To get change at the scale and pace needed to deliver on our net zero commitments, and to enable the more fundamental systems change needed to ensure the wellbeing of people and planet, competition and consumer protection laws will need to reorientate to give far greater weight to net zero and resilience. Delivering sustainability often requires a difficult balancing act, trade-offs and identification of win-wins which can be complex and challenging.

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We support the underlying consultation proposition that net zero creates a step-change and the need for a new expert capability across electricity and gas systems. We also argue for a need to evolve whole-system approaches to energy system architecture, coordination and governance. In developing the Future System Operator role as outlined in the consultation, we also highlight areas that need more attention

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We fully support the need for a Strategic Policy Statement, and also recognise that it needs to be part of the strategic objectives which have been set for Ofwat in legislation. The SPS admirably seeks to give these steers which are, welcomely, significantly more numerous and granular than in the 2017 SPS. We outline our response to Defra’s three key questions and make suggestions for improving the SPS. But we also argue that the SPS would be greatly improved if – either within the document or elsewhere – ministers set out a strategic vision for a future water industry.

With major changes ahead in energy and water there is a growing need to look across sectors. There have always been inter-dependencies but the focus on net zero creates new opportunities and risks. There needs to be more dialogue and joint planning. With Strategic Policy Statements being developed for water and energy the time is right to think afresh about these interactions and for the regulatory framework to evolve to support a cross sector approach

One of the mantras in regulatory circles at the minute is the need to focus on “whole systems”. Over recent years Ofgem has been expanding its thinking from simply “whole electricity system” to “whole energy system” to a position now where transport and heat are being brought into the picture. However, looking more widely still the strategic cross-sector issues between energy and water rarely get discussed. This Viewpoint aims to highlight where some of the important overlaps lie as a basis for encouraging more truly whole systems thinking.

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