IN Brief:
- Ofgem's second Strategic Direction Statement identifies policy areas expected to require coordinated industry-code changes.
- Immediate priorities include strategic network planning, onshore network delivery, grid-forming capability, ramping arrangements, and code-governance reform.
- Ofgem expects the first code to begin operating under the new licensed-manager framework before the end of 2026.
Ofgem has published its second Strategic Direction Statement for industry codes, setting out the energy-system developments that it expects to require coordinated changes to Great Britain’s technical and commercial rulebooks.
The regulator intends to consult on and publish a Strategic Direction Statement annually, providing code administrators, emerging licensed code managers, panels, market participants, and other organisations with a common view of the policy areas that should shape modification work.
The 2026 statement divides work into three time horizons: “Act now”, “Think and plan”, and “Listen and wait”. The immediate category covers policy areas where code changes are expected to be developed and, in most cases, implemented within two financial years, taking the current horizon to April 2028.
Several of those priorities have direct power-engineering consequences. Centralised Strategic Network Plan development is included in the immediate programme, alongside Regional Energy Strategic Plans, faster delivery of onshore networks, anticipatory investment, low-carbon technology rollout, frequency control, grid-forming capability, and ramping arrangements.
The relevant rulebooks include the Grid Code, Distribution Code, Connection and Use of System Code, Distribution Connection and Use of System Agreement, Balancing and Settlement Code, Security and Quality of Supply Standard, System Operator-Transmission Owner Code, and other electricity and gas arrangements.
The breadth of that list reflects how a single physical change to the energy system can require amendments across several codes. A network-planning policy may alter connection requirements, investment responsibilities, charging arrangements, technical standards, information exchange, and operating obligations at the same time.
Grid-forming capability illustrates the engineering side of the programme. Wind, solar, and battery installations connect through power-electronic converters rather than behaving like conventional synchronous machines, changing the way inertia, fault contribution, voltage response, and system stability are provided.
Great Britain already has grid-forming provisions in the Grid Code, but Ofgem’s current programme anticipates further work on technical requirements and the extent to which capabilities that have previously been non-mandatory should become compulsory. The Distribution Code may also need corresponding requirements as converter-connected assets become more widespread below the transmission level.
Ramping arrangements create a related operational issue. The speed at which batteries, generators, and interconnectors alter their output can give market participants additional flexibility, while abrupt changes across many assets can create system-balancing and frequency risks.
The second statement places ramping arrangements within the immediate programme, with relevant changes potentially affecting the Balancing and Settlement Code, Distribution Code, and Grid Code. Increasing battery volumes make that work particularly relevant because storage can move rapidly between charging and discharging states.
Strategic network planning presents a different coordination problem. NESO’s Centralised Strategic Network Plan is intended to provide a longer-term view of the transmission infrastructure required as generation, storage, and electricity demand change, while Regional Energy Strategic Plans address development at a more local level.
Those planning exercises do not deliver substations or circuits by themselves. Code arrangements still determine how projects connect, how network investments are recovered, which technical standards apply, and how responsibilities are divided between operators and users.
The statement arrives while governance of the codes is itself changing. The Energy Act 2023 created the framework for licensed code managers, and Ofgem expects the first code to begin operating under the new arrangements before the end of 2026.
That transition will create a period in which some codes operate under licensed managers while others remain within the existing framework. Cross-code projects will therefore have to progress without allowing the governance transition to fragment changes that depend on several rulebooks moving together.
Ofgem is also placing greater emphasis on simplifying existing arrangements rather than adding another layer of rules for each new technology or policy. That does not remove disputes over cost, risk, timing, or responsibility, but it gives future code managers a clearer set of priorities against which modification programmes and resources can be organised.
The second Strategic Direction Statement moves code reform closer to the physical changes already taking place across generation, networks, storage, and demand. Its effectiveness will depend on whether network planning, grid-forming requirements, ramping rules, flexibility, and governance reforms translate into coordinated technical changes on the timescales now set out.
