Grid can cope with increased electrification – new report
Net zero will require a transformation of the energy grid on a scale unseen since the 1960s – but these upgrades are possible and will bring huge benefits for UK homes, business and energy security, a new report has found.
An upgraded grid will allow millions of homes to install heat pumps and EV chargers, and will unlock investment and business growth, the report by leading energy analysts Regen shows.
This vision of a grid fit for net zero is within reach if there is sufficient investment and more smart working from Government and regulators.
The Regen report, Building an Electricity Network for Net Zero, evaluates existing initiatives from the Government, OFGEM and network operators to develop grid capacity and ease access to the grid, and sets out what further priorities need to be implemented to ensure the grid is ready for net zero.
Among the recommendations is a call for OFGEM to ensure that networks can invest in capacity. Last year, the regulator cut 17% of the budget for grid investment proposed by network operators, a move that Regen calls “a gamble”. OFGEM must now help networks to unlock budgets so that the grid can receive the investment it needs, before consumers start to see problems with connections.
Network companies will need to make significant investments and this will enable the grid to move away from expensive fossil generation and onto low-marginal cost renewables. In turn this could will enable electrification of heat and transport. In the long-term network costs per unit of energy delivered could fall.
Regen’s report also calls for the Government and OFGEM to reform grid investment processes so that investment is provided ahead of need, not after the fact, and for the Energy System Operator to bring forward reforms to the connection process so that renewable energy projects are not left waiting years for a connection.
These actions are essential to develop both the low-voltage connections that are needed for millions of heat pumps and EVs in homes across the country, and the high-voltage connections that will provide the bulk of the UK’s electricity.
Furthermore, the report calls for greater clarity on planning policy and for the establishment of community benefits for areas hosting energy infrastructure projects, to help remove barriers to and accelerate the delivery of net zero. It calls for the Government to ensure net zero is given proper weight in the planning framework, which could enable infrastructure to be built on time.
The Regen analysis, which was commissioned by net zero charity MCS Charitable Foundation, provides a clear set of solutions to concerns raised in recent weeks and months about the delays in connecting new renewable energy to the grid, with some timescales for connecting new projects to the transmission network over 15 years. The key finding of the report is that these concerns can and must be addressed.
David Cowdrey, Director of External Affairs at MCS Charitable Foundation, said, “This report set out to respond to the question: can the grid cope with a massive shift towards electrifying heat and transport. The answer is very clearly, with the right investment, yes.
“Not only is upgrading the grid essential to preparing the country for a carbon-free energy system, but investing now will bring huge benefits in the form of cheap, clean energy. The Government, regulator, and network operators must now urgently bring forward investment and reform planning policy to facilitate grid development.”
Author of the report, Frank Hodgson at Regen, commented, “We are in a race to develop renewable power and electricity storage to meet our net zero goals and tackle high bills caused by the UK’s reliance on fossil fuels, but delayed investment in the electricity network is leading to clean energy projects not getting a connection date for 15 years.
Recent commitments to drive forward progress from the government and the regulator are encouraging but the priority now is moving from action plans to delivering reform and investment at pace. This report sets out the scale of the challenge to upgrade our electricity networks, the initiatives underway and the key priorities to ensure network infrastructure is not a barrier to net zero.
Notes to editors
Building an Electricity Network for Net Zero sets out an analysis of three major areas where the grid needs upgrading: low-voltage networks, including connections to homes to power heat pumps and EV charging; high-voltage networks, including new renewable energy developments; and transmission, including connections for offshore and centralised energy generation.
The report contains recommendations for Government, OFGEM, the Energy System Operator, and network operators. It sets out to communicate these in a way that is accessible to a non-technical audience, while also addressing the technical challenges of upgrading grid infrastructure.
The investment in grid projects (cables, pylons, substations etc) comes from the network companies that operate the grid, who raise capital from global investors and financial institutions to pay for this. The amount the network companies are allowed to invest is set by OFGEM, the industry regulator. The networks earn a return on their investments via network charges over a period of about 45 years. Network charges are ultimately paid by consumers (both households and industrial/commercial consumers).
Network companies need to invest £100-£140bn in the grid up to 2050 to prepare for net zero. This compares with the £180bn NHS budget last year alone, and an annual Defence budget of over £50bn.