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Draft legislation extends Ofgem's powers

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The Department for Energy and Climate Change (DECC) has this month published a white paper setting out draft legislation to open up the right to develop and operate onshore electricity transmission assets.

According to the white paper, transmission assets would no longer automatically be given to the regional monopoly operator, but would instead be awarded to a successful participant in a competitive tender process.

The draft legislation extending Ofgem’s powers would mean that the three monopoly transmission companies in the UK, namely National Grid Electricity Transmission, Scottish Hydro Electricity Transmission and Scottish Power Transmission, would have to compete against other firms.

The move follows 2009 legislation that enabled Ofgem to run a competitive process for transmission infrastructure that connects offshore generators like wind farms to the mainland. According to the department, extending Ofgem’s powers to enable competitive tendering for onshore electricity assets could bring new players into the market, encourage innovation and bring significant savings to consumers.

Last October, Ofgem announced it was consulting on how to tender out new onshore electricity transmission infrastructure projects worth £100m or more. The first tender could take place as early as next year.

Meanwhile, in separate news, the DECC has pledged in a recent report to do more to increase the proportion of renewable energy used to heat the UK’s buildings and fuel its vehicles in a bid to meet binding EU targets by 2020.

In its third progress report on the promotion and use of energy from renewable sources for the UK, the DECC revealed that the country’s energy sector has met an interim objective and is on track to meet its share of the overall goal. However, the Government acknowledges that it still needs to do more to encourage the uptake of clean sources of energy for heat and transport.