In our submission to the 2023 Spring Budget, we proposed changes to current government and regulatory policy in six key areas.
These changes are necessary to help unlock investment through energy network companies, which is required to ensure Britain’s energy network infrastructure continues to support our country’s economic needs as it decarbonises.
The price control regime used for regulating Britain’s energy network infrastructure is considered world-leading in terms of securing investment, which in turn drives economic efficiency and performance that is related to agreed outcomes.
But there now needs to be an additional focus on unlocking private investment through energy network companies to build and transform energy network capacity. This is to help ensure we can deliver the low-carbon technologies needed to meet our targets in 2030 for hydrogen production, in 2035 for electricity decarbonisation and our wider 2050 net zero targets.
In our submission, we set out the economic benefits that Britain’s energy network infrastructure can deliver in terms of supporting productivity growth, reducing inflationary pressures and addressing regional economic imbalances.
To do that, we propose the following changes:
Regulatory reform to unlock strategic investment in energy network infrastructure, by:
- Updating Ofgem’s remit to incorporate the government’s net zero targets as set out in the 2008 Climate Change Act. This is important so that long term net zero goals are recognised and planned for now.
- Issuing guidance to Ofgem to unlock strategic energy network infrastructure investment, in the form of a Strategy & Policy Statement.
Accelerating investment in hydrogen network infrastructure, by:
- Accelerating the development of a regulated asset base business model for hydrogen network infrastructure, with an interim measure introduced until that business model is finalised.
- Developing a business model to support the blending of hydrogen into gas networks by hydrogen producers.
Reforming the land rights & consenting process for energy network infrastructure, by:
- Reforming the Planning and Electricity Acts to permit timely and cost-effective installation and maintenance of electricity infrastructure.
Growing new smart energy markets to maximise energy network infrastructure capacity, by:
- Introducing new financial support, allowances, incentives or business models to reduce the upfront costs of smart ‘behind the meter’ low-carbon technologies for households and businesses.
- Mandating that new low-carbon technologies in homes & businesses installed are ‘smart’ to ensure they can take part in flexibility markets.
- Introducing a licence requirement on energy suppliers to offer flexibility services to households.
Confirming future innovation funding for energy network infrastructure, by:
- Confirming the extension of the Network Innovation Allowance beyond 2026 or confirm the government’s intention to develop a successor allowance of a similar nature.
Developing a policy strategy for seasonal energy storage, by:
- Updating the British Energy Security Strategy to include a commitment to deliver an energy storage strategy by the end of 2023, which defines what business models will be developed to secure investment in seasonal energy storage.
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About Energy Networks Association
Energy Networks Association (ENA) is the industry body representing the electricity wires, gas pipes and energy system in the UK and Ireland.
ENA helps its members meet the challenge of delivering electricity and gas to communities across the UK and Ireland safely, sustainably and reliably.
Its members include every major electricity and gas network operator in the UK and Ireland, independent operators, National Grid ESO which operates the electricity system in Great Britain and National Gas which operates the gas system in Great Britain. Its affiliate membership also includes companies with an interest in energy, including Heathrow Airport and Network Rail.
What are energy network operators?
Energy network operators manage and maintain the wires, pipes and other infrastructure which delivers electricity and gas to your home, business and community. They are private companies which are regulated by Ofgem and employ around 40,000 people in Great Britain.