The Clean Growth Strategy (CGS) should take a more ‘whole system approach’ to fully harness the potential for economic decarbonisation offered by energy networks, according to the Energy Networks Association (ENA).
The trade body has responded to the 165-page document published in October - after more than a years’ delay – calling it “just the starting point” for a more developed, cohesive approach from government.
At the heart of this should be the principle of taking a ‘Whole-System Approach’ to policy, regulation and market design, the ENA argues.
To this end, the organisation has been critical of the CGS’ implication that electrification could hold sway over future heat decarbonisation policy. It states that the suggestion that such a strategy, for both heat and transport, “has seen waning support in recent years across the energy sector”.
Citing research from 'Big Four' consultancy KPMG conducted on behalf of the ENA, the association has argued that evolving both gas and electricity networks to help decarbonise the economy could save consumers as much as £214 billion by 2050, compared to a full or near-full electrification scenario.
This would see an incremental cost to the consumer up to 2050 of £4,500 to £5,000, or £104-122 billion in total, as opposed to a cost of £12,000 to £14,000 under a full or near-full electrification scenario (estimated between £274-318 billion).
“We therefore would seriously question whether the challenges and costs posed by the Electricity Pathway are the best way for the government to reach its decarbonisation objectives as part of the Clean Growth Strategy,” the response document states.
“ENA believes that also focussing on decarbonising our gas networks alongside that of electricity networks is the cheapest way to meet our carbon commitments.”
Using its own Open Networks project as an example, the ENA claims that the goals of its distribution system operator (DSO) transition programme are firmly aligned with those of the CGS, and has called for the former’s ‘Whole System Approach’ to be more strongly recognised in the government’s efforts.
It has also called for greater recognition of the role of the current and future RIIO innovation price controls as instruments of government policy on decarbonisation.
“This is important to provide a sense of direction of travel for the strategic use of energy networks in decarbonisation policy whilst ensuring that Ofgem’s short-term (currently 8-year) objectives of price controls are aligned with the government’s long-term decarbonisation and energy policy objectives.”
The innovation efforts of networks will no doubt play a role in power system decarbonisation however Ofgem has repeatedly warned of tougher price controls over this spending in the future to address what the regulator’s head of networks has described as “concerns people have around network company returns”.
Despite these concerns and calls for additional recognition of the role networks can play in decarbonisation, ENA members welcomed the publication of the document. It is said to represent a move forward in developing a more co-ordinated approach to government policy on decarbonisation, providing greater connection and strategic co-ordination across a variety of different policy areas.
The strategy of identifying “low-regrets” steps, which the ENA says can be explored and used to make long-term policy options.
However, the response maintains that its comments act only as “the starting point for further discussions” with government to further boost to role of networks in future decarbonisation plans.