Vattenfall has been granted an independent distribution network operators (IDNO) licence by Ofgem, allowing the Swedish company to move into the UK’s network operations market.
The licence was granted on 1 November to Vattenfall Networks, a new unit within the business that will build and operate new connections to the existing network in new residential, retail or industrial areas. Vattenfall told Clean Energy News that Ofgem is encouraging more competition in these areas by establishing a new networks framework
Each DNO covers a separate geographical region of Great Britain, with IDNOs owning and operating smaller networks located within the areas. They are regulated in the same way as DNOs, except that the IDNO licence does not have all the same conditions, with the charges they are able to apply capped for all customers at a level broadly consistent with the DNO equivalent charge.
Vattenfall Networks is expected to begin operations in 2018 with a hope that its first client will be signed on soon after. The company will focus on new build networks of varying sizes, hoping to develop a number of IDNO and private networks over the next five years.
This will expand Vattenfall’s investment in the UK electricity market, marking what it has called ‘a first step’ in establishing smart, independent electricity distribution network operations in Great Britain.
Magnus Hall, Vattenfall’s president and chief executive, said: “This is an another important step for Vattenfall in the UK which is an interesting market where we see good opportunities to further grow with our climate smart energy solutions. This is in line with our overall strategy to become fossil free in a generation and supporting our customers in reducing their carbon footprint.”
The new division is to be unbundled and independent of Vattenfall’s existing UK sales and generation business and will serve to build on the activities the company has already built up in the UK.
Annika Viklund, head of the distribution business at Vattenfall, explained: “Vattenfall has extensive experience in operating electricity networks, including smart meters, and we are now also investing in micro grids and smart street lighting.
“We will use our expertise to develop the British networks business. Vattenfall will offer integrated and climate smart energy solutions to future customers in Great Britain.”