Preparing Great Britain’s gas system for transition
What does the future hold for gas networks, and how should that affect the regulatory framework around them in the short term? Ofgem’s Jack Presley Abbott gives his view.
Great Britain’s gas system is entering a period of transition as the economy decarbonises. On one of the coldest days last winter, Great Britain (England, Scotland and Wales) used 407 million cubic metres of gas. That’s four times more that the average daily demand seen over the summer. Yet overall demand is declining as our energy system decarbonises.
While the pace and end-state of that decarbonisation remain uncertain, gas will continue to play an important role in:
- keeping homes warm
- supporting industry
- underpinning energy security for many years
Managing that transition successfully will require the regulatory framework to evolve alongside the energy system. The gas regulatory framework is the rulebook for how Britain’s gas network operates, and our role is to ensure that framework remains fit for purpose throughout this transition. We must maintain security of supply, support strategic planning and ensure costs are allocated fairly.
By Jack Presley Abbott, director of energy systems management & security, Ofgem
By Jack Presley Abbott, director of energy systems management & security, Ofgem
Great Britain’s gas system is entering a period of transition as the economy decarbonises. On one of the coldest days last winter, Great Britain (England, Scotland and Wales) used 407 million cubic metres of gas. That’s four times more that the average daily demand seen over the summer. Yet overall demand is declining as our energy system decarbonises.
While the pace and end-state of that decarbonisation remain uncertain, gas will continue to play an important role in:
- keeping homes warm
- supporting industry
- underpinning energy security for many years
Managing that transition successfully will require the regulatory framework to evolve alongside the energy system. The gas regulatory framework is the rulebook for how Britain’s gas network operates, and our role is to ensure that framework remains fit for purpose throughout this transition. We must maintain security of supply, support strategic planning and ensure costs are allocated fairly.
Supporting strategic energy planning
Britain is moving towards a more strategically planned energy system. As major decisions on electricity, gas and hydrogen infrastructure are increasingly guided by wider system planning, it's right to ask whether the rules governing the gas system are keeping pace.
But how should gas network capacity be allocated when multiple organisations want to connect? This question is coming into sharper focus as strategic energy planning becomes more important. Interest from data centres seeking gas connections has highlighted the growing need for clarity on who gets access to capacity and on what basis.
Our call for input on gas connections and access arrangements explores whether gas connections should be better aligned with strategic energy planning, building on the principles underpinning recent electricity connections reforms. The recent growth in proposed data centres demonstrates why these questions matter. It also highlights the need for arrangements that can support growth while remaining aligned with wider system objectives.
Without clear rules, projects could face uncertainty and delays. A modernised regulatory framework would provide clearer expectations around access, costs and investment decisions.
Security of gas supply will remain paramount throughout the transition. Even if the gas network is used less overall, significant infrastructure is likely required to
- maintain resilience
- meet peak demand
- support wider energy security.
A lower-utilisation system is a different system, not a less important one. We will continue to work closely with government as it develops future arrangements for gas security and resilience, and we will act where necessary to protect security of supply.
Enabling a diverse gas system
Great Britain's gas system already relies on a diverse mix of domestic production and international supplies, and lower-carbon gases could play a bigger role in the years ahead.
As that mix continues to evolve, the regulatory framework will need to evolve with it. That means ensuring the gas system remains secure and efficient, markets continue to function effectively, and the rules around charging remain fit for purpose in a changing energy landscape.
With demand patterns changing, questions about who pays for the gas network and how costs are recovered will become increasingly important. These issues can't be left until the later stages of the transition. They need to be considered now so that costs can be anticipated, managed and allocated.
This is reflected in our work on gas disconnections, exploring how to improve the process if customers want to take themselves off the gas grid as they decarbonise their homes. It will also look at how we should recover network costs as use changes. We’ll be publishing the final report on our Gas Disconnections review in the coming weeks to set out what we will do next.
These questions are also closely linked to Ofgem's wider Cost Allocation and Recovery Review, which we will update on later this year. As that work progresses, we will carefully consider the costs of transition alongside broader questions of fairness and efficiency across the energy system.
The transition of Great Britain’s gas system presents a series of interconnected challenges. Our work on gas connections and access, disconnections, and cost allocation and recovery represents the first steps in ensuring the regulatory framework evolves alongside the gas system.
This also reflects the recent DESNZ review of Ofgem. This called on us to take a more proactive role in identifying and addressing emerging challenges across the energy system.
The future of gas may be uncertain, but our objective is not: ensuring the regulatory framework remains fit for purpose throughout the transition.
