Government reaches agreement to take National Grid owned ESO into public ownership

The UK government is to buy the electricity system operator (ESO) from National Grid for £630m. Under the deal ESO will be transferred into public ownership to create the new National Energy System Operator (NESO), an independent, public corporation responsible for planning Britain's electricity and gas networks.

The agreement paves the way for Britain’s energy system to be planned by a single publicly owned organisation, this is the first time a single organisation has strategic planning responsibility across both gas and electricity. Government says the move is key to its new and more strategic approach to accelerate its “clean power mission” and “help deliver clean power by 2030.”

Currently, there is no single body responsible for overseeing the strategic planning and design of the country’s electricity and gas networks. NESO is designed to fill this gap – breaking down the siloes which currently exist between the planning of electricity and gas systems, with independent oversight for the design of all the country’s energy networks.

Furthermore long delays in connecting new and renewable generation capacity to the grid are frequently cited as a major blocker to the country’s challenging net zero transport ambitions.

Set to come into being on 1 October, NESO, working alongside Great British Energy, will be responsible for connecting new generation projects with the electricity grid.

NESO will be chaired by former E.ON chief executive Dr Paul Golby, with Fintan Slye taking on the chief executive role.

Energy Secretary, Ed Miliband, said, “This marks a milestone for Britain’s energy system as we bring the system operator into public ownership to provide impartial, whole-system expertise on building a network that is fit for the future. 

“The new National Energy System Operator has a huge role to play in delivering our mission to make Britain a clean energy superpower. 

“We need to move Britain off expensive, insecure fossil fuel markets, and onto clean, cheap homegrown power that we control. This is how we reduce bills in the long term, strengthen our energy independence and support skilled jobs across the country.”

The government believes the changes will enable investors to build out new energy infrastructure with confidence in how their project will fit into the country’s wider clean energy plan.

Paul Golby, Chair of the National Energy System Operator said, “NESO will support a more integrated and coordinated strategy to meet the unprecedented challenges of climate change, ensuring security of energy supply and keeping bills as low as possible.

“NESO brings together critical roles and responsibilities under one roof, creating an environment that is essential for success. We will have a broad strategic oversight of both the electricity and gas systems, managing system planning, market operations, and ensuring that our energy infrastructure is secure, resilient, flexible, and future-proof.”

The National Energy System Operator has been established through powers under the Energy Act 2023. This sets out the responsibilities of the new public body to maintain the UK’s energy supplies, protect energy consumers and plan for an efficient clean energy system that is fit for the future. 

As part of this, NESO will take a cross-sector approach to planning the country’s energy system “in the best interests of the British public” - looking across electricity, gas and hydrogen, as well as renewable generation, storage and other emerging technologies like carbon capture usage and storage. The independent organisation will map out the country’s future energy networks – helping both the government and Ofgem make informed decisions when considering new infrastructure, speeding up grid connections and progressing the UK’s net zero goals.

Jonathan Brearley, Chief Executive of Ofgem, said, “The setup of NESO is a huge step forward in ending Britain’s exposure to volatile energy markets and getting clean, renewable power to every single one of us.

“Its work is central to long-term energy security and to running the system day to day. We look forward to working with NESO to ensure Britain gets the clean power system it needs at the lowest possible cost to consumers and taxpayers.”

John Pettigrew, Chief Executive of National Grid, said, “We look forward to working together with NESO to continue to drive the UK’s energy transition forward at pace; accelerating the decarbonisation of the energy system for the digital, electrified economies of the future.”