At the start of the 21st century, Great Britain’s energy delivery systems looked in good shape. The electricity network was delivering energy from centralised nuclear and gas stations. Contributions from elderly coal stations were gradually being replaced by new renewables projects, supported by flexibility from pumped storage plants. All bid into a single Great Britain market covering the Scottish, Welsh and English landmass, enabled by a 400 kV and 275 kV transmission network. Meanwhile, the gas grid reaches four-fifths of household consumers, and in the previous decade several LNG import terminals had been added to its existing North Sea import terminals, allowing for more diversity of supply. (Northern Ireland, while part of the UK, has separate energy markets with limited interconnection with Great Britain.)

That was before the energy world changed. Some changes were headline news: the UK met the urgency of addressing climate change by committing to an economy with ‘net zero’ carbon emissions by 2050. Other changes were more obvious within the industry: so-called ‘distributed’ energy technologies began to roll out across Great Britain, some low-carbon (such as onshore wind and solar), some of them low-cost (such as small gas engines which could respond quickly to grid fluctuations) and some adding fast flexibility (with a rush to build batteries). The owners and operators of these plants wanted new ways to buy and sell electricity and gas, as well as other services required to keep energy flowing, and this was made possible by digital technologies.

In this fast-evolving world, Great Britain’s electricity networks were no longer fit for purpose. New physical infrastructure, governance and market structures were required. This change has been incremental and slow to support decarbonisation. Now the government has decided to try to cut through barriers with a new delivery body, the National Energy System Operator (NESO). The government-owned organisation will have responsibility for market design, long-term plans and strategy for both gas and electricity – and will continue to be the ‘real-time balancing’ market operator for electricity.

‘Once you have this independent body, you really can be the glue that sits at the heart of the whole energy transition,’ says Julian Leslie, Director of Strategic Energy Planning and Chief Engineer at the Electricity System Operator (ESO), which will transition to become the new NESO. His vision extends beyond the grid to the whole energy system, building on the independent system operator (ISO) model to bring in more of the energy vectors, to bring in the energy network solutions – looking at the methane gas network and at potential roles and opportunities in hydrogen and CCUS (carbon capture, utilisation and storage) networks.

A new system
What has to change? First on the list is expansion of the electricity transmission network. Its biggest-capacity cables are in the wrong place, designed to bring power from onshore conventional plants instead of from large offshore assets like wind farms. The network has to be expanded and redesigned for huge new power flows.

Leslie explains: ‘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 in place in 2025.’ That will be the subject of national consultation and finally endorsed by government.

A second major area of change relates to the effect of decarbonisation on the future of the gas networks. With the net zero target in place, there have been suggestions that gas networks would be phased out and the heating load switched to high-efficiency electric options (such as domestic heat pumps). But some assets important to the low-carbon agenda rely on the gas network, such as local combined heat and power (CHP) plants, or distributed gas engines. What is more, direct heat would also continue to be required for some industries. As a result, other voices have proposed that, instead of being decommissioned, the network should be converted to carry hydrogen – potentially also using it to replace domestic natural gas.

In the past the electricity and gas transmission networks were deeply interdependent. Although both were owned by subsidiaries of National Grid, they were operated blind of each other. Now, as NESO emerges from the electricity network operator, gas expertise is needed. Leslie elaborates: ‘We need to be thinking about what investments you need in the long term, such that you can operate the system under all conditions.’

He points out that unexpected things occur as gas use declines. For example, ‘you might need more assets, like compressors, to make sure that you are getting the gas to where it needs to be at the time you need it, because you don’t get the natural flow as you do today where everyone is taking gas’.

A third area of change is using market solutions for the’ busiest times’ instead of building new networks. When the government looked at the operation of energy networks, it realised that although huge investment was required to meet new network needs, it could limit the investment – and the disruption and environmental effects – by seeking to create a ‘smart’ responsive and flexible system. Instead of planning to install new, bigger, networks to accommodate the maximum possible demand.

If price signals could be used to get business and domestic consumers to think about when and how they use energy, especially electricity, it could cut the cost and disruption for everyone. This might be achieved by market solutions, such as by offering credit to customers if they retimed power use from periods when cables were overloaded to times when they were underused.

Part of the NESO rationale is in direct contrast to the notion that being a subsidiary of an asset owner meant there could be ‘a perception that the system operator would always favour an asset-based solution over a market solution’ says Leslie. At the new NESO, in contrast: ‘We are not trying to sell a product; we don’t make a product; we do not make money from doing one thing over another. Therefore, the decisions we make will be in the best interests of the priorities of the government, the priorities of the regulator, and protecting consumer value.’

He adds: ‘In electricity, we run and operate those real-time and ancillary markets, and on the gas side we will be designing new markets for gas and potentially hydrogen. They will run in close to real time.’

‘We are not trying to sell a product; we don’t make a product; we do not make money from doing one thing over another. Therefore, the decisions we make will be in the best interests of the priorities of the government, the priorities of the regulator, and protecting consumer value.’ – Julian Leslie, Director of Strategic Energy Planning and Chief Engineer at the Electricity System Operator (ESO)

The distribution network
Low-voltage networks are not directly part of the NESO’s remit, but they also have to evolve. Most do not have enough capacity to accommodate additional distributed assets like solar photovoltaic (PV) farms and onshore wind, nor to manage increased power flows to new asset classes like electric vehicle chargers and power flowing in the ‘wrong’ direction (flowing ‘up’ to the transmission grid, as large groups of small generators combine, as well as flowing ‘down’ from large sources to local users).

Local distribution network operators own and operate those networks, and are introducing local markets to make the best use of the infrastructure. Still, the NESO will influence them, and ensure its national planners have broad visibility of low-voltage developments, because it will also develop and co-ordinate regional strategic plans.

When NESO goes live this summer, it will be ‘breaking new ground in Great Britain’ as a fully-integrated whole energy system operator with responsibility for whole energy network design and market design. It’s a huge task, requiring a holistic view. While someone in his position might be tempted to post job advertisements for whole-system energy planners, Leslie points out: ‘You can’t find them anywhere in the world – they don’t exist. Therefore, we have the opportunity to build them on a whole energy system basis from the ground up.’

Unique in its system operator role across different energy vectors, the new organisation is far from alone in making a shift towards looking at energy from a ‘whole system’ point of view. The Energy Institute itself has covered the entire global energy spectrum since it was formed in 2003 by a merger of the Institute of Petroleum and the Institute of Energy. While whole system experts may be thin on the ground at the moment, once it starts operating, NESO could set the direction of travel for the future energy industry.

• Further reading: ‘Repurposing infrastructure for the energy transition.’ Repurposing existing infrastructure such as pipelines to transport alternative fuels such as CO₂ or hydrogen can help accelerate the transition while reducing cost and waste. However, this is not without its challenges, explain the EI’s Technical Manager, CCUS, Eva Leinwather and Technical Officer, Energy Transition, Chimwemwe Kamwela.
• Find out more about the blueprint to decarbonise the UK’s electricity grid, with some £58bn of grid investment proposed to move offshore wind power ‘to where it is needed’ and meet the nation’s growing demand for electricity by 2035.