The National Grid plc remains one of the largest private energy infrastructure companies in the UK and has a significant presence in both the UK and the US. However, its role in the UK energy system has changed, especially with the spinoff of the energy system operator (ESO) to the new public body NESO.
NESO (National Energy System Operator) is a publicly owned, independent system operator responsible for balancing the electricity system, planning, forecasting, and net zero integration.
The Transition from National Grid ESO to NESO
Until 2024:
- National Grid ESO was a wholly owned subsidiary of National Grid plc.
- It managed the operation of the electricity system: real-time balancing, forecasting, grid code, connections, etc.
- It had no ownership of physical assets (unlike National Grid Electricity Transmission, or NGET).
From 2024 onwards:
The UK government created NESO: the National Energy System Operator. NESO is being spun out from National Grid ESO and will:
- Balance electricity and gas supply/demand in real time
- Operate wholesale energy markets
- Oversee connections to the electricity transmission network
- Run capacity and flexibility markets
- Produce Future Energy Scenarios (FES) and network planning
- Facilitate net zero integration across electricity, gas, and future systems (e.g., hydrogen, CCUS)
How NESO and the National Grid (NGET) Interact
NGET is legally and financially part of National Grid plc. and is a Transmission Network Operator (TNO).
- National Grid plc provides corporate governance, strategic oversight, capital investment, and risk management for NGET.
- NGET is independently regulated by Ofgem under the RIIO-T2 price control framework.
- National Grid plc must ensure NGET complies with regulatory obligations, but cannot use NGET’s revenues freely — returns are controlled by Ofgem.
So while National Grid (NGET) owns and maintains the wires, NESO tells the electrons where to go, plans for the future, and ensures the system remains stable and fair. NESO will plan, operate, and coordinate the energy system across electricity, gas, and future vectors, aligned to Net Zero.
Why the Separation?
The UK government wanted:
- Greater independence and transparency
- No commercial conflicts of interest (National Grid owns networks, so can’t fairly operate them)
- A single energy system operator to manage both electricity and gas, enabling better planning for Net Zero and future energy systems
Timeline
2022 – NESO announced by BEIS
2023 – Legal framework established (Energy Act 2023)
2024 – NESO being operationalised
2025 – Full operational transfer (expected)
All TNOs in the UK
All Distribution Network Operators (DNO) in the UK
Check out the Carbon Intensity app from NESO, to stay up to date on the grid mix, and to use as a rough guide for when to charge your phone, put your washing on or run the hoover round.
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