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Elexon proposes reforms to System Operator roles and code arrangements

lexon has set out options for a single energy code body to work alongside a reformed System Operator (SO) in their new policy, ‘Reforming the System Operator Roles and Code Arrangements’. This approach will allow better management of the energy system on the road to net zero.

Elexon has put forward options for reforming gas and electricity system operation and the energy codes in tandem so that ‘once in a generation’ changes can be made to how central services for the energy system are delivered.

Elexon initially outlined its thinking on reforms at its annual seminar last year.

Ofgem has recommended to the Government that an independent body, fully separated from National Grid, be created to carry out the electricity SO role and lead the path to net zero.

About the current roles
Currently the electricity and gas SO roles are carried out by National Grid ESO and National Grid Gas. The BSC is one of 11 energy codes across the energy sector managed by six different organisations. Major changes to the codes can take years to be implemented, which does not lend itself to making fast, widespread, cross-fuel changes to support the energy transition to net zero.

Advantages of a new ‘Market Operator’
Elexon believes that the gas and electricity system operators could be merged, and that a new ‘market operator’ could be set up as a single independent body managing all of the energy codes.

The advantages of this include:

a co-ordinated ‘whole system’ approach to gas and electricity system operation, which will support major changes including heat decarbonisation and electric ‘vehicle to grid’ schemes
faster, more co-ordinated changes to energy code rules aiding in the delivery of net zero
greater ability to make quicker and more widespread changes to commercial agreements across the energy sector
a simpler set of code arrangements for energy companies to manage and engage with
Download the policy
Reforming the System Operator roles and code arrangements
Alternative options
An alternative option is for a single body to carry out gas and electricity system operation, together with management of all energy codes. Elexon believes that this would be more complex and harder to deliver compared with a merged System Operator working alongside a Market Operator.

Views of the Elexon CEO
Elexon’s Chief Executive, Mark Bygraves, said:

“The scale of change needed across the energy sector to achieve net zero is vast. Elexon has been advocating consolidation of the energy code arrangements for a number of years and we believe there is now a golden opportunity for holistic reform of the code and system operation arrangements.

“We welcome the Government’s White Paper and we want to contribute to the reform process that follows it. We believe that the options we have set out are an ambitious, but achievable, set of changes which the Government could consider as part of the next steps.”

Next steps
Following the Energy White Paper, published in December, it is expected that the Government will consult later this year on energy code governance arrangements, and review the organisational structure for the Electricity System Operator (ESO).

Energy white paper: Powering our net zero future

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