It’s very hard to know how close the electricity system recently got to a blackout. Probably not that close, but it’s also hard to know how good NESO (the National Energy System Operator) is at forecasting future demands, and even harder to know whether a system grounded on intermittent small-scale and geographically dispersed wind turbines and solar panels and reliant on interconnectors is going to be able to cope with an ever-greater focus on the firm-power demands of an increasingly digital world, with AI and data centres.
Whatever the answers, what we do know is that NESO is tasked with achieving net zero by 2030, and if it is tightly tied into the interests of the government, there is an inherent conflict of interest between the policy job and the day-to-day management of the system. The former is ultimately political; the latter is technical.
NESO should be objective, transparent and independent of government. When NESO checks the forewords to its documents with the secretary of state or the political advisers, and when corporate relations people are present in the control room, the alarm bells should be ringing.
NESO was set up with a fundamental design fault, and it is this that lies at the heart of the current controversies. There were two different models for NESO. One was “big NESO”, taking the ESO (Energy System Operator) out from National Grid and grafting it onto a broader policy-driven body. The other was “small NESO”, with policy being run out of the department, and the system operations being a stand-alone, genuinely independent body.
A separate fully independent NESO would have had only one job: to keep the lights on given the electricity system. That is a major and ever more difficult task in its own right. NESO should be fully transparent. It should not have corporate relations and PR and it should not have politically minded managers. Its board should comprise professionals – engineers and system specialists. It is what was recommended in the “Cost of Energy Review”.[1]
The failure to separate out the functions was embedded in the board of NESO from the start, which included ex-regulators and more politically savvy people. With the exception of the first chairman, few had much practical experience of the electricity system. Some of its reports have been too political. This was reflected even in the names of the scenarios they set out. One of these scenarios, “Falling Behind”, had obvious negative connotations. Not surprisingly, it is hard to have much confidence that the NESO board would publicly spell out some of the more alarming implications for system security of the flat-out dash for net zero by 2030. And of course they haven’t.
When there is a design fault, the usual response is to try to paper over the cracks. And so it is turning out. NESO has called in the lawyers to look at the recent incidents. They will probably have some recommendations, including about processes and perhaps even about independent directors. Given that it is hard to make the situation more conflicted than it currently is, these sticky plasters will struggle to make the situation worse.
What will probably happen is that the conflicts that arise from the core design fault will carry on until the system actually breaks – or there is a change of government minded to protect itself from the fallout if and when the system does indeed break. If, as seems eminently possible, there are more hairy moments, and if, in due course, there are power cuts – perhaps even on the scale of the one that occurred in Spain and Portugal in April 2025 – the fallout will likely include lots of finger pointing. If the failures are big enough, the design fault might actually get fixed.
It is not hard to do. Split the ESO out of NESO and establish it as a separate organisation with a clear set of duties, with requirements to make all its data and models publicly accessible, save only for elements that are militarily sensitive. It should have a board full of technocrats with a track record of independence.
That leaves the residual NESO. Its role and duties are tied up with the government’s net zero targets, and their pursuit. It looked sensible to have an agency to do some of this, such as spatial planning, when there was a cross-party consensus, but not now that this consensus has completely broken down. Two of the main opposition parties want to abandon net zero territorial targets, and hence to amend or repeal the Climate Change Act 2008 (and the 2019 Amendment). Absent the consensus, NESO is the de facto agent of the Labour government, and is supported by the Liberal Democrats. In consequence, it should be part of government and its planning should go back to the department, as it did for most of the history of the energy sector. The only point of “independent” reports from NESO and its scenarios is if there is some extra credibility by not being the department. But there isn’t.
Given the inevitable political nature of the organisation and the twin and very different tasks of policy and planning, on the one hand, and running the system to keep the lights on, on the other, imagine what it is like to run its board. Every time there is a problem with the system operations, and the possibility of a power cut, this will subsume everything else. It will take up the time of the board and its senior management. It is what might be called “the Environment Agency problem”, where every time there is a flood, everything else becomes of much less importance. In the past, even a Chair of the Environment Agency has had to resign when he was abroad on holiday when flooding struck. It’s the classic board and organisational challenge of short-term emergencies versus the long-term management of the remit.
The current set-up for NESO is further confused because it is a public corporation, not an agency of government. And because it is a public corporation, it has to be regulated, in its case by OFGEM. The scope for confusion given overlapping objectives is obvious, as is the consequent increased overall regulatory burden. Instead of one or the other, it is both.
The choice of a public corporation model was forced on the then government because it wanted to be able to pay the NESO leadership at rates above civil servant rates. The constraints of pay limits in the public sector resulted in the byzantine organisation and regulation that have emerged.
What lessened the obvious potential tensions between all the moving parts was the set of individuals, all of whom appear to have been on side and on message with the department and the previous secretary of state. None was ever likely to say much in public that might have challenged the 2030 net zero target, and the energy mix that it entails.
This is not a healthy state of affairs. There is not going to be challenge and debate and openness and transparency about the underlying problems in the net zero 2030 target and beyond. They are not going to be out there highlighting some of the more obvious difficulties. And they have not been. They should not be blamed: that is how the set-up works. That is why there need to be corporate relations people in NESO, why they might have been in the control room so that difficulties and problems could be “spun”, and why they might have had a front-row seat in preparing the presentations for the NESO reports and documents.
Why, you might ask, should NESO have any corporate relations at all? Why should it want to manage the “messages”? If it is the department of government, it is quite understandable to be focused on messaging. But not as the operator of the electricity system. Corporate relations would have no role in a genuinely independent system operator.
With yet another new secretary of state, this is a good moment to sort out the fundamental design fault. It would save the risk to the secretary of state of a lot of grief if and when something goes seriously wrong. But don’t bet on its happening until there is a crisis, and only if and when it is a serious crisis.
Will there be a crisis? The answer is of course uncertain, but it is more likely as the system becomes more and more intermittent, as more and more wind and solar are added. Why? Because the system is inherently more difficult to manage, and because it needs to manage big swings in electricity generation. In the “old system” with gas, and nuclear (and coal), there was lots of firm power, so that only around 60GW of capacity was needed to meet an expected peak demand of around 45GW. But with wind and solar as the mainstays of the future system, the intermittency means that – according to NESO – the system might need around 250–300GW to meet a somewhat higher peak demand. Worse still, it will need lots of interconnectors, and interconnectors that can deliver quickly when there is a generation deficit.
It doesn’t take much to imagine the risks. What if the French nuclear generation is offline? What if continental Europe has similar peaks and troughs of demand and supply? What happens when the gas back-up is so intermittent that it is required to be instantly available but for only 4% of the time? There are lots of risks that are “new”. They didn’t arise under the old firm-power system.
None of this suggests that it is a mistake to have lots of renewables nor that power cuts are imminent. Having lots of renewables, and fast-tracked, is a political choice with massive system consequences, and high system costs, whatever the claims about renewables being cheap. What is true is that if this is the direction of travel, the system is inherently more uncertain and harder to forecast. Other things being equal, power cuts are more likely. All the more reason for a genuinely independent professional system operator, outside the policy remit of NESO. The sooner the design fault is remedied, the less chance of nasty surprises.
[1] Helm, D. (2017), “Cost of Energy Review”, 25th October.
