Upgrading the electricity transmission network

25 DESNZ, Ofgem and NESO have plans in place to improve spatial planning and coordination of generation, grid capacity and demand. These will not have an impact until after 2030. In the meantime, to improve their oversight and alignment of grid
upgrades in the run up to delivery of the Clean Power 2030 target, they should:
a. strengthen the grid upgrades portfolio management function. While grid projects are delivered by privately owned and regulated companies, DESNZ has established a portfolio management function because delivery depends on coordinated action across government, the regulator and industry. To make best use of this function, DESNZ, Ofgem and NESO should:
? develop a single, consistent view of portfolio performance, including agreed definitions of project milestones and progress, common reporting across organisations, and a clear assessment of whether the portfolio remains on track to deliver Clean Power 2030;
? assess and prioritise projects according to their impact, including developing a better understanding of the consequences of delays for constraint costs, the connection of new generation and future demand. NESO should support this through more transparent and regular forecasts of constraint costs;
? identify the projects and risks that present the greatest threat to achieving Clean Power 2030 and establish clear routes for escalation and intervention where project risks exceed agreed tolerances; and
? identify the interventions available to address the most significant delivery risks and barriers, and assign clear responsibility for taking action to DESNZ, Ofgem, NESO, Transmission Owners or other stakeholders, as appropriate.

publish regular updates on the cost, timetable and delivery status of grid projects. This may require either changes to licensing or voluntary agreement from the Transmission Owners. Greater transparency would improve accountability to Parliament and consumers and provide a clearer picture of progress towards Clean Power 2030. This would strengthen the Transmission Owners? incentives for delivery of projects by combining existing financial incentives with greater public accountability for project performance.

review options for Clean Power 2030 generation projects expected to connect to the grid before sufficient network capacity is available. Connecting these projects may result in substantial constraint costs, but delaying them could unpick existing agreements and increase investment risk (with potential knock-on impacts for future investments). DESNZ should assess the available options and these broader trade-offs to ensure its chosen approach is value for money and in the best interests of consumers and the energy system.

review whether the Security and Quality of Supply Standard strikes the right balance between maintaining system reliability and allowing network upgrades to be completed more quickly. DESNZ, Ofgem and NESO should provide advice to ministers on the trade-offs between resilience, cost and speed of delivery so ministers can decide their tolerance of risk.

The number of approvals expected up to 2030, combined with the need to support timely project delivery, places greater demands on Ofgem?s regulatory capacity. Ofgem should:
e. assess the effectiveness of its regulatory approach in protecting consumers while supporting rapid delivery of network upgrades. Ofgem should compare actual project costs and delivery of projects under the current price control framework and identify any evidence of systematic bias in cost estimates. It should publish a full evaluation of the current price control framework and use this to strengthen future price controls and determine whether additional consumer protections are required.

To strengthen decision-making for future network investment after 2030, and demonstrate that the chosen projects are optimal, DESNZ, Ofgem, and NESO should:
f. consider and set out the economic, social, resilience, security and environmental costs and benefits when:
? NESO explains why the pathways set out in its proposed Strategic Spatial Energy Plan provide the best mix of projects;
? DESNZ advises ministers on which pathway to choose, informed by NESO?s modelling; and
? Ofgem makes decisions about specific projects and future price control periods.