The Future of Gas:

Developing a Gas Markets Plan together

You have told us that developing a long-term gas market change plan to coordinate market change projects would facilitate the energy transition.

In The Future of Gas: how gas can support a low carbon future, we said we would work with stakeholders to initiate the development of a Gas Markets Plan (GMaP)

Read on to find out our thoughts on:

  • why a GMaP is needed;
  • how the industry, decision makers and stakeholders can collaborate on future market change to provide value for consumers; and
  • the scope of the GMaP and examples of potential change projects.

Background

Many of you contributed to our Future of Gas (FOG) programme, during which we met and spoke to around 150 stakeholders to gather evidence, discuss and test the role of gas in the UK’s transition to a low carbon economy.

We published our conclusions in The Future of Gas: how gas can support a low carbon future in March 2018.  The key findings were that:

  • gas would play a crucial role in achieving the UK’s 2050 carbon reduction ambitions when testing what stakeholders told us against the 2017 Future Energy Scenarios for gas. You told us that the role of gas may vary depending on the decarbonisation path
  • policy drivers and decisions, particularly related to decarbonisation, could result in different evolutions of the gas market and networks. Many people called for more clarity from policy-makers about the timing of their decisions
  • there were key policy themes:
    • decarbonisation of heat, transport and industry
    • whole energy system
    • future networks and markets.
  • Carbon Capture Usage and Storage (CCUS) is critical to decarbonising gas.

For each theme, we set out the scale of the challenge as we’d heard it, the potential solutions, what National Grid will do and made public policy recommendations.  We included potential timelines of what decisions were needed when to facilitate progress.

Since then we, as the Gas System Operator (GSO), have talked with stakeholders about:

  • the focus and scope of the proposed GMaP
  • how best to bring the industry together to develop the GMaP
  • our role as the Gas System Operator in initiating this.

Everyone agreed that an industry engagement forum, instigated by the GSO, would help to facilitate the changing energy industry.

We heard that the forum should provide a clear route for current and future industry participants to help to develop the GMaP and other initiatives stakeholders agree are necessary.

Why is a GMaP needed?

We all know that the changes happening in energy are complex and fast-moving.  Many factors are driving change, including:

  • decarbonisation
  • decentralisation
  • digitalisation
  • gas arriving from different locations and sources
  • customers needing different things
  • industry participants reviewing their traditional business models
  • innovative business models and technologies emerging to deliver different gas futures.

The gas market may need to adapt to these changes in ways that are different to the past and to reflect policy decisions to be made in the coming years.

Stakeholders told us they thought the GMaP would focus on the National Transmission System (NTS) and related market frameworks.  But when the industry comes together to discuss development of the GMaP we will see if there is appetite for it to evolve to become a broader industry plan.

Industry supported a plan for the next 2-10 years because there is relative certainty about actions that need to be taken in that timeframe, whereas beyond ten years is too uncertain.  But we’ll need to talk more to understand if stakeholders consider there’s a need for an enduring plan and how that can be developed and monitored.

By developing a GMaP, representatives of industry, policy and regulation, together with those representing societal interests can look across all potential projects for market change with the objective of proactively delivering the most efficient outcomes for consumers.

In developing our GMaP we might ask ourselves:

  • Are there interdependencies between different potential change initiatives, policy, regulatory, technological or market changes?
  • Could different co-ordination across projects drive optimal efficiency for consumers?
  • What are the triggers for us to act on medium to long-term issues? How will we capture intelligence that informs our decision to act?
  • Are there innovation opportunities to address energy transition challenges?
  • How do we measure the effectiveness of the GMaP in co-ordinating market change projects to deliver value for consumers?

Collaborating to provide value for consumers

The aim of the GMaP is to deliver efficient, cost-optimal gas market solutions for consumers.

We can do this by collectively putting consumers at the heart of decisions about facilitating whatever the future of gas looks like.

Let’s bring together traditional and non-traditional market participants, potential new entrants, consumer representatives, BEIS, regulators and the GSO in one engagement forum, to:

  • provide transparency of the likely and actual changes impacting the gas market and different stakeholders, through the GMaP;
  • look for opportunities to engage strongly and reflect the goals of parties such as BEIS and Ofgem; and
  • take a collective gas industry approach to future challenges where appropriate to support and inform policy and regulatory decision makers.

The GSO will be an equal voice and stakeholders have told us they will want to play a role in supporting delivery.

We will be seeking your views on the formation of a senior level steering group to guide the forum’s priorities.

What will the GMaP include?

We’ve heard what changes you think are needed to market frameworks, services and network operations over the next 2-10 years.  The word cloud below gives examples of those changes, including what might trigger the industry to act and desirable outcomes.

What’s missing? Which projects could be complementary? How can we best look across the challenges to create the best value future?  Join us and other stakeholders at our engagement events at so we can continue to work it out.

By working together industry and stakeholders can deliver consumer benefit by establishing a credible, trusted process to assess potential change and take the right action at the right time to support the energy transition.

Interested in starting to develop the GMaP? What are your thoughts about the engagement approach?

Contact us using these details:

Elaine Baker               [email protected]          07980 947540
Dipali Raniga              [email protected]          07580 696162
Neil Rowley                 [email protected]            07785 381424