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10 | 24TH -30TH MAY 2019 | UTILITY WEEK News Where will the investment come from to deliver the low carbon transition? W e strongly support the trajectory for a zero carbon future as set out by Labour. However, these proposals are in danger of undermining their very own decarbonisation objectives. They could also cost the British public a lot of money. Decarbonisa- tion targets are getting more ambitious and through innovation the energy networks are transforming the energy landscape. From work like the ENA Open Networks Project and on gas decarbonisation, the network companies are intrinsic to meeting these policy objectives. To introduce this complex change will not only jeopardise this jour- ney but bring it to a stop. At the heart of these renationalisation proposals there is a void on where the investment in the future will come from. In the past six years alone, companies have invested over £22 billion in their gas and electricity grids across the country, which is 2 per cent of annual UK investment. Without this investment going forward, decarbonisa- tion will be seriously undermined. State assets will be in competi- tion with other public spending priorities. How will the need to deliver a decarbonised future compete with schools and hospitals? It seems irresponsible to put this vital energy investment in a queue with funding for children's education and the public's health. Looking back to the days of state ownership the energy networks were more expensive and less reliable. Since privatisation in 1990 network costs to the billpayer have fallen by 17 per cent. At the same time that costs have fallen, reliability has improved: the public have experienced 60 per cent fewer power cuts while their length has been reduced by 84 per cent. Energy networks have responded quickly to the rapid growth of the low carbon transformation. Renewables' share of total genera- tion was at a record high level of 33.3 per cent in 2018, up from 29.3 per cent in 2017. Over 30GW generation has been connected to the distribution network. Britain is decarbonising gas with 100 sites producing green gas now connected to the network. Also thanks to the work of the gas networks, hydrogen has been named by the government as a plausible pathway towards UK decarbonisation. Labour proposes bureaucratic complexity that will stiš e innova- tion, not encourage it. It is unclear how the new structures would work together and how they would deliver. Our Open Networks Project and work on gas decarbonisation has reinforced how vital it is for e› ective co-ordination and clear lines of responsibility. The attractiveness of the UK to encourage inward investment would be undermined by these proposals. The net result would be to reduce investment and increase the cost of that œ nance. Unstable regulatory frameworks and arbitrary acts by governments do not encourage investors. This will mean that energy bills for consumers will go up and we have been striving to reduce them. We will continue to make the case for a sector that is deliver- ing on cost, on reliability, on decarbonisation and on serving our communities. Turning the clock back to state ownership would only cause massive cost and disruption and mean that the British public would miss out on the smarter, cleaner, more ež cient energy system that we all agree is needed to keep our lights on, our homes warm and our carbon emissions down. Read David Smith's full opinion piece at utilityweek.co.uk Opinion David Smith Chief executive, Energy Networks Association Inside story (continued) at the pace of the transition to a low carbon economy. More broadly, energy networks them- selves are worried that Labour's plans will distract from the broader push to decarbon- ise the grid by scaring o› investors from the sector (see ENA column, le¢ ). The Energy and Climate Intelligence Unit (ECIU) conducted a highly critical analysis of network proœ ts last year, which has been seized on by Labour to back its case that these companies are proœ teering at consum- ers' expense. Labour accuses the network companies of "gaming" Ofgem's charging regime. However, Jonathan Marshall, head of analysis at the ECIU, judges that Ofgem has toughened up its approach on charging since he wrote this report. He says: "The tide has turned on how punchy Ofgem is prepared to be. It has come out strongly on what it is pre- pared to let these companies earn." He also worries that Labour assumes that networks will continue to deliver at current levels while in the midst of a fundamental overhaul. Catherine Mitchell, professor of energy policy at Exeter University, is no great fan of either the network companies nor Ofgem. She argues that the regulator has "failed" to promote the evolution of the distribtution network operators (DNOs) into distribution service providers, which will facilitate the emergence of a more decarbonised market, such as has happened across the Atlantic in New York State. "The companies have tried to keep change at a speed they can control, and Ofgem has not forced them to do more. But Mitchell questions whether nation- alisation will achieve the transformation she wants. "Even in public hands they will have to be regulated – so we still have the same problem to some extent." She backs the idea of a publicly owned independent and integrated system operator of the transmission system, going one step beyond National Grid's recent internal split. But even this critic of the networks believes that the arguments for a change of ownership at the distribution level are "more complicated". As well as the substantial cost that would be involved in buying out the DNOs, the pub- licly owned entities would still have to be regulated, Mitchell says. And whether Labour can even push its plans through is a moot point, with law- yers lining up to predict they would become quickly entangled in a judicial mineœ eld. Labour's mooted nationalisation of the continued from previous page "This is what physics, far more than politics, is tell- ing us. Rena- tionalising a Robin Reliant wouldn't magi- cally turn it into a Nissan Leaf." Ex-Labour MP Alan Simpson