The Energy Transition | UK advances clean power with reform bill, electricity regulation and fusion research

This week we look at the introduction of the Energy Independence Bill to Parliament, a government consultation on reforming the Renewables Obligation, and a major engineering milestone in UK fusion research.

UK government brings Energy Independence Bill to Parliament

The UK government has introduced the Energy Independence Bill in the House of Commons. The bill, which was given its first reading on 4 November, aims to accelerate the transition to clean power, reform energy infrastructure and reduce household bills. Members of Parliament will next consider the bill at its second reading, but no date has been announced yet.

Developers of new onshore wind and ground-mounted solar projects over 5 megawatts (MW) would have to provide benefits to host communities, host communities, including benefits in kinds through legally binding benefit agreements. Additionally, designated promoters and operators of qualifying renewable electricity generation facilities with a capacity of at least 1 MW capacity would also have to offer local communities an ownership stake of up to 20% through shared ownership schemes. 

Charges and flexibility

The legislation supports plans to scrap standing charges on household gas bills and introduce an "enduring" shift of 75% of domestic Renewables Obligation costs from energy bills to public spending. Ofgem is set to receive stronger enforcement powers, including the ability to order compensation and impose fines, bringing energy brokers and price comparison services under regulation for the first time.

Aiming to address a current gap in asset visibility, it introduces an obligation for installers to register distributed energy assets – including domestic batteries, electric vehicle chargers, heat pumps and solar – with distribution network operators. This aims to secure reliable data needed to optimise network planning and to encourage participation in consumer-led flexibility. Additional powers introduced to encourage flexibility include removing supplier levy costs from electricity re-exported to the grid, including through demand "turn-up", batteries, and vehicle-to-grid charging.

Part 6 covers reformed national pricing, which grants Ofgem and the secretary of state new time-limited powers to modify codes, licences and related documents governing balancing and trading reform. It is highlighted that reforms to codes and licences will make the reformed national pricing arrangements mandatory, and enforceable and operable by Ofgem, the National Energy System Operator and market participants.  

Licensing and infrastructure

On licensing, the Energy Independence Bill delivers on the government's manifesto commitment to issue no new exploration licences, while simultaneously introducing transitional energy certificates to support continued production from existing fields throughout their lifetime. Onshore oil and gas licences, including those for fracking, will also be ended.

The bill will also modernise consenting and land-access processes in respect of new grid infrastructure, aiming to ensure these are proportionate and efficient across the whole system. It will also establish, in law, the publicly owned Great British Grid.

Government consults on fixed-price certificates for UK Renewables Obligation schemes

The Department for Energy Security and Net Zero is consulting on a fixed-price certificate (FPC) system for the Renewables Obligation (RO), the RO Scotland, and the Northern Ireland RO schemes. The RO remains the UK's largest renewable electricity support scheme. More than 26,600 generating stations are accredited to a total capacity of 35GW.

Price stability

Currently, the price of RO certificates is not fixed but market determined. This reflects the certificates' buy-out price, set annually by Ofgem, and the redistribution of buy-out and late payment funds to suppliers that comply with the schemes. 

A switch to FPCs was first proposed in 2011, for introduction from 2027. The original intention was that this would assist with anticipated market price volatility that could occur when accredited stations come to the end of their support period on 31 March 2027. In 2023, a call for evidence was published seeking views on a move towards an FPC model. The responses acknowledged the value of a movement to a new model in order to provide greater price stability. 

Two models

The 2023 call for evidence proposed two models. The first model proposed a central counterparty but no trading of certificates. This would be a departure from the current model, as generators would be paid directly by the central counterparty at a fixed price per certificate. Suppliers would therefore not be required to purchase certificates from generators and instead would purchase them from the central counterparty. 

The second model would retain certificate trading alongside a central counterparty. Generators would still receive certificates but then choose either to sell the certificates in the market or directly on to the central counterparty at a fixed price. 

Respondents generally preferred model one. The current consultation now asks respondents to consider if this would be the best option. 

Implementation and funding 

The consultation also proposes a legal framework for implementation, with the transition no earlier than the start of the 2028/2029 scheme year. 

A new FPC administrator would take over much of the scheme's role, rather than Ofgem. The consultation also considers how to collect payments from suppliers to cover the costs of the scheme, the frequency of these payments and the process of reconciling suppliers' levy payments against the funds required by the proposed FPC administrator.

It also asks how to protect the FPC administrator's solvency against risks such as higher-than-forecast generation or supplier default. Suppliers could be required to provide credit cover the first line of protection against supplier default.

Certificate funding

The consultation considers how to price FPCs, including a proposal for generators to provide the same level of detail for generation as they currently do and to the same timetable. It looks to establish the value of the FPCs given that it is proposed that the certificates will not be traded in the market;

It also proposes that the fixed price would include an uplift, in order not to remove fully the effect of "headroom", the buffer concept under the current RO system, as well as increasing the FPC levy for transitional ROCs. These would be tracked by using timestamps and valued at the buy-out price for the relevant scheme year. 

The consultation remains open until 12 January 2027.

UK fusion project achieves engineering milestone with installation of heating component

The UK Atomic Energy Authority (UKAEA) has achieved a milestone in the development of the UK's flagship fusion machine, the Mega Amp Spherical Tokamak (MAST) Upgrade, with the lowering of a 12-tonne double beam box into position at its Culham campus.

More heating power

The component is designed to house two additional neutral beam injectors, which will fire high-energy neutral atoms into plasma to raise its temperature. Adding a second injector is intended to increase MAST Upgrade's heating potential from 4.4 MW to 8.8 MW.

UKAEA hopes that this will enable scientists to study the stability of higher-pressure plasmas and test how MAST Upgrade's exhaust system copes with more extreme conditions; this research is directly relevant to the UK's prototype fusion power plant, Spherical Tokamak for Energy Production or STEP, and future commercial fusion plants.

The double beam box lift forms part of a broader programme of engineering improvements to MAST Upgrade which are underway, including the installation of a new electron Bernstein wave microwave heating system and the manufacture and installation of the positive ion neutral injectors.

Research timetable

All major hardware is intended to be fitted into place within the double beam box vessel by the end of autumn 2027, with scientific experiments due to commence in 2028.

This article was written with the assistance of Rani Mandalia and Raihaanah Kulthoom, trainee solicitors.