Ofgem's Chief Executive writes about the energy networks' £300m Green Recovery call for evidence
By Jonathan Brearley, Chief Executive of Ofgem
Today, Ofgem has confirmed arrangements that will allow local electricity network companies to come forward with fresh new opportunities for green investment. This work, through the next phase of our ongoing ‘Green Recovery’ initiative with Britain’s energy networks, could see hundreds of millions invested over the next two years, and work sped up, to kick start the green recovery.
The network companies that run Britain’s energy pipes and wires are playing a pivotal role in boosting economic recovery from the pandemic.
Already, over £2 billion worth of projects across the gas and electricity networks are reactivating supply chains and helping drive overall economic activity.
But it’s clear that ‘building back’ for business-as-usual is not enough. The sector must sharpen its focus on building back greener too.
For Ofgem, 2021 promises to be the year of delivery for creating a greener and fairer energy system, with a new Strategy which will help us drive forward the race to meet governments’ net zero carbon emissions targets. This is backed by our greenest ever price control funding rounds for network companies and the system operator, which are due to either start in April or, in the case of local electricity networks, well in development to start in 2023.
With the net zero clock ticking and the economy affected by the pandemic, we must act now.
Over the past six months, Ofgem has been working closely with the Energy Networks Association (ENA) and energy network companies on an ambitious ‘Green Recovery’ project that looks to getting investment quickly into the ground, ahead of the start of the new price control in 2023.
Last year we urged network companies to speed up delivery on projects that could help drive post Covid-19 recovery or build a greener infrastructure.
The networks rose to that challenge, and collectively rapidly ramped up investment across Britain – including £80 million of projects on the local electricity grids accelerated to start in 2020 alone. That programme includes support for a world leading vaccine centre in Oxfordshire, and commencement of work on a zero carbon substation that will support increased electric vehicle charging in the South Manchester Enterprise Zone.
Now, working with the companies through the ENA, Ofgem is developing arrangements that can allow the networks to search out and invest in fresh opportunities that will drive a green recovery, benefitting consumers.
The aim is to see this work start quickly and expect new projects to start as early as May, building momentum ahead of the next price control period. We will fund these crucial projects under the current price control and grant extra funds where needed, subject to a cap. However, we will only green-light projects that companies can demonstrate strike the best possible deal for consumers, both on cost and on delivering net zero carbon emissions.
This initiative will help networks seize the opportunities raised by recent policy announcements. For example, network companies could start early on scoping out key roadway sites where they need to boost grid capacity; ready to hit the ground running as the Government’s electric vehicle motorway charging scheme fires up.
Today’s announcement focuses on the local electricity distribution grids but we are exploring similar opportunities for electricity transmission, which will also have a role to play in the electric vehicle revolution, as well as the gas sectors.
From all sides, the message on transforming our energy infrastructure to become greener and fairer is clear: get going on it.
I am looking forward to seeing the energy sector continue to play its part in the green recovery.
Notes to editors
About Energy Networks Association
Energy Networks Association (ENA) is the industry body representing the companies which operate 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 Grid 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 45,000 people in the UK and Ireland. They are represented by their industry body, Energy Networks Association (that's us).
Energy supplier or network operator? Energy network operators are entirely separate to your energy supplier, which is the company that bills you for using electricity and gas. Energy suppliers and generators are represented by Energy UK.