The Energy Transition | UK government launches energy sector digitalisation plan

This week, we look at the digitalisation plan for Clean Power 2030, Ofgem's regulatory framework for NESO, the government's proposal for offshore wind developers to boost local green skills, and much more.

Digitalisation plan looks to Clean Power 2030 goals

The National Energy System Operator (NESO) has published its energy sector digitalisation plan, setting out the case for, and its proposed approach to, the digitalisation and digital integration of the energy system to enable the government to deliver the goals of the Clean Power 2030 action plan.

NESO said the plan is intended to be "iterative" responding to stakeholder feedback, implementation successes, and technological developments. Its guiding principles include a focus on consumer benefit and a prioritisation of cyber security to ensure responsible digitalisation delivery.

This first iteration of the plan focuses on actions for shared digital infrastructure that the government considers will have the greatest impact on achieving clean power. It addresses areas where inaction could hinder progress, increase costs, or undermine system resilience, such as telecoms infrastructure and cyber security. It also identifies the milestones that will mark progress towards the delivery of the actions.

These actions, gaps, and milestones making up the plan are organised into three layers, each of which the government considers represents a distinct aspect of the energy system:

• Infrastructure and connectivity. Focuses on the physical assets of the power system and the collection of data from these assets.
• Integration. Centres around transforming collected data into useful information and ensuring secure, efficient access to this information across the sector through systems and applications that are required.
• Activity coordination. The people and organisations that operate and govern the power system. This layer covers the mobilisation, organisation, and governance required to align activities and ensure coherence.

The plan draws on expertise from across the sector as well as international approaches to digitalisation. The plan notes, for example, that Australia's significant investment in advanced digital-grid management – such as real-time monitoring and automated controls – has addressed grid instability and operational challenges. It stresses that sector engagement will be critical for the success of the plan and its continued evolution.

Heat networks to be regulated by Ofgem from 2026 

Ofgem will take on the role of regulating heat networks from January 2026 to protect consumers and to ensure they are getting a fair deal while bringing the sector in line with protections already seen in the gas and electricity markets.

Currently, heat networks operate in a largely unregulated market, leaving many households without clear rights when problems arise. The upcoming framework will introduce protections, including fair billing practices, minimum service standards, a formal complaints process, and measures for vulnerable consumers.

Ofgem has noted that introducing regulation for this sector has many challenges, including the inconsistency of design, in particular, poor design, variable service quality and consumer protection, the wide mix of organisations operating networks, and links with housing regulation.

To manage this, Ofgem is adopting a phased approach. Initial rules will apply from early 2026, with all operators required to register within a year. By 2027, a full set of standards covering pricing and performance guarantees will be in place.

Ofgem's enduring regulatory framework for NESO 

Ofgem has decided on its enduring regulatory framework for the NESO. Ofgem has previously introduced what it describes as "critical changes for 'Day 1' of NESO" and more broadly changes to the performance incentives framework, which commenced on 1 April 2025 and ends on 31 March 2026. The period is known as the business plan period 3 or BP3.

The enduring regulatory framework, which will commence with the business plan cycle on 1 April 2026, is the third stage in its phased approach to the NESO regulatory framework. The framework will set out clear standards by which NESO is to operate, including having clear safeguards in place, minimum outcomes it must achieve, as well as ensuring any financial incentives for senior staff are aligned with performance.   

The framework is split into chapters, which include performance incentives, business plan and plan assessment, cost regulation, stakeholder mechanisms, licence obligations and enforcement, staff-level incentives, regulatory finance, and innovation.

Key features of these chapters include maintaining a public performance incentive scheme focused on outcomes and value for money, a two-year business planning cycle with stakeholder engagement, a cost regulation approach using a pass-through funding model, strengthened stakeholder mechanisms including an independent challenge panel, and clear licence obligations.

The framework is designed to be dynamic and proportionate, allowing flexibility in responding to ever-evolving energy system needs. It will be continually reviewed based on experience and stakeholder feedback to ensure accountability.

Government launches reforms to the Clean Industry Bonus

The government has launched a consultation on reforms to the Clean Industry Bonus (CIB) within the Contracts for Difference (CfD) scheme, which would apply from Allocation Round 8 (AR8).

The proposed reforms include introducing criteria to strengthen workforce protection through commitment to a new offshore wind fair work charter, and increasing skills investment via either pooled funds for industry-wide needs or project-specific initiatives.

The consultation also proposes extending the CIB to onshore wind to support clean power generation through streamlined supply chains and implementing technical improvements to ensure the scheme operates efficiently.

The CIB encourages developers to invest in sustainable supply chains, including facilities located in UK regions which have suffered from declining industry, to promote economic growth and environmental benefits.

The government has invited stakeholders to submit their views by email to renewableCIBs@energysecurity.gov.uk or respond online by 6 October 2025.

Government’s plan for offshore wind developers to boost local green skills 

The UK government has announced its intention to require offshore wind developers to pay into a skills fund or invest directly in training programmes for the communities local to their projects. 

The aim is to create "thousands of well-paid, good-quality jobs in offshore wind" and ensure fair pay, trade union access, and strong worker protections.

Support will be provided for those transitioning from the oil and gas sectors, as well as apprentices and school-leavers, and may come in the form of education, apprenticeships, work experience, and new equipment.

The initiative is in the consultation stage and, if successful, will be delivered through the Clean Industry Bonus scheme.

Nuclear Regulatory Taskforce issues first interim report

The Nuclear Regulatory Taskforce, an independent advisory body set up by the government to review the UK's nuclear regulatory framework, has published its first interim report. This is a precursor to the final report expected to be published this autumn, and both focus on the task force's main aims to assess all areas of civil and defence nuclear regulation. 

The interim report builds upon feedback received from stakeholders regarding the operation of the regulatory framework in practice and identifies six areas of opportunity where the regime can be streamlined.

The report defines these as:

• Risk management and proportionate treatment.
• Reducing the complexity of the regulatory and planning landscape.
• Enabling delivery in the planning regime.
• Capacity, capability, and culture of the expertise and workforce within the sector.
• International harmonisation of standards.
• A greater analysis of the direct and indirect costs of delays.

The report concludes (subject to the final report being published) that there is a need for a "firm strategic steer" from the government to establish a coherent national policy and strategy for "effective and efficient delivery of safe nuclear". 

The Task force has invited specific responses to the questions raised within the interim report to its dedicated mailbox, ahead of the evolution towards publication of the final report.

This article was written with the assistance of Adam Budd, Ellie Smyk, trainee solicitors, Sumaiya Hafiza, solicitor apprentice, and Tomisin Agbonifo, paralegal.