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Some good news this week, as Ofgem handed the networks an early Christmas present in the shape of £46 million for eight innovation projects. These awards include the last round of funding for power networks from the Low Carbon Networks Fund (LCNF), as well as the gas and electricity Network Innovation Competitions (NIC). Power networks will move to the NIC model next year, when the LCNF comes to an end and RIIO-ED1 kicks in.
The LCNF has been a resounding success. It has fostered a new culture of innovation in a sector where research and development had been all but wiped out by years of RPI-x. As Energy Networks Association chief executive David Smith writes in our Chief Executive’s View column this week, the fruits of the competition were on show in Aberdeen at the LCNI conference last month – and they were astounding (p6). Both the networks and Ofgem can be truly proud of this partnership, which has delivered tangible benefits for companies and customers, and put the UK at the forefront of global innovation in this space.
It would be a tragedy if this advantage was lost with the end of the LCNF.
Industry sources report that the early signs for its replacement, the electricity NIC, look promising.
Ofgem must now ensure there remains a business incentive for networks to invest in innovation. Fair enough, the regulator wants to save customers money, but if it is over-zealous in clawing back savings, it risks undermining the business case for innovation.
As the networks look to their future, with all the new threats and challenges that entails, innovation has never been more important. It’s a question of survival.
• There were red faces at National Grid and SSE this week following our revelation that Peterhead, one of the three power stations contracted to guard against blackouts this winter, failed its test run. The national significance of Jillian Ambrose’s scoop was recognised by papers including the Financial Times and The Daily Telegraph – but the cause of the failure remains a mystery, with SSE and National Grid each insisting it’s something for the other to disclose. It’s time to come clean, we think. Read more on pages 4 and 26.
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