RenewableUK has called for Ofgem to put net zero “at the centre of every decision it makes” and said there is a risk the regulator is underestimating “the scale of much-needed grid investment that needs to happen in the next five years”.
The trade body, responding to Ofgem’s announcement today of final determinations for network companies spending over the 2021-26 RIIO-2 price control period, said this risked delaying or restricting renewables deployment.
RUK’s head of policy and regulation Rebecca Williams (pictured) said it was now vital “that Ofgem’s legal duties and responsibilities are linked more firmly and more specifically to achieving the UK’s legally-binding net zero target, not least because this will achieve decarbonisation at the lowest cost to consumers as renewables are the cheapest sources of new power”.
However she welcomed some of the changes made in Ofgem’s decision, which determines how much spending is allowed by electricity transmission companies, National Grid ESO, and gas transmission and distribution.
“We’re glad to see that Ofgem has listened to some of the concerns we raised about its plans to reform the network price control framework with £30bn grid investment to connect low carbon generation across Britain, and a further £10bn on standby, over the next five years.
“But the plans are still treating net zero as if it is a future aspiration or even an uncertainty.”
“It’s good to see that Ofgem recognises the importance of attracting investment to connect offshore wind farms along the east coast of England, as well as higher levels of renewable capacity in Scotland including onshore wind, but it’s still unclear whether grid charges will be set at the right level to bring forward the investment that’s needed.
“Ofgem has also highlighted the need to support the development of hydrogen as a vital step towards decarbonisation – we’re calling for a rapid scaling-up of renewable hydrogen produced using electricity from offshore wind to reach net zero.”
She added that underestimating the spend needed for grid investment risked leading to higher charges for consumers “if we fail to capitalise on renewables as our lowest-cost power sources”, which she said “calls into question whether this regulatory regime is the right one to support the delivery of net zero going forward”.
RUK said it would continue to “work closely” with Ofgem to ensure government carbon reduction and offshore wind targets were achieved.
ScottishRenewables said Ofgem’s determinations contained “welcome progress on a number of issues”.
It said Ofgem’s decision to introduce “greater agility” into uncertainty/reopener mechanisms would help ensure necessary investment was not delayed.
However SR policy manager Cara Dalziel said significant work remained.
“Net-zero should be central to every decision made by both Ofgem, as a facilitator of development, and government more generally, and we look forward to working with network companies and Ofgem to ensure RIIO-2 facilitates the vital transition to a decarbonised energy system with renewables at its heart,” she added.