ENA's Head of Markets Policy Edward Gill, looks ahead at how energy network infrastructure can help support and drive green growth.
As 2022 draws to a close, the news about the economic challenges facing the country is most definitely on the gloomy side of things; inflation remains high, interest rates have risen once again and a recession looms.
But today’s economic challenges tell us much about the opportunities that the drive to net zero can create in the future, and the contribution that Britain’s energy network infrastructure can make to help realise those opportunities.
In Great Britain, we have enough electricity cables to go around the world twenty-five times and enough gas pipelines to stretch more than three quarters of the way to the moon. Our energy network infrastructure as an asset is worth more than six times the value of the 2012 London Olympics.
The geographical footprint of that infrastructure means it has the huge potential to make a valuable contribution to our country’s fortunes, as we look to brighter economic days ahead, in a way that also delivers decarbonisation.
Here at ENA, we see that contribution coming in three key areas:
First, is the direct economic stimulus that investment in network infrastructure can provide to help first restore and then maintain growth. That investment can act as a long-term economic stimulus that creates new green skills and jobs right across the country. For example, last year energy networks published plans to invest £4.4bn in reducing industrial carbon emissions in the next ten years, which would help create 17,000 high-tech hydrogen jobs to future-proof our industrial heartlands across north-west England, the Humber and Teesside, Southampton, north-east Scotland and south-east Wales.
To help provide that stimulus, companies need to be allowed by the regulator to make investment decisions that are forward looking and strategic, rather than backwards looking and reactive. With that change, we can keep the upfront cost of investment to our households, businesses and economy low by spreading it across future energy bills and across different generations – as they have done before; in the last decade, network companies have invested more than £58bn in infrastructure across the country, nearly £2,200 for every household.
Second, we need to boost the capacity of our energy network infrastructure to help kill energy price-driven inflation. We can do that by connecting cleaner, more secure, sources of homegrown electricity and hydrogen production projects to Britain’s energy networks, more quickly.
We want to deliver that increase in capacity in two ways; by building new wires and pipes to transport electricity and hydrogen around the country, and by using existing ones as efficiently as possible, using smart flexible electricity markets and repurposing parts of our existing gas network so they are hydrogen-ready.
To do this, we not only need the government to provide greater direction to Ofgem on network investment; it must also accelerate crucial decisions on the investment models for hydrogen infrastructure and set out its vision for the use of hydrogen storage, which can help create a buffer of supplies for us to use year round, whatever the weather, come sunshine or snow.
Third, we need to focus on how cleaner, more efficient energy network infrastructure, alongside green skills, new network infrastructure and smart technologies, can solve low levels of economic productivity that have left the UK ranked in the bottom half of the G7 countries.
The role of our energy network companies in this respect is to help keep the cost of producing and delivering reliable energy supplies as low as possible for Britain’s businesses and industries. It exists to provide the widest possible range of entry points for energy production, for example for new wind farms, solar farms or hydrogen production plants, and exit points for its consumption, wherever businesses and industries might need them to be.
Adaptability and agility are key to ensuring that our energy network infrastructure provides that service as efficiently as possible. So Ofgem must set out its plans to continue or replace existing network innovation funding, in the form of the Network Innovation Allowance, that will allow network infrastructure to continue to adapt to a fast-changing energy system.
Transforming the building blocks of our energy system can provide a long-term economic and productivity stimulus for today whilst protecting our efforts to deliver economic stability and stimulate sustainable, long-term growth.
In each of these three key areas, Britain’s energy networks stand ready to play their part in helping ensuring that’s the case.
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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.