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‘A powerful case’ for net zero investment: SSEN unveils RIIO-T2 business plan

Image: SSEN.

Image: SSEN.

SSEN has submitted its finalised RIIO-T2 business plan to Ofgem, solidifying its five goals for the period.

The transmission system operator (TSO) has put the plan forward after a consultation with local and national stakeholders, as well as its RIIO-T2 User Group, after unveiling its draft in June.

The plan covers the period from April 2021 to March 2026, laying out five goals to support the UK and Scottish government’s net zero targets. These goals remain largely unchanged from the draft plan:

  • Transport the renewable electricity that powers 10 million homes
  • Aim for 100% transmission network reliability for homes and businesses
  • Every connection delivered on time
  • One third reduction in greenhouse gas emissions
  • £100 million in efficiency savings from innovation

The main change to these is the revision of its reliability goal, which was originally to maintain 100% reliability, after stakeholder feedback that it should be an aspiration target where it is cost effective to do so.

The plan makes an investment case for a minimum total expenditure of £2.4 billion over the RIIO-T2 period, which SSEN says is essential to maintain and grow the north of Scotland transmission network to meet the needs of current and future generators and customers.

This is an increase from the £22 billion total expenditure forecast in the draft business plan.

SSEN forecasts a total expenditure of between £470 million and £750 million each year, lauding its ability to achieve its goals with the average cost for the GB consumer coming in at around £7 a year.

A network for net zero

The business plan focuses on four areas it will deliver on, the first being a network for net zero. This is to be achieved by enabling the growth of renewable generation and the electrification of heat and transport.

By the end of RIIO-T2, SSEN expects there to be 8.1GW of generation connected to the north of Scotland transmission system, with connected generation required to increase to between 13.6GW and 15.7GW by 31 March 2026 for net zero.

The TSO is taking a ‘Certain View’ approach to balancing investment requirements with consumer concerns on rising costs, an approach that 80% of attendees at its consultation events supported.

The approach is broken down into Certain View, where all of the investments and activities with a strong evidence of need and the best option can be identified, and Uncertainty Mechanisms, pre-defined regulatory mechanisms that allow an increase in expenditure when the need can be demonstrated.

The total expenditure forecast for the Certain View is £2.36 billion over RIIO-T2.

To deliver a network for net zero, there will be Certain View capital investment of £761.9 million in generation connections, regional and strategic infrastructure that has a certain need and £129.1 million of preconstruction expenditure to ensure readiness to invest beyond the Certain View.

There will also be flexible uncertainty mechanisms to protect consumers from uncertain investment while enabling investment to proceed when the need is confirmed.

A safe and reliable network

The second section the Business Plan is to deliver is a safe and reliable network, aiming for 100% reliability for homes and businesses.

The Plan will see a Certain View capital investment of £810.2 million in replacing or refurbishing existing network infrastructure and direct operating costs of £87.3 million.

Security of supply

Building resilience reduces vulnerability to both natural and man-made threats, SSEN said. Its plan highlights reliability, redundancy, resistance and response and recovery as four areas that will see action, including new network control facilities with the capability to analyse real-time data and the creation of two warehouses to store spares for critical assets.

Under security of supply, the Business Plan will deliver a Certain View capital investment of £272.6 million to refurbish, replace or upgrade network equipment and systems for security of supply and £57.8 million in existing business IT and operational technology, and cyber resilience.

A sustainable network

SSEN emphasised the importance of trust, publishing its new Stakeholder Engagement Plan alongside the Business Plan. The strategy was built with the input of over 130 stakeholders, to “fundamentally” redesign SSEN’s approach to stakeholder engagement and the role of stakeholders in its decision-making.

There are also five core business policies that have informed the business plan, including enabling whole energy system solutions, its innovation strategy and its stakeholder engagement strategy.

Its sustainability and competition strategies also informed the plan.

Rob McDonald, managing director for SSEN Transmission, said the company believes the Plan represents a balanced package that makes a “powerful case” for “vital” investment needed for net zero.

SSEN also outlined its intentions to cut its own greenhouse gas emissions by a third through decarbonising its fleet and "clean[ing] up" the gases used in its network infrastructure.

Ofgem is to consult on the business plan, with open hearings expected to take place in the first half of 2020.

As part of Ofgem’s consideration of the final plan, it will consult with stakeholders during 2020 before determining what level of investment should be taken forward from 2021 through to 2026.

The full business plan can be read here.

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