Ofgem has published its second preliminary Strategic Direction Statement (SDS), setting out how it expects energy industry codes to evolve in support of government policy, market reform and the transition to a smarter, more flexible energy system. The SDS is intended to provide a coordinated framework for prioritising code changes and guiding future decision-making across the energy sector.
The updated SDS builds on the first preliminary statement issued in 2025 and reflects stakeholder feedback, policy developments and emerging industry priorities. It identifies areas where code modifications may be required over the next one to five years and categorises these against three delivery horizons:‘Act Now’, ‘Think and Plan’, and ‘Listen and Wait’. This approach is designed to help industry focus resources on the most strategically important changes while providing greater visibility of future reform requirements.
The statement covers a broad range of policy objectives, including consumer protection, market innovation, network development, low-carbon technology deployment, energy flexibility, system resilience and governance reform. It also aligns with the wider Energy Act 2023 reforms, which introduce a new code governance framework, licensed Code Managers and enhanced strategic oversight of industry codes.
Alongside publication of the SDS, Ofgem has highlighted the role the document will play in coordinating strategic change across industry codes and supporting the implementation of harmonised code governance arrangements. The SDS will be reviewed and updated annually, providing an evolving roadmap for code modifications as government policy and sector priorities develop.
For metering stakeholders, the SDS provides important insight into the regulatory and market developments that may drive future changes to the Retail Energy Code (REC), Smart Energy Code (SEC) and Balancing and Settlement Code (BSC). Topics such as smart metering, consumer-led flexibility, data sharing, low-carbon technology deployment and market digitalisation are expected to remain central themes as the industry progresses towards a more integrated and data-driven energy system.