NESO: Revolutionizing Energy System Operation in Great Britain
Key Ideas
- NESO, the new National Energy System Operator, took over electricity system operation and gas system planning in Great Britain on October 1, 2024.
- As a publicly owned company with operational independence, NESO aims to manage the energy system in the public interest and avoid conflicts of interest with commercial entities.
- The transfer of responsibilities from National Grid to NESO was facilitated through a transfer scheme outlined in the Energy Act 2023, ensuring continuity in contracts and operations.
- Elexon, responsible for managing the Balancing and Settlement Code, transitioned ownership from NGESO to the top energy contributors, maintaining its not-for-profit status and operational duties.
NESO, the National Energy System Operator, officially took charge of electricity and gas system planning in Great Britain on October 1, 2024. This transition marked a significant shift in the management of the energy system, aiming to promote operational independence and public interest. The establishment of NESO was preceded by the UK Government and Ofgem's consultation on creating a Future System Operator (FSO), leading to the Energy Act 2023, which provided the legal framework for the formation of the Independent System Operator and Planner (ISOP), later known as NESO. The transfer of responsibilities from National Grid to NESO involved the acquisition of shares and ownership changes, with NESO inheriting the roles previously held by National Grid Electricity System Operator Limited (NGESO) and National Gas Transmission plc (NGT). Notably, NESO operates on a not-for-profit basis, regulated by Ofgem and funded through energy bills to ensure impartiality. The transfer scheme outlined in the Energy Act 2023 facilitated the smooth transition to NESO, emphasizing the continuity of contracts and operations. Additionally, Elexon, responsible for managing the Balancing and Settlement Code, underwent ownership transition to top energy contributors while maintaining its operational responsibilities. NESO's regulatory framework includes separate licences for electricity system operation and gas system planning, aligning with its goal of efficient and transparent energy management in Great Britain.