National Grid Electricity Transmission (NGET) has set out plans to invest £7.1bn in making the network more reliable, resilient and low-carbon in its RIIO-2 business plan.
Covering the period for 2021-2026, NGET assured that it had fully built in the benefits of its successful innovations and efficiencies from the current period, saving at least £707mn, while committing to finding a further £383mn in efficiency savings. It explained the plan was underpinned by stakeholder and consumer priorities with the cost to the average annual household bill forecast at £23.60.
The majority of investment – £4.28bn over five years – is to be spent on providing a safe and reliable network. This will see investment in renewing and modernising 6-19% of NGET’s different network asset types to maintain reliability for future generations and the delivery of three major electricity cable projects in London, Sheffield and North Wales to maintain security of supply.
NGET pledged £936mn of expenditure over five years to enable the ongoing transition to the energy system of the future, with this used to increase the network capacity by 22.5GW, avoiding system operation costs of at least £250mn per year. In a bid to make it easier to connect and use the network, NGET will spend £417mn over five years, including the connection of 15.3GW of customer capacity to provide the UK with clean power, flexible storage and access to clean and cheaper power from Europe.
Other commitments include £555mn to protect the network from external threats, £255mn to care for the environment and communities and an £84mn programme of work funded through Ofgem’s Network Innovation Allowance provisions. Here, NGET said it would commit to creating a more innovative, performance-based culture across its organisation; explore how digitisation, AI and data sharing can reduce asset management costs; and deliver a programme of innovation focused on reducing greenhouse gas emissions, such as finding and using alternatives to high carbon materials on the network.
As well as its own plan, NGET set out what was needed from policy makers by 2021 on the route to net zero, advocating the importance of working together on solutions. NGET said that a clear policy framework to fairly distribute the costs of decarbonisation across households, tax payers and businesses was needed, as well as a standard carbon pricing methodology to ensure whole-life environmental impacts are factored into investment considerations. This would sit alongside funding for key net-zero investments.
It also called for an industry agreed approach to whole-system solutions across energy companies; a flexible, ex-ante price control framework to deliver net zero; and a workable early competition to model to ensure the right capital at the right rate of return, giving consumers the confidence that they are securing an economic and efficient deal across the whole-life of large projects.