MPs urge snap network price control review to spur grid development

The government should carry out a snap review of Ofgem’s network price controls, MPs have urged.

The House of Commons environmental audit committee (EAC) warns that slow grid connections must be fixed to avoid putting the government’s net zero goals at risk, in a new report on Enabling sustainable electrification of the UK economy.

Among a wide-ranging set of recommendations for fixing the grid connection and planning process, the committee calls for a rethink of Ofgem’s current model of electricity network regulation, which is based around multi-year business plans.

These price control periods are not “not responsive enough” for an energy system in “rapid flux”, it says: “The present regulatory model locks in market controls over many years: in the current climate, this risks slowing down innovation and restricting network development.”

The committee recommends that the government should examine Ofgem’s current ED2 (distribution) and T2 (transmission) price control periods to establish whether the measures are driving the necessary connections and increases in capacity.

If they are not, these price control periods should be re-opened or modified in order to incentivise immediate network reform.

And future network regulatory reviews should be geared to respond as rapidly as possible to further potential innovations to decarbonise the economy, the report recommends.

The committee also raises concerns that the relationship between the Centralised Strategic Network Plan and the Strategic Spatial Energy Plan, both currently being prepared by the energy system operator (ESO), is unclear.

Unless the two plans are developed in tandem, there is “an evident risk that the two plans will deliver suboptimal outcomes”, it warns.

On grid connection reform, the report says Ofgem’s setting of milestones for vetting progress on individual projects has not yet led to an “immediate and radical” reduction in queue times.

It recommends that the regulator should review these milestone queue reforms with a view to prioritising projects which are demonstrably ready to connect to the grid, and move renewable energy projects to the front of the queue.

On the government’s proposals to offer payments for those affected by grid upgrades, the committee recommends that ministers should assess the merits of ensuring that a proportion of community benefit are delivered earlier in the process, such as from when planning consent is granted.

Overall, the committee expresses concerns about the lack of evidence that currently exists of a unified overall approach to planning for the energy system.

The government, together with Ofgem and the ESO, should establish by the end of this year a “multidisciplinary planning cell” to produce a delivery plan setting out the necessary investment and rollout of electricity infrastructure required to deliver the government’s current low carbon electricity generation ambitions.

The report also urges the government to publish by the end of 2025 an energy storage strategy, including the measures planned by ministers to ensure that there is ‘sufficient capacity’ in place to meet the system’s needs in 2035 and in 2050.

Philip Dunne MP, chair of the EAC, said: “This project, around which there is a broad consensus, will require an unprecedented level of planning and coordination across government, as well as significant private investment.

“There is no lack of demand to take part in the clean energy revolution; UK businesses are queuing around the block to secure access to the grid. As green technology improves and becomes easier to access, this will only increase.

“But achieving that goal will require sustained investment and unrelenting effort across all aspects of the energy system.

“Immediately after the general election, the government must address these concerns as a priority, and set out clearly how it will balance achieving net zero goals with delivery of a secure energy supply.”