Energy white paper to propose ESO sale

The final break-up of the National Grid and fresh efforts to accelerate the smart meter rollout are among the options the government is exploring in its much-delayed energy white paper, Utility Week has learnt.

Both business secretary of state Alok Sharma and energy minister Kwasi Kwarteng have said that the white paper, which was originally set to be published last summer, is due to be unveiled this autumn.

Kwarteng told a meeting of the net zero all party parliamentary group in May that he had already signed off two versions of the paper, which was said to be at an advanced stage of preparation when Greg Clark was sacked from the role of business, energy and industrial strategy (BEIS) secretary of state in Boris Johnson’s reshuffle last summer.

Utility Week has learnt that the government is considering using the white paper to complete the splitting out of the electricity system operator (ESO) from National Grid.

The system operator, which is responsible for balancing the supply and demand of electricity, has been a separate company from the transmission network’s owner National Grid since April 2019. However, the ESO has remained part of the National Grid group.

Within government though, the separation of the two bodies is regarded as unfinished business

A former Conservative MP confirmed to Utility Week that the break-up of the Grid is on the cards if and when the white paper sees the light of day.

Earlier this week, Ofgem launched a review of the ESO’s performance during the summer, when balancing costs rose 39 per cent to £718 million.

A push to accelerate the stuttering smart meter programme is also expected to feature in the document, reflecting Kwarteng’s enthusiasm for deploying technology to enhance the flexibility of the energy system. The minister has held a number of roundtable discussion about flexibility over recent months.

Suppliers are expected to be given more scope to push the installation of smart meters, particularly in non-domestic settings, rather than relying on customers to request the devices.

The issue of achieving greater flexibility has also received greater scrutiny during recent weeks as generators, such as EDF’s Sizewell B nuclear plant, have pocketed sums running into tens of millions of pounds to shut down due to a surplus of electricity on the grid.

“There are areas where companies would be allowed to push it a bit more. Having a minister who gets it, which Kwasi does, is very useful. Smart meters need a shot in the arm from government,” said an energy policy source.

Other areas likely to feature in the white paper are further measures to develop hydrogen and carbon capture and storage.

A BEIS spokesperson said it remained the government’s “ambition” to publish the energy white paper in the autumn.