ED2 can provide the backbone of net zero

Great Britain’s electricity distribution networks today (1 July) submit their draft business plans for the next price control period, RIIO-ED2. John Spurgeon, head of regulation at the Energy Networks Association, takes a closer look.

The energy sector is undergoing an unprecedented period of change as the UK works towards a net zero carbon future. The electricity networks are playing a central role in unlocking net zero, providing the backbone needed to adopt low-carbon technologies, including electric vehicles and heat pumps and connecting more renewables than ever before.

Proposals within the electricity distribution networks’ draft business plans submitted today will help to deliver even more renewables, boost resilience and safety, and with a focus on flexibility will enable customers to take advantage of new products and services.

Having already embarked on spending £300 million to support a green economic recovery from the pandemic, the networks are looking to deliver a net zero future that enables economic growth, creates green collar jobs, and in which vulnerable and fuel poor customers are supported, protected, and can access the benefits net zero offers.

Working in partnership with stakeholders

Delivering for customers is at the heart of all the business plans. Their plans have been co-created with customers and stakeholders, making sure their commitments accurately reflect the priorities and expectations of people across Britain.

Tens of thousands of customers have fed back their views on what networks’ strategic priorities should be, making the business plan submissions truly customer driven. Final drafts of the business plans are submitted to Ofgem on 1 December, so customers and stakeholders still have an opportunity to engage and share their views with their local network operators.

As energy customers fund the work the networks do, it is essential the networks deliver value for money. Customers want the networks to continue investing in Net Zero and post-pandemic recovery but doing so in a way that is as affordable as possible. The plans put forward by network companies would make this possible with minimal changes to the average energy bill.

Delivering net zero

Net zero is the most significant issue facing the energy networks within the period these business plans cover. Networks must manage their own impact on the environment and enable the transition towards a smarter, more flexible energy system. These business plans are a critical step along a much longer-term pathway to delivering net zero emissions.

While we need investment in our electricity networks, delivering Net Zero is also about using infrastructure and new technology in better, smarter ways to unlock benefits for customers, businesses, and society.

Networks already have a “flexibility-first” approach, and this will continue through RIIO-ED2 especially as more community-owned, renewable energy projects are connected and as growing numbers of customers use heat pumps and electric vehicles.

Providing customers with the best possible service

The network companies are already providing excellent service to customers, with satisfaction rates averaging 9 out of 10. Beyond their commitment to climate action and reliability, network companies are particularly focused on supporting customers who live in vulnerable circumstances or fuel poverty. This is particularly important as the country focuses on an economic recovery from the effects of Covid-19. Within their business plans, networks are taking steps to provide additional support for fuel poor and vulnerable customers and make sure that all customers can benefit from the net zero transition.

Operating a reliable, resilient network

Customers are looking for a reliable service from their network operator. Since 2015 the number of power cuts has fallen by a fifth, while the average length of interruptions has fallen by 15 per cent to just over 30 minutes. Improving the safety, reliability and resilience of the networks will remain a top priority, increasingly so as more of our heating and transport is electrified.

While this includes continued investment in reducing power cuts and protecting the environment, customers also need an energy system that is resilient against newer issues like potential malicious cyber incidents and mitigating the effects of climate change. These issues also factored into the draft plans.

A flexible, regulatory framework that can deliver investment and net zero

To deliver the net zero energy system customers need, in RIIO-ED2, the networks will need the ability to invest in targeted ways to prepare for future demand. This will help to expand existing capacity and bring more renewable generation online, while accommodating uptake of low carbon technologies like heat pumps and electric vehicles.

Working with a flexible regulator, the industry is already delivering an accelerated £300 million investment in green recovery, targeting local grid upgrades across over 200 sites over the next two years. RIIO-ED2 must provide a framework in which investment like this can be brought forward, delivering economic and societal benefits for all and at pace.