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Ofgem releases part of the framework for the RIIO-2
Price Control for distribution networks
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Release of framework kicks off the RIIO-2 process for
distribution networks, with major implications for GB
decarbonisation
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Renewable energy & clean tech sector comments, as
how distribution networks are governed has been a historic
barrier to deployment
Frank Gordon, Head of Policy at the REA
commented:
“With decarbonisation a public and industrial
imperative, and the pace of technical change remaining rapid, we
welcome Ofgem’s review of the price control system for the
electricity distribution networks. Key features, including
prioritising the delivery of Net Zero, changing allowable returns
and bringing the default contract period to five years, are sound
decisions although could conceivably go further given the
problems with the networks in recent years.
“We note that this is only part of the overall process
as the document does not include the decisions on how and whether
to incentivise networks to speedily and affordably connect
renewable energy and clean technologies. We also believe that
procuring new flexibility capacity can reduce the overall level
of new infrastructure, such as wires and pylons, needing to be
installed which needs to feed into the process as
well.”
“The REA cannot understate the importance of this
process. Whilst many networks are presently becoming more
involved in managing grid constraints, for example by tendering
for energy storage services, distribution networks have
traditionally been major obstacles for the deployment of
renewable energy and clean technologies. Costly grid connections,
slow decision making, and a lack of transparency in charging
methodologies are often-cited problems for developers. The
benefits of many clean technologies to the networks, such as
energy storage and smart electric vehicle charging, are also
often not reflected by the networks.
“Recent REA analysis shows that there has been a
doubling of the amount of power being exported to the
distribution networks since 2012, mostly due to small-scale and
local renewable generation technologies being deployed. The march
to Net Zero will require significant further expansion of
distribution-connected renewable power generation. Networks need
to be both encouraged through this price control framework to
proactively prepare for this, and our industry needs to be sure
that there is a transparent and robust penalty and review system
for network operators who cannot or will not keep up with the
pace of technological change.
“We look forward to working with Ofgem and other
stakeholders in the coming months to ensure our networks are
ready for a significant expansion of low-carbon heat, power, and
transport technologies in the 2020’s.”
Notes to Editor
· Ofgem’s
RIIO-ED2 Framework Decision can be found here: https://www.ofgem.gov.uk/publications-and-updates/riio-ed2-framework-decision
· REA
analysis relating to exports to distribution networks is part of
the REA & ElectraLink 2019 Flexible Futures project, details
here: https://live.r-e-a.net/wp-content/uploads/2019/10/flexible_futuresfinal.pdf
