| Government and Ofgem should work with network companies to facilitate anticipatory investments in grid infrastructure. |
192. Long-term planning and a system-wide approach is needed to secure investments in the UK's electricity infrastructure now. Under the current system, grid development only takes place once considerable demand has been identified, minimising investment. This slows down the pace of renewable energy development.
"The need for grid updates remains one of the largest blockers in the critical path of our offshore wind projects." - BP168
193. As the UK's energy system transitions to net zero, investors and businesses need the Government and Ofgem to plan much more long-term to secure investment in future network capacity. Delays in expanding grid capacity mean that cheap, low carbon power is wasted. The Review heard that the lack of anticipatory investment in the electricity grid is already hampering deployment. It also heard warnings that similar challenges would beset the roll out of heat pumps and electric vehicles (EVs) at distribution grid level if we do not act swiftly. The Review recommends that government and Ofgem work with network companies to facilitate anticipatory investments in grid infrastructure, to unlock renewables deployment and to build the necessary infrastructure for heat pumps and EVs.
194. The lack of a system-wide approach to grid development means that investments in renewable energy have been delayed. A large pipeline of renewable projects has been unable to connect to the grid and the Review has heard from numerous stakeholders that the lack of grid investments in the transmission network has created constraints on the network and led to delays in new renewables investments. The Government's British Energy Security Strategy (BESS) acknowledges this and included the Holistic Network Design (HND) to accelerate connecting network infrastructure and reform the UK's approach to grid development to support renewable deployment and benefit consumers.
195. Government must accelerate delivery of its commitments made in the British Energy Security Strategy. Rolling out the HND is critical to deliver the Government's ambition of up to 50GW from offshore wind by 2030 and ensuring long-term certainty for businesses.
196. The scale and interconnectedness of the transition needed in energy networks is too great to be left to individual projects to deliver without a strategic framework. The Review welcomes the re-introduction of the Energy Security Bill into Parliament and the inclusion of the Future System Operator (FSO). The Review heard from multiple stakeholders that creation of an FSO is an essential building block to support the development of a net zero energy system and taking a strategic approach to planning and development.
197. The Review heard that the Future System Operator should be set up as quickly as possible and that its duty to advise government and Ofgem is used to support decision-making on key policies, including how network development across electricity, gas, hydrogen, and CO2 network development can be co-ordinated and accelerated.
| Mission: A strategic framework and delivery plan for the critical grid and infrastructure networks of the future to turbocharge onshore and offshore development | ||
| Issue heard by the Review | Action recommended | |
| As a regulator Ofgem is currently limited in its remit and therefore cannot prioritise net zero accordingly. | Government should update Ofgem's remit to incorporate the Government's net zero target as set out in the 2008 Climate Change Act. | |
| Delays in getting new power generation sites connected to the transmission and distributions grid risk undermining UK renewable and clean energy ambitions. | Government and Ofgem should work with network companies to facilitate anticipatory investments in grid infrastructure. | |
| There is currently no comprehensive overview of how infrastructure for different gaseous and liquid fuels and CO2 will need to develop in the future, alongside changes to the power grid. | Develop by 2025 a long-term cross-sectoral infrastructure strategy for the transport and distribution of liquid and gaseous fuels, electricity and CO2. | |
| Market design and regulations need to be adapted to increase further investment in generation capacity, system flexibility and provide more locational signals, whilst ensuring the system retains system operability. | Deliver REMA as a priority, to scale up electricity sector investment, unlock the benefits of renewables, reward flexibility and maintain security of supply. | |
| The price of electricity needs to provide a clear signal to encourage use of low carbon technologies. | Commit to outlining a clear approach to gas vs. electricity 'rebalancing' by end 2023/4 (depending on the fossil fuel prices), and should make significant progress affecting relative prices by the end of 2024. In outlining this approach, ensure that the distribution of the costs which make up energy bills are passed through to consumers, through their suppliers, in a way which is fair, affordable, and supports competition, decarbonisation and economic growth | |