Ofgem told to fund grid upgrades ahead of need

The government has signalled that Ofgem should allow greater upfront investment in the electricity network ahead of major sources of generation coming online.

The British Energy Security Strategy, which was published on Thursday (7 April), stated that an accelerated roll out of network infrastructure is required to underpin its broader goal to boost low-carbon generation.

It said the government will ensure that Ofgem expedites its approvals process for infrastructure in anticipation of major new sources of generation and demand that may mean the network has to be remodelled.

The importance of such strategic network investment will be reinforced in Ofgem’s forthcoming Strategy and Policy Statement when it is published.

Delivering network upgrades ahead of need will minimise both overall cost and public disruption, the document said: “Building ahead of need, where good value for money, may mean paying more in the short term for an asset that isn’t efficiently utilised immediately but is the cheapest option over the long term and reduces the need for repeated disruptive works to continually upgrade the system.”

The green light for Ofgem to take a more anticipatory approach to investment is one of a number of measures outlined in the document, which are designed to cut system costs by offering “clear” signals on future need.

These include:

• Appointing an Electricity Networks Commissioner to advise government on policies and regulatory changes to accelerate progress on network infrastructure
• Setting out a blueprint by the end of this year for the whole system in the Holistic Network Design (HND), which will identify strategic infrastructure needed to deliver offshore wind by 2030, and the Centralised Strategic Network Plan (CSNP)
• Updating the energy national policy statements to recognise both the HND and the CSNP in the planning system
• Publishing a strategic framework this year with Ofgem for how networks will deliver net zero

The strategy also said some of the infrastructure requirements identified in the HND and CSNP will be exempted from the wider introduction of competition in the onshore transmission network.

It said the moves outlined in the strategy to create a more “efficient and locally-responsive” electricity system could bring down costs by up to £10 billion a year by 2050.

The plan also heralded a number of moves to streamline the planning system for offshore wind and solar projects.

The Renewable National Policy Statement will be strengthened to reflect the importance of energy security and net zero, and Habitats Regulations Assessments will be reviewed for all projects that enter the planning process from late 2023 onwards.

It said these moves will aim to cut the consent time for offshore wind projects from up to four years to one year.

The strategy said the government will also consult on stronger planning rules to encourage the development of ground-mounted solar panels.

And it stated the planning process for approving rooftop solar will be “radically” simplified through the introduction of fast track permitted development rights.

The strategy said changes to Contracts for Difference auctions for the sixth allocation round in 2024 will incentivise projects to locate and operate in a way that minimises overall system costs.

Other moves in the strategy include the completion by the end of this year of a review of the planning barriers that households can face when installing energy efficiency measures, such as improved glazing, including in conservation areas and listed buildings.