Source · Select Committees · Environmental Audit Committee
Recommendation 25
25
Accepted
Paragraph: 99
Encourage anticipatory network investment to meet likely future demands on the electricity system.
Recommendation
A general focus by Ofgem on ‘just in time’ network investment means that limited current network capacity can be a barrier to new connections. We recommend that the Government and Ofgem work together to encourage anticipatory investment where it is apparent that new demands on the system are likely. This should be done through clear direction based on the Centralised Strategic Network Plan, as well as through targeted market incentives and reform of the network price control review process.
Government Response Summary
The Government accepts the recommendation, stating it will work with Ofgem to encourage anticipatory investment through a supportive investment regime and reform of the network price control process. NESO will develop a Strategic Spatial Energy Plan by 2026 and a Centralised Strategic Network Plan by 2027 to guide strategic investment.
Paragraph Reference:
99
Government Response
Accepted
HM Government
Accepted
As set out above, Ofgem is responsible for setting and reviewing the electricity network price control, however, the Government will continue to work with Ofgem to ensure this works as effectively as possible and is in line with our Clean Energy Superpower mission, including Clean Power by 2030. To enable strategic investment ahead of need in GB’s electricity networks, a supportive and adaptable investment regime is planned, which recognises the benefits of ‘future proofing’ the network and provides strong incentives for timely delivery of clearly defined outputs. Ofgem is working to ensure that the next electricity transmission price control (RIIO-ET3) will be sufficiently agile and forward-facing to remove regulatory approval from the critical path and ensure that funding requirements do not delay strategic transmission projects. RIIO-ET3 will look to build on the progressive principles of the Accelerated Strategic Transmission Investment9 mechanism and incorporate a similar regime into the enduring price control framework. Strategic planning of the major investment needed will be central to ensuring consumer value for money. To support this NESO will develop a Strategic Spatial Energy Plan (SSEP) in 2026 that feeds into a Centralised Strategic Network Plan (CSNP), to be published in 2027, identifying required strategic investment across the GB energy networks. Before this, Ofgem will draw on transitional strategic network plans: NESO’s ‘Beyond 2030: National Blueprint’10 will help set out the need for individual networks projects in the RIIO-ET3 price control.