In its 2023 AI Regulation White Paper ‘A pro-innovation approach to AI regulation’ the UK government outlined its approach to regulating AI, which focussed on maximising the benefits of AI, while minimising the risks. Please see our overview here and a flowchart for navigating the White Paper here. In February 2024, Secretaries of State across the Government wrote to a number of regulators requesting an update on their strategic approach to AI. The letter from the Department for Science, Innovation & Technology (“DSIT”) and the Department for Energy Security and Net Zero (“DESNZ”) to the Office of Gas and Electricity Markets (“Ofgem”) is available online here.

Ofgem responded to DSIT and DESNZ by publishing an update on how it anticipates it will regulate AI within the energy sector to ensure it is used “safely, responsibly and sustainably”, which we have summarised below. 

Potential of AI

Ofgem’s update outlines its strategic approach to AI, which it asserts holds great potential which can be leveraged to transform the energy sector, while remaining mindful of the challenges and risks it may introduce. Significantly, Ofgem predicts AI could play an important role in contributing to the decarbonisation of the energy sector and helping the UK government achieve its net zero targets. 

Artificial Intelligence Principles

Ofgem’s strategic approach will be underpinned by an AI policy framework, which it is currently developing based on the principles in the AI Regulation White Paper, including:

• safety, security and robustness;
• transparency and explainability;
• fairness;
• accountability and governance; and
• contestability and redress. 

As more thoroughly set out in Ofgem’s strategic approach to AI, Ofgem aims to implement the AI policy framework to address the fast-evolving use of AI in the energy sector and to ensure that the technology is harnessed and used appropriately, effectively and in a manner which evaluates and minimises risks to the sector and wider society.

Next Steps

While the publication of Ofgem’s response signposts the key issues which it considers will frame the use of AI in the energy sector, it is also a key indicator of the path ahead. Ofgem’s call for input to the energy sector regarding the use of AI closed on 17 May 2024, following which it will:

• analyse the findings from the call for input and update its approach to regulating AI;
• develop AI guidance for energy bill payers, energy companies and organisations;
• continue to work with companies and organisations across the energy sector; and
• continue to research and identify the opportunities and threats associated with use of AI in the energy sector.

If you would like to discuss how current or future regulations impact what you do with AI, or how changes in the energy sector’s use of AI may impact your business, please contact James Phillips or Tom Doherty. If you would like to speak with our technology team, please contact Tom Whittaker, Brian Wong, Lucy Pegler, David Varney, or Martin Cook.