The Energy Transition | Great British Energy's new strategic priorities set out by UK government

This week, we look at DESNZ's statement of strategic priorities for GBE, NESO's progress on its Virtual Energy System, the IEA's global Hydrogen Review, and more. 

DESNZ releases statement of strategic priorities to Great British Energy

The Department for Energy Security and Net Zero (DESNZ) has released its statement of strategic priorities for Great British Energy (GBE). DESNZ established GBE as a government-owned, operationally independent company with a mandate to invest in clean energy projects across the UK, supporting the delivery of Clean Power 2030. It has been allocated £8.3 billion of funding to own, develop and invest in the energy transition in the UK.

Under section 5 of the Great British Energy Act 2025, it is required to reflect the Secretary of State's strategic directions and priorities in its own strategic plan, which it now has six months to produce.

Core objectives

The DESNZ statement sets out GBE's two core objectives that provide further information on the intended outcome and direction of travel for GBE.

The first objective is to drive "clean energy deployment across the whole of the UK, as a strategic developer, investor, and owner of clean energy projects". This objective indicates that the government will use GBE for broad support to the sector, referencing assistance to enable the deployment of established renewables as well de-risking newer technologies.

The second objective is to ensure that "UK taxpayers, billpayers, communities, and the current energy workforce benefit from the clean energy transition by increasing public ownership and community involvement in the development of clean energy projects, and by supporting jobs and economic growth across the UK".

A notable aspect of this second objective is that the government isn't limiting the focus on creation of jobs in the sector to roles in Aberdeen; that is, the expectation is that GBE will enable the creation of roles in renewable project delivery and investments extending beyond those planned as part of other government initiatives relating to the North Sea transition. 

GBE activities set out

The statement also sets out the activities that GBE should undertake to fulfil its core objectives. These actions include playing a central role in the investment in and development of the UK's domestic energy supply chains, driving benefits to local and community energy (such as its first project which was to put rooftop solar on schools and NHS sites), and establishing a portfolio which both maximises social value and plugs the gaps in private sector investment.

It explains that GBE has a "unique position as a developer at the interface of the public and private sectors" and so collaboration with a wide range of stakeholders will be central to its effective operation. Partnerships, some of which have already been formed, will include devolved and local governments, the National Wealth Fund, investors, private sector stakeholders, industry and local communities.

Though GBE may have to incur additional risk to incentivise private sector investment, especially in nascent technologies and during the development stages of projects, it is expected to see positive returns on its portfolio and have a plan for being self-financing by 2030.

Ofgem consults on plans to establish the market facilitator

Ofgem has opened a consultation on a suite of proposed documents to establish the new role of market facilitator.

Under the UK government's Clean Flexibility Roadmap, published in July 2025, Elexon was appointed as the market facilitator, with a remit to align local and national flexibility arrangements and markets.

Ofgem states that this role is designed to eliminate the barriers that flexibility providers currently face when taking part in flexibility markets. As we have previously reported, the government has already highlighted the importance of unlocking the full potential of flexibility in the energy system, with the roadmap identifying it as a key element of delivering a reliable, low-cost and consumer-driven clean electricity system.

Pursuant to the "clean flexibility" roadmap, the market facilitator will be established before the end of 2025 and, once established, will be regulated by Ofgem.

Following previous rounds of consultations on the market facilitator's role, Ofgem is now inviting views on a suite of documents outlining how it will operate and be governed.

This includes seeking input on:

• The governance regime of the market facilitator – its responsibilities, remit and deliverables, as well as key performance indicators measured by Ofgem.
• A draft impact assessment – assessing the benefits of establishing the market facilitator role and determining whether Ofgem has overlooked any potential consequences.
• Proposed amended distribution and system operator license conditions to ensure NESO and distribution network operators must support the market facilitator and comply with its directives.

This consultation is open until 16 October 2025 and interested parties have been invited to send responses to flexibility@ofgem.gov.uk.

IEA publishes its Global Hydrogen Review 2025

The International Energy Agency (IEA) has published its Global Hydrogen Review 2025. The report indicates that whilst low-emission hydrogen projects are currently facing delays and cancellations, the production of low-emissions hydrogen is still set to grow substantially by 2030.

Despite production of low-emissions hydrogen being forecasted to reach 37 million tonnes a year by 2030, a decline from the previous forecast of 49 million tonnes a year based on projects announced a year before this report, it is still anticipated that the number of projects that are either operational, under construction or have reached a final investment decision by 2030 will be five times more than in 2024. These projects are expected to produce more than 4 million tonnes of low-emissions hydrogen each year. The report also notes that an additional 6 million tonnes could be produced, if policies to aid with low-emissions hydrogen demand are introduced.

Key challenges affecting these projects include that it is currently much cheaper to produce hydrogen from fossil fuels rather than low-emission sources, the rising costs of technology (such as electrolysers), uncertain regulatory frameworks and the slow development of the required infrastructure.

The report also highlights that the majority of electrolysers are manufactured in China, however, and that producers elsewhere are struggling with reduced revenues and financial losses resulting in bankruptcies. It is also noted that China has manufacturing capabilities for 20 gigawatts (GW) per year; however, demand is currently only 2GW. This oversupply and lack of demand could lead to consolidation in the market.

In spite of these challenges, the IEA predicts that there is still potential for strong growth by 2030 in this sector, as a result of the cost gap between fossil fuel and low-emission hydrogen being expected to narrow by 2030 if electrolyser costs decline as anticipated.

The report makes various recommendations to address the challenges facing the industry, including schemes to support the scaling up of production, increasing demand through regulation, removing barriers to deployment of hydrogen infrastructure and addressing and enhancing public support to reduce risk and encourage financing of projects.

NESO publishes progress with its Virtual Energy System: Data Sharing Infrastructure pilot

The National Energy System Operator (NESO) has published the progress it has made as a result of its Virtual Energy System (VES) Data Sharing Infrastructure (DSI) pilot. This pilot was intended to create a digitalised and efficient energy system. The DSI pilot was implemented to demonstrate how scalable and secure data exchange among energy networks and market participants improves real-time system operability and coordination.

Testing for the pilot included an outage planning use case, revealing valuable insights into technical, legal, regulatory, and social challenges, such as skills needs and regulatory frameworks. From this, NESO gained insight into the ways in which different organisations adopt and tailor models to meet their needs.

Given the success of the pilot, and that it met its goals, NESO is progressing it to the minimum viable product phase. This phase will look to expand participant numbers and diversify data products, incorporating direct stakeholder feedback for continuous improvement.

This initiative aligns with broader UK digitalisation and decarbonisation goals, aiming to better integrate distributed energy resources and consumer flexibility, reduce carbon emissions, and lower operational costs. This development signifies a shift towards a more data-driven energy network that can efficiently balance supply and demand, drive net zero ambitions, and create value across the system.

This article was written with the assistance of Oliver Derham and Yasmine Jauffur, Trainee Solicitors and Tomisin Agbonifo, Paralegal.