Britain’s energy networks work with Ofgem to unlock up to £300m for a green recovery

As the Prime Minister made clear in his Ten Point Plan, the green industrial revolution will impact every corner of the UK. Therefore, by working closely with Ofgem, Energy Networks Association (ENA) members have drawn up plans to unlock early investment in the grid to support the technologies of tomorrow to be delivered quickly, driving green jobs and green growth across Great Britain.

ENA is today launching a six-week call for local authorities, developers and other parties to state the case as to why extra capacity in their locality should be selected for investment. There is a particular interest in evidence about locations where network investment can be made quickly to support shovel-ready developments that underpin the transition to a net-zero carbon emissions economy, in line with Government targets.

With tens of millions of pounds available for investment in each distribution network licence area, there is up to £300m available across Great Britain.

This funding will be in part sourced from network companies’ existing allowances, where they have delivered efficiencies from the RIIO-ED1 price control period. These existing funds as well as newly raised funds will be reallocated to help fast-track network capacity investment in places where it will support green developments. This investment will be directed to the most efficient projects i.e. flexibility, whole-systems solutions and ‘least-regrets’ expenditure.

Evidence will be gathered throughout the six-week call period and used to determine which of the distribution network operator sites (or additional sites that are proposed as suitable) meet the core criteria:

• Utilisation (e.g. how much of the capacity might be used in the near term)
• Deliverability (e.g. how quickly infrastructure and solutions could be completed)
• Value for money (including wider societal benefits that can be achieved).

Keeping Britain’s energy flowing

ENA members have been working hard throughout the pandemic to keep Britain’s energy flowing and have continued their vital role in maintaining the critical national infrastructure that transmits and distributes electricity and gas. While the pandemic is ongoing, the networks have continued to innovate and work towards Net Zero and will now play a pivotal role in driving a green recovery.

Britain’s energy network operators have a strong track record of delivery and have demonstrated globally recognised leadership in green innovation and investment through Ofgem’s RIIO regulatory framework for many years. Innovation will be at the forefront of this investment round with capacity unlocked to support technologies like battery storage, renewables, heat pumps and the electrification of transport through the installation of electric vehicle hubs in towns and rapid-charging at motorway service stations.

Energy Minister Anne-Marie Trevelyan MP said:

“The UK’s energy system is one of the most advanced in the world and through the Prime Minister’s Ten Point Plan and our Energy White Paper, we are ensuring that it is also the greenest so we can eliminate our contribution to climate change.

“Unlocking investment in the grid is vital to speed up the development of clean, green technologies that cut emissions and create thousands of jobs as we build back greener.”

Jonathan Brearley, Chief Executive of Ofgem, said:

“With the clock ticking on the UK’s race to hit net zero carbon emissions, we cannot afford to delay in building a clean energy infrastructure that will help power our transport and heat our homes emissions-free.

“We’re urging electricity network companies to come forward with fresh new sites for green investment, starting work quickly, to help kick start the green recovery.”

David Smith, Chief Executive at Energy Networks Association which represents the UK and Ireland’s energy networks businesses said:

"The Prime Minister has given a very clear direction that the economic recovery from Covid-19 is to be as green as possible – we are incredibly proud to be making that a reality.

"Our energy network operators have already helped turn Britain into a superpower of renewable energy. With this backing from Ofgem and the Government, we can ramp-up the network investment  to support not only renewables, but battery storage, electric vehicles, heat-pumps and all of the other technologies we will need to achieve our net zero future."

Areas that do not have 'shovel ready' network locations for capacity increase in the next two years will not miss out, with the opportunity to submit their evidence to DNOs for inclusion in the RIIO-ED2 business plans, which will be submitted to Ofgem. Whilst this funding is allocated solely to electricity distribution companies, there is exploratory work underway for electricity transmission and gas network companies as to what can be delivered through the RIIO-2 framework.