sizes is, as the ADE sets out, no small feat.
“We recognise that there is more progress to be made but Great Britain is a leader in flexibility, with the fastest decarbonising grid in the G7.
“As we move forward, the establishment of NESO will be instrumental in helping to navigate the complexities of our evolving energy system to achieve our net zero and energy security goals.
“Our world-leading Demand Flexibility Service resulted in millions of households engaging with consumer flexibility for the first time, which the ADE’s report credits as projecting flexibility into the mainstream.
“Moving demand for things like heat and transport away from the peak we can make the whole system cheaper, building less power stations and less network – a huge win for Great Britain.
“We are steadfast in our commitment to delivering a flexible, clean, green grid for the future – while also ensuring that we maintain the security and integrity of the system at all times.
“We are engaging comprehensively with flexibility providers to develop the advice that NESO will be providing to the government on the pathways to reaching clean power by 2030 and in the near future we will be publishing a new flexibility markets strategy.
“Both of these plans are being developed in consultation with stakeholders and we welcome all engagement.”
Energy Live News has contacted the Department for Energy Security and Net Zero for comment.
