British energy regulator Ofgem is proposing reforms to wholesale electricity markets to reduce Britain's reliance on gas imports and accelerate the transition to low-carbon energy supply, it said on Friday.
Last year, the government set out plans to increase offshore wind capacity to 50 gigawatts (GW) by 2030 and increase solar power.
However, existing market and regulatory frameworks are not geared up to running a system with much more renewable energy in a cost-efficient way, Ofgem said in a statement.
The regulator has therefore set out some reforms which it said could help deliver 10 billion pounds ($12 billion) a year of savings to customers by 2050.
Spiralling wholesale gas prices due to reduced supply have been exacerbated by the war in Ukraine this year and are crippling industry and households, with many power suppliers going bust.
High gas prices have had a knock-on effect on power prices, creating huge retail bills for consumers which are expected to keep rising.
Analysts at Cornwall Insights forecast a government price cap on energy prices will rise by more than 60% in October to an average of 3,244.54 pounds a year largely due to soaring gas prices.
The potential reforms include splitting the wholesale electricity market to reduce the potential for the gas market to set prices in the power market.
"Using pricing signals could include moving from setting wholesale electricity prices at a national level to either a regional or local level," Ofgem said.
Another reform would be strategic planning for the energy system by a new independent Future System Operator at a national level and a potentially similar model at a local level, it added.
Ofgem will discuss with government and stakeholders the feasibility and benefits of such measures.
($1 = 0.8359 pounds)
(Reuters - Reporting by Nina Chestney in London and Sinchita Mitra in Bengaluru; Editing by Shinjini Ganguli and Carmel Crimmins)
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