Utility Week

16 | AUGUST 2021 | UTILITY WEEK Policy & Regulation RIIO-ED2: Analysis DNOs outline £23bn step towards net zero All six electricity distribution network operators in Great Britain submitted their draft business plans for the RIIO-ED2 price control to Ofgem at the start of July. Utility Week looks at what is being invested, and where. ENW was one of two companies, along with Western Power Distribution, to produce an early version of its dra plan to gauge cus- tomer feedback. The version submitted to Ofgem last month included a slightly higher total expenditure (totex) gure for the 2023 to 2028 period, up from £1.9 billion in the rst dra to £2.033 billion. However, the network stressed that the expected impact on bills had now been revised down from a £2.14 annual increase to £2.03. The revised costs equate to a 53 per cent rise compared with the average for the eight- year ED1 price control. ENW intends to spend £502 million on replacing and refurbishing network assets (a 53 per cent rise on ED1 levels) and £300 mil- lion on maintaining and repairing the net- work (up 18 per cent vs ED1). The company is proposing an 80 per cent rise in spending on engaging with customers, with £71 million earmarked over the ve years. The distribution network operator (DNO) expects to spend £117 million on ensuring capacity is available to all (up 89 per cent), with £91 million for new connections (+594 per cent) and £77 million on supporting energy eŽ ciency (+588 per cent). The business plan cites the creation of a new stakeholder panel to help shape ENW's transition towards a distribution system operator (DSO) model. The plan includes an annual ongoing eŽ - ciency assumption of 0.5 per cent per annum. SPEN has requested totex of more than £3.2 billion, representing a 28 per cent increase in annual spending when compared with the ED1 price control to £647 million. The total includes £430 million of load-related expenditure, of which £347 million is for network reinforcement, £602 million to replace and refurbish assets, and £509 mil- lion of operating costs. The company, which currently operates 105,000km of network and 30,000 substa- tions, says it plans to install more than 800km of new cables, build 700 new sub- stations and create more than 1,100 jobs. The business plan incorporates £84 million of embedded eŽ ciencies that have already been proven during the current price control, £29 million of ongoing eŽ - ciencies and £84 million of eŽ ciencies from innovation. SPEN has also proposed to spend £111• million on environmental programmes and create a £30 million Net Zero Fund to support low-carbon community projects. Within its licence areas, the company expects to see 370,000 domestic heat pumps installed, 670,000 electric vehicles Northern Powergrid has proposed totex of £3.2 billion between 2023 and 2028, which equates to £624.1 million per year. This is up 36 per cent on the average for ED1, with a 5 per cent increase in customer bills. The DNO, which covers 3.9 million homes and businesses in the North East, Yorkshire and northern Lincolnshire, has identi ed 12 output areas across its business plan. Three of these account for 87 per cent of the total costs – asset resilience (33 per cent), decar- bonisation (30 per cent), and reliability and availability (24 per cent). Total network investment costs are pitched at £1.65 billion for ED2, which is on average 69 per cent higher than in ED1. Load-related expenditure is set to increase by 420 per cent from ED1 to £645.5 million, while non-load related asset renewal costs are proposed to increase by 3.3 per cent to £634 million. The DNO is asking for £630 million in net- work operating costs – a 2.6 per cent rise on the average in the current price review cycle. Northern Powergrid stresses in its busi- ness plan that it is adopting a "œ exibility- rst" approach to decarbonisation. To this end its strategy is to "monitor – manage – reinforce". In the rst instance it plans to leverage investment in monitoring to provide visibility of capacity constraints. This will lead to deploying smart grid solu- tions and contracting customer œ exibility (either directly or indirectly). The company stresses that only a er exhausting these rst two steps would it seek to build additional capacity. The plan includes £87 million for its dis- tribution system operator (DSO) strategy, including £21 million for LV monitoring, and a further £16 million for enabling whole sys- tems solutions. The business plan points to £396 million of embedded totex eŽ ciency savings. For all the latest developments on RIIO, visit: https://utilityweek.co.uk/tag/riio2/

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