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Green Recovery Investment

SP Energy Networks is working with Ofgem to unlock around £300m to support the transition to Net Zero and deliver a green economic recovery from Covid-19.

Through the Energy Networks Association (ENA), SP Energy Networks earlier this year launched a six week call for evidence for sites in each of our two distribution network areas (Central and Southern Scotland and Cheshire, Merseyside and North & Mid Wales) where there is expected to be significant green activity such as renewable energy generation or a high uptake of low carbon technologies such as electric vehicles or heat pumps in the near future. Based on this evidence we have identified 41 projects that we believe can benefit from quick deployment of network investment in the next two years. Our submissions are currently being considered by Ofgem and the ENA.

The UK, Scottish and Welsh Governments have ambitious plans to put the nation and local communities at the forefront of delivering a Net Zero carbon economy. This means substituting many of the fossil fuels we use today for clean renewable energy sources, generated from renewable sources such as wind and solar. We are already seeing the transition from petrol and diesel vehicles to those powered by batteries with electricity coming from the grid. Increasingly we are going to see the use of electrically-powered heat pumps as one of the key technologies which can replace traditional fossil fuel heating systems, alongside other potential solutions such as green gas.

A key aspect of achieving Net Zero is through the decarbonisation of heating and transport. Whilst DNOs are not directly involved in the up-take of these low carbon technologies (LCTs), adequate electricity network capacity and resilience is essential to the use of all LCTs. 

The aim of this exercise is to rapidly deliver electricity distribution infrastructure and solutions in places where that will lead to rapid, material development. 

Green Recovery Priorities

The call for evidence was open to all public and private stakeholders in the relevant DNO region and has been designed to understand and validate the state of readiness of proposals and plans that developers, local authorities and other stakeholders are considering around the areas we have identified. This will enable us to create a priority order of network investment (reinforcement) and implement this over the next two to three years. It will also inform longer term network development in RIIO-ED2[1] and beyond.

Priority is to be given to locations on the basis of likely:

  • Utilisation (e.g. how much of the capacity might be used in the near term – evidence of user demand or need).
  • Deliverability (how quickly infrastructure and solutions could be completed).
  • Value for money. This would consider:
    • Firstly, the cost of the particular scheme relative to the prospective utilisation, including the potential capability of the scheme to provide flexibility or other DSO services; and
    • Secondly, any wider benefits the scheme may have (e.g. supporting the delivery of government policy, wider regional investment it may unlock and job creation)
[1] RIIO-ED2 Sector Specific Methodology Decision | Ofgem

Timeline

The Green Recovery call for evidence was issued on Monday 8th February 2021 and lasted six weeks. After a period of review and short-listing by the DNOs, Ofgem and Government, the final list of sites will be announced in mid-May 2021, with work commencing thereafter.

Stakeholder Engagement

During the call for evidence, SP Energy Networks hosted a series of virtual stakeholder engagement events that interested parties attended to find out more information on the Green Recovery scheme and ask questions. In parallel, we have also been working closely with local authorities to determine where best to focus our investment in the context of local energy and transport plans.

Funding

The Green Recovery funding will be made available to distribution networks by Ofgem. Any funding made available will be limited to the cost of the distribution network solutions and not as a contribution towards the cost of the technologies being installed, or the cost of any final service connection required to the local network. The normal competition in connections process will be available to 3rd parties for the final service connection. Please note that this funding is separate to recent Government funding announcements in the 10-point plan, however we do expect that this scheme will be complimentary to and support those Government funding arrangements going forward.

Frequently Asked Questions

The below list of FAQs has been compiled by ENA.

Q: I/we have been unsuccessful in our application for Green Recovery funding. Will there be another round of Green Recovery funding in the future?

A: At this stage we don’t know. We believe that there is scope for further funding rounds and we will be working with both Ofgem and the ENA to make a strong case for that. We will be happy to consider any proposals that were unsuccessful this time in any future Green Recovery funding rounds. Applicants may also submit their evidence to DNOs for inclusion in the RIIO-ED2 business plan, which will be submitted to Ofgem and cover investment in the networks during the period 2023-2028.  

Q: What are the most important criteria in your assessment of what will be funded? How are they weighted?

A: The process for selecting sites is discussed in Section 3 of this document. This Call for Evidence is part of the overall network planning for DNOs and will allow further evidence to be collected from stakeholders to further justify investment in that area of the network.   

Q: What type of projects will succeed in this scheme?

A:  The process for selecting sites is discussed in Section 3 of this document. We are looking for shovel-ready projects that will support the Green Recovery and address key Government policies such as net zero and the decarbonisation of transportation.  

Q: Will an existing in-progress project be able to apply for a retrospective refund of infrastructure works?

A: No – this funding is aimed at new projects that are struggling to be justified due to network infrastructure costs, rather than those that can or have already been paid for.  

Q: If I have recently accepted a connection offer but no works have yet started, can those be suspended whilst the project is considered under this funding arrangement?

A: No – this funding is aimed at new projects that are struggling to be justified due to network infrastructure costs, rather than those that can or have already been paid for.  

Q: There are a number of options for connection point(s) of our project – is the help available to assess these to decide which to put forward for funding?

A: All DNOs are available for a bilateral discussion on potential projects, to help with decision making as to the best point of connection to the network.  Please approach the relevant DNO accordingly.  

Q: What exactly will the funding cover? Will it cover my equipment costs?

A: The funding that Ofgem will make available to networks will be used to invest in the networks. This reinforcement will be targeted in areas with significant green activity and can be thought of as strengthening the networks and/or bringing the network closer to 3rd party (green) projects, which in turn will reduce the cost of connection for those projects. The funding will not cover the costs of the 3rd party project/equipment, nor the sole-use connection assets.

Q: It is unlikely that I will be able to obtain all of the Land Rights and/or Planning Permission for my site within the 6-week CfE period – will I be penalised and miss out?

A: Not necessarily – it is not compulsory to have Land Rights and/or Planning Permission fully agreed by the time this CfE closes. However, the more information and evidence that you can provide to us the better. If this information exists, it will further evidence the fact that your scheme is shovel-ready or can be quickly deployed, which is one of the key aims of this Green Recovery scheme.

Q: When does my scheme have to be completed? Is it required to be finished by the end of RIIO-ED1?

A: No – there is no end-date requirement for stakeholder schemes, however we are looking for committed stakeholders who have shovel-ready schemes that can be quickly deployed to support the Green Recovery. The intention is that the majority of the network investment is completely by the end of ED1 though.

 

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