A new report released today by the National Infrastructure Commission (NIC) has declared that the current rate of investment in electricity distribution networks must double by 2050 to ensure rising demand from renewables can be met.
The report, titled “Electricity distribution networks: Creating capacity for the future”, notes that nationally, between £37 billion and £50 billion of investment into the electricity distribution network could be needed to support additional demand and generation between now and 2050, a sum that represents at least a doubling of current annual allowances for distribution network spending, with investment needing to accelerate most quickly in the next five to ten years.
Furthermore, the NIC has made several recommendations to ensure the ongoing stability of energy distribution networks across the UK, including introducing measures to maximise the use of flexibility across the system, reviewing the security of supply standards for distribution networks, and developing structured ways for local stakeholders to input into Regional Energy Strategic Plans.
The report notes that flexibility will be “key” in meeting the UK’s mission to deliver clean power by 2030, and that maximising consumer-led flexibility could reduce the amount of investment required in the distribution network by around 15%.
Additionally, the paper notes that improvements to the collections process will be required in order to deliver the increasing number of distribution connections that will be required in the coming years, acknowledging that while such reforms are currently ongoing, they must be prioritised to meet the needs of the grid.
Outdated regulations in the planning system were also highlighted as a blocker to the expansion of the distribution network, and the NIC recommends that a small number of targeted changes to the planning system – such as those laid out in the land use framework – are made in order to resolve this.
Sir John Armitt, chair of the National Infrastructure Commission, said: “The UK is heading in the right direction on decarbonising power, but we can’t be complacent. We must learn the lessons from playing catch-up on transmission grid expansion and get ahead of the curve on investing in our local networks. That requires a new approach to regulation which encourages operators to make prudent local investments that anticipate future demand.”
Nick Winser, National Infrastructure Commissioner, added: “Every part of our electricity sector must play its part in supporting economic growth, and distribution networks are no exception. But that requires a more strategic approach that empowers proactive investment and ensures network operators do more to make connections easier and faster for more businesses.”
Industry reacts
In response to this report, Charles Wood, deputy director at trade body Energy UK, said: “The recommendations of this report should be implemented in full to address the barriers facing developers and consumers connecting to distribution networks across Great Britain.
“Inconsistencies in DNO approaches to delivering connections result in a postcode lottery that threatens to leave regions and neighbourhoods behind as others see the benefits of a lower-carbon, flexible, homegrown energy system. Ongoing reforms to connections and system planning at the national level must be met with equivalent efforts at the regional distribution level, and this report is an excellent summary of the actions required to modernise and improve delivery at all levels of the energy system.”
Yselkla Farmer, CEO of BEAMA commented: “The NIC distribution review highlights the need to end the ‘build just-in-time’ approach that has led to a lack of network capacity being a blocker for growth and decarbonisation. Instead, the UK needs to invest ahead of need for economic growth. Ofgem and government will risk the UK missing Clean Power 2030 goals if they wait until the start of the next price control in 2028 to fix the issues, and by then it will be too little too late.”
SSEN Distribution’s managing director, Chris Burchell, said: “This is a very important and timely report, and we welcome the bold, ambitious vision the NIC has laid out for the future of distribution networks, including recommending a shift from a reactive ‘steady state’ investment process, to a proactive and efficient approach that will support our customers in a net zero world.
“Now the NIC has made its recommendations, we stand ready to work with the UK Government and the energy regulator, Ofgem, to digest the findings and act quickly to create the proactive investment mechanisms that will accelerate green growth up and down the country. For our part, we will continue to bring forward efficient investment proposals that will keep costs low for consumers in the long-term.”
