Guidance

Energy Security Bill overarching factsheet

Updated 1 September 2023

Why are we legislating?

As the world has emerged from the COVID-19 pandemic, global demand for energy has risen significantly – this has been exacerbated by Putin’s malign invasion of Ukraine. As a result, the wholesale price of gas has reached historically high levels.

To protect households from the full impact of rising prices, the government acted swiftly to help families and businesses across the country, including through the Energy Price Guarantee and Energy Bill Relief Scheme.

But secure, clean and affordable energy for the long term depends on the transformation of our energy system. The government recently published ‘Powering Up Britain’, which brings together our Energy Security Plan and Net Zero Growth Plan to set out how we will ensure the system is fit for the future, achieve net zero by 2050 and boost economic growth. Together, these set out a pathway to greater energy independence through the deployment of low carbon technologies.

The government’s landmark Energy Bill is essential to this transformation. As the most significant piece of energy legislation in a generation, the Bill will provide a cleaner, more affordable, and more secure energy system.

How the Bill will achieve this

Leveraging private investment in clean technologies and building a homegrown energy system

Over the last decade the UK has built one of the most diverse energy systems in the world but previous governments have historically failed to make these investments which has left us in the current situation. The Bill will deliver on key commitments to drive an unprecedented £100 billion of private sector investment by 2030 into new British industries and supporting around 480,000 clean jobs by the end of the decade.

Accelerate the growth of low carbon technologies

We will introduce state of the art business models for carbon capture usage and storage (CCUS) and hydrogen, attracting private investment by providing long-term revenue certainty. Together with the measures on CO2 transport and storage, this will put the country on a path to seize market share and grow the economy.

Enable the set up and scale up of the CO2 and hydrogen transport and storage networks

Alongside enabling the delivery of business models for hydrogen transport and storage, the Bill will establish the economic regulation and licensing framework to ensure successful deployment of CO2 transport and storage networks.

Enabling enhanced knowledge sharing across the CCUS industry

This will support the effective regulation and utilisation of the UK’s geological storage potential and its key role in helping to achieve our net zero ambition.

Taking further steps to explore the role for hydrogen to heat our homes and workplaces

We will enable the delivery of a large village hydrogen heating trial by 2025, providing crucial evidence to inform strategic decisions in 2026 on the role of hydrogen in heat decarbonisation.

Scale up heat pump manufacturing and installation, and a new white goods industry in the UK

We will establish a market-based mechanism for the low-carbon heat industry to step up investment and lower the cost of electric heat pumps, through economies of scale and innovation.

Facilitate the delivery of new nuclear

Government’s ambition is to ramp up nuclear energy capacity in the UK up to 24GW by 2050. Great British Nuclear will help us scale up our nuclear programme and match global competition.

Take the next big leap on the technology of the future with fusion regulation

We will make the UK the first country to legislate for fusion, providing clarity on the regulatory regime for fusion energy facilities.

Accelerate the decarbonisation of UK transport

To help fulfil our net zero goals, the government will further incentivise the use of low carbon fuels in transport by extending the eligibility of renewable transport fuel orders to include recycled carbon fuels and nuclear derived fuels. These can replace fossil fuels, like petrol and diesel, while providing similar carbon emissions savings to the renewable fuels already considered under these schemes.

Reforming our energy system to protect consumers from unfair pricing.

The last piece of primary energy legislation of this scale was the Energy Act 2013. Almost 10 years later we need to ensure that this Bill accounts for the current global context.

Enhancing our network security with a new system operator, which will boost energy resilience

We will establish a Future System Operator, an independent body with responsibilities in both the electricity and gas systems, ensuring efficient energy planning, enhancing energy security, minimising cost to consumers and promoting innovation.

Creating more competition in our electricity networks to deliver bill savings

We will enable competition in onshore electricity networks, delivering up to £1 billion savings by 2050.

Protect consumers from increasing network prices in the event of energy network company mergers

We will enable the Competition and Markets Authority to review any relevant energy network company mergers under the Energy Network Special Merger Regime. We estimate this could save energy consumers up to £420 million over 10 years.

Protecting consumers from cyber threats with new protections for smart appliances

We are taking powers to deliver appropriate protections for consumers and the grid by placing requirements on energy smart appliances.

Helping consumers manage their energy use and cut their bills to help with the cost of living

We are continuing to drive industry progress on the smart meter rollout which is set to deliver a £6 billion net benefit to society.

Enabling innovation and gearing our system toward net zero

We will reform energy codes, overhauling the way that the technical and commercial rules of the energy system are governed.

Reducing the number of cabling, landing points, and substations

We will introduce multi-purpose interconnectors as a licensable activity, we are providing certainty to investors and developers, enabling them to make decisions regarding future multi-purpose interconnector projects.

Removing obstacles to innovative batteries and pumped hydro storage

We will facilitate the deployment of electricity storage, such as batteries and pumped hydro storage, by clarifying it as a distinct subset of electricity generation.

Creating a more equal and fair energy market

We will enable the government to establish a buy-out mechanism under the Energy Company Obligation scheme for suppliers.

Ensure families living on heat networks are better protected

By appointing Ofgem as the new regulator for heat networks in Great Britain, we will ensure consumers get a fair price and a reliable supply of heat.

Kick-starting the development of heat networks

By enabling heat network zoning in England, we will overcome barriers to deployment by identifying areas where they provide the lowest cost solution to heating buildings.

Taking back control of powers given to the EU on the energy performance of buildings

The Bill will provide a replacement power to enable the UK government to amend the EU-derived Energy Performance of Buildings regime going forward.

Strengthen the Energy Savings Opportunity Scheme

Improving the quality of the scheme’s audits and disclosures by businesses across the UK. This will include actions by the business to deliver more energy bill and carbon savings and it will provide powers to expand the scheme to include net zero elements in audits and more businesses.

Accelerating deployment of offshore wind to meet the BESS 50 gigawatts ambition, whilst continuing to protect the marine environment

We are seeking to establish and Offshore Wind Environmental Improvement Package, which will include tailoring the Habitat Regulation Assessment process, deliver strategic compensation and introduce a new Marine Recovery Fund.

Back key UK industries to boost competitiveness and long-term resilience, including steel and chemicals

Delivering on the ‘British Industry Supercharger’, we will ensure that Energy Intensive Industries (EIIs) remain profitable by compensating them for a portion of their network charging costs.

Ofgem net zero duty

Amending the existing duties of the Gas and Electricity Markets Authority (the governing body of Ofgem) by including reference to the net zero targets and 5-year Carbon budgets in the Climate Change Act 2008 will require the regulator to consider how their decisions may assist the Secretary of State in meeting the government’s net zero targets.

Ensuring the safety, security and resilience of the UK’s energy system.

The responsible operation of the UK energy system is crucial for our safety and security. That is why the Bill will bring forward measures relating to core fuel resilience, nuclear and the offshore oil and gas sectors.

Protect our fuel resilience from malicious action

We will bring forward measures for downstream oil security (such as oil terminals and filling stations) to prevent fuel supply disruption, such as from industrial action, malicious protest and for reasons of national security.

Boost British nuclear by removing barriers to investment

The British Energy Security Strategy is clear that nuclear is an important part of the UK’s energy mix. The Bill will remove potential barriers to future investment by enhancing our nuclear third-party liability regime.

Prepare for our nuclear future and clean up the past

The Bill will also facilitate the safe, and cost-effective clean-up of the UK’s nuclear sites, ensuring the UK is a responsible nuclear state by clarifying that a geological disposal facility located deep below the seabed will be licensed.

Making our oil and gas sector fit for the future to ensure high standards

Our oil and gas sector will continue to play an important role in ensuring security of supply. This Bill will enable existing legislation to be updated ensuring that the offshore oil and gas environmental regulatory regime maintains high standards in respect to habitats protection and pollution response.

Ensure responsible ownership of our UK assets

The Bill will ensure that the UK’s oil and gas and carbon storage infrastructure remains in the hands of companies with the best ability to operate it.

Protecting taxpayers by maximising cost recovery

In line with the polluter pays principle, the government will be able to more fully recover the costs associated with regulating offshore oil and gas decommissioning activities from the industry.

Simplifying regulatory frameworks

This Bill will bring forward the final delicensing and re-use of nuclear sites. It will allow more proportionate clean-up of these sites, resulting in estimated savings of around £490 million (NPV) over the first 20 years, with similar savings up to 2080.

Strengthen the Civil Nuclear Police’s powers to help keep Britain safe

This Bill will introduce legislation to enable the Civil Nuclear Constabulary to utilise their expertise in deterrence and armed response to support the security of other critical infrastructure sites.

Bringing Nuclear Decommissioning Authority pensions in line with the majority of the rest of the public sector