EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Our business plan for 2023-28: a draft for consultation
July 2021
Northern Powergrid: our business plan for 2023-28 – 1 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Who we are
At Northern Powergrid we are proud to provide an essential service to eight million people in our region. We take that responsibility seriously and believe that our customers should get a service that is second to none. In short, our aim is to be the best at what we do.
Where we are in the process
Start of the Developing our Refining our Ofgem 2023-28 plan with you plan with you determinations price control
October August July December June December 2019 2020 2021 2021 2022 2022 Our DSO v1.1 Our Initial business Final business Draft Final publication Emerging plan submission plan submission determinations determinations Thinking publication WE ARE HERE
This is our draft business plan for We have been building our plan through This feedback has shaped the outputs the RIIO-ED2 price control period, an extensive programme of engagement that we plan to deliver in RIIO-ED2. Our which runs from 2023 to 2028. with our stakeholders over the past draft plan sets these out along with how two years. As part of this we released much they will cost, the benefits they our Emerging Thinking consultation in will provide and how we will measure August 2020 and have been engaging our success. We will continue to engage on a range of costed options and on our plan through to final submission refining our plans with stakeholders. to Ofgem in December 2021.
8m 63,000 3.9m 96,000 25,000 2,450 people substations homes and km of overhead sq km of network people in served businesses lines and our workforce underground cables
NORTHUMBERLAND, COUNTY DURHAM AND TYNE & WEAR
TEESSIDE
NORTH YORKSHIRE
WEST YORKSHIRE
HUMBER
SOUTH YORKSHIRE AND NORTH LINCOLNSHIRE
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Executive Track record and business Giving consumers summary | 3 plan commitment | 17 a stronger voice | 29
17 Track record 29 Our enhanced engagement 25 Business plan commitment and process assurance 36 Our enduring stakeholder 26 Outputs and incentives engagement approach
Outputs
Delivering an Maintaining a safe and Meeting the needs of environmentally resilient network | 90 consumers and network sustainable network | 41 users | 121
CLIMATE ENVIRONMENT DECARBONISATION SCENARIOS AND SAFETY RELIABILITY & CUSTOMER CONNECTIONS VULNERABLE ACTION PLAN INVESTMENT AVAILABILITY RESILIENCE SERVICE CUSTOMERS
DSO PHYSICAL & ASSET OPENNESS & OUR ENABLING WHOLE COMMUNITIES STRATEGY SYSTEM CYBER RESILIENCE RESILIENCE TRANSPARENCY SOLUTIONS
41 Decarbonisation 90 Safety 121 Customer Service 46 Scenarios and Investment 94 Reliability and Availability 126 Vulnerable Customers 62 DSO Strategy 102 Our business-wide approach 134 Our Communities 73 Enabling Whole System to resilience 138 Connections Solutions 103 Asset Resilience 144 Openness and Transparency 81 Environmental Action Plan 111 Climate Resilience 116 Physical and Cyber Resilience
Our Consumer Value Explaining our costs | 172 Making it happen | 190 Propositions | 148
Enablers | 152 172 Explaining our costs 190 Delivery 188 Real price effects (RPEs) and 193 Financing ongoing efficiency 196 Balancing ambition with affordability INNOVATION DATA & WORKFORCE DIGITALISATION RESILIENCE 198 Managing uncertainty and risk
152 Innovation 159 Data and Digitalisation 166 Workforce Resilience
To see our list of annexes, Supporting documents: EJPs and CBAs, visit ed2plan.northernpowergrid.com
+46 +61 +46 Annexes Engineering Cost benefit Justification analyses Papers (EJPs) (CBAs)
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A fantastic opportunity and a significant responsibility
We are proud to lead the Northern The plan we have put together, with We believe that our task is to embrace Powergrid team that provides our stakeholders’ help, for the 2023-28 that uncertainty and chart an optimised the North East, Yorkshire and regulatory period means changing the course through it. We will do that by northern Lincolnshire with the way we run our business. We must take building on a track record of being electricity network that powers a leading role in enabling our region to among the industry leaders on everyday life for more than play its part in meeting the UK’s target of efficiency, ensuring that we develop eight million people across 3.9m reducing carbon emissions by almost 80 an increasingly flexible and innovative homes and businesses. per cent by 2035. Our network will be approach to running and investing in instrumental in facilitating this change, the network that opens up all the Efficiently delivering a top-class service as it sits at the heart of a decentralised, credible pathways to decarbonisation where the lights stay on, the network low carbon energy system, and we will as affordably as possible. stays healthy and our customers enjoy be working across that whole system to outstanding, ever-improving levels find innovative ways to deliver on that Although this is a five-year plan, it of personal service has always been target. That will be enabled by a 36 per has to begin to solve problems where both a rewarding challenge and a cent increase in investment, centred the answers will manifest themselves considerable responsibility. Living up to on enabling customers to participate in over the next 25 years. In that respect, those demands already makes us one finding flexible solutions that make for the long-term horizon of our owner – of the biggest investors in our region. a more efficient transition to the lower Berkshire Hathaway Energy – has been Those challenges and responsibilities carbon world. a real strength. We have been able to have become even more significant take decisions to make investments now given the importance of energy to the There are also a whole host of other that will make the overall transition both global, national and regional challenge improvements we are going to make more likely to succeed and cheaper of decarbonisation. for our customers across every area in the long run. They will also help to of our business. These include higher power the economy in the region as, The future presents an opportunity levels of reliability and resilience, more together, we work to drive economic to power our region with sustainable, targeted support for those members of growth, supporting the government’s long-term investments that unleash the our community who need it the most, ambitions to spread prosperity across potential of innovation, digitalisation, and even better levels of customer the country and repair the damage done our people and collaboration to: satisfaction than the 9/10 rating we by the pandemic. already deliver. — lead the drive towards decarbonisation; Our stakeholders have made it clear — operate a highly reliable and to us that all of these priorities matter resilient network; to them, but decarbonisation is the — delight our customers with biggest and most important challenge. outstanding service; Although we know what the end result — provide remarkable value for money; must be, and the broad changes that — ensure world-class levels of safety will have to be made to achieve it, and security; and the specific pathway to net zero is — be a force for good throughout our inevitably uncertain. region and beyond.
Phil Jones Chief executive
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The future presents an opportunity to power our region with sustainable, long-term investments that unleash the potential of innovation, digitalisation, our people and collaboration to:
— Lead the drive towards decarbonisation
— Operate a highly reliable and resilient network
— Delight our customers with outstanding service
— Provide remarkable value for money
— Ensure world-class levels of safety and security
— Be a force for good throughout our region and beyond
NorthernNorthern Powergrid: Powergrid: our our business business plan plan for for 2023-28 2023-28 – – 4 4 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Building a business plan that responds to your choices
Big levels of ambition and big changes
Our extensive stakeholder engagement Decarbonisation is the most significant strengthened by increased reliance on programme explored a full range of change our industry has faced in electricity as we decarbonise. You want costed plan options, with five different decades. Certainly it is the biggest us to meet these priorities while keeping levels of service across 12 output areas driving force that has shaped our plans. bills low. for our business. After engaging with more than 52,000 stakeholders at We know decarbonisation is the top hundreds of events, you have been very priority. You’ve also told us that overall clear that we have to balance ambition reliability and resilience of the network with affordability. is very important and will remain so,
Building on our track record of delivery
Our track record of delivery so far in the we expect to significantly exceed our 2023 to March 2028. By the end of the eight-year regulatory period that runs targets, while investing more than existing period we will have delivered from April 2015 to March 2023 is strong. £3.2bn into our business. our flagship smart grid enablers We promised to give you ‘more for less’ programme, increasing our ability to – and we have made good on that. We Our investment has also helped prepare control and analyse how the network are on track to deliver our 53 business us for the challenge ahead in the next is operating in real time and target our plan commitments and in many cases period, which will take us from April investment efficiently.
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12 output areas
RELIABILITY & ASSET AVAILABILITY RESILIENCE
VULNERABLE DECARBONISATION ENVIRONMENTAL CUSTOMERS ACTION PLAN
OPENNESS & PHYSICAL & CONNECTIONS OUR TRANSPARENCY CYBER RESILIENCE COMMUNITIES
CUSTOMER SAFETY CLIMATE SERVICE RESILIENCE
Balancing ambition with affordability
Output Levels areas of ambition Your current Enhanced Major Breaking new A new package performance upgrade ground world
Decarbonisation
Asset Resilience
Reliability and Availability Vulnerable Customers
Connections Environmental Action Plan
Openness and Transparency
Physical and Cyber Resilience
Our Communities
Safety
Customer Service
Climate Resilience
Shaped by our engagement with you >52,000 >325 >55 89% stakeholder events panels stakeholder interactions acceptance (domestic customers)
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Ensuring our region can decarbonise is the top priority DECARBONISATION
Our stakeholders have been clear that Our plan reflects our expectation keeping pace with the growth we ensuring our region can decarbonise that customers will change their can already see emerging and making is paramount. Our network has to be consumption patterns in response sure we do not leave too much to do geared up to service new demands to price signals in the energy market, in the 2030s. In doing so we will make for electricity, and it is going to have reducing the strain on our network that transition as efficient and therefore to meet those requirements in an at times of peak demand, and as affordable as possible and ensure increasingly sophisticated way. potentially saving customers over no one is left behind, by maximising £113m during the period. both the use of flexibility and synergies We believe that the best way to do that between the investments we need will be through a decentralised energy Although we have built a detailed to make for decarbonisation and for system based around locally connected plan based on the projections that asset resilience. renewable generation, electricity tie to the government’s current 10-point storage solutions and demand that can plan for decarbonisation, the reality Our flexibility-first approach is key to flex to help keep overall costs down, is that nobody really knows yet how enabling us to manage this uncertainty. facilitated by a network that is smarter the journey will unfold. That’s partly and more flexible than ever. what makes it an opportunity as well To do all this efficiently, we will operate as a challenge. an even smarter and more flexible We have optimised our investment energy system for our customers. strategy for a network that can We think that by embracing and serve our region as it decarbonises managing uncertainty we can We will advance the optimisation of the by planning for one of the steeper efficiently open up credible pathways costs, functionality and performance of pathways to decarbonisation from the to decarbonisation and allow our energy services for customers through 2030s and onwards, opening up all the customers to make many of the choices widespread collaboration to improve credible pathways to decarbonisation. that shape the future. That means the whole energy system.
Delivering substantial decarbonisation savings through our asset resilience ASSET investments... RESILIENCE
The long-term condition and long-term health of the asset base. We this will not only open up accelerated performance of our asset base will be intend to make the most of the benefits pathways to net zero, but it will also efficiently managed so it is safe, reliable, from our asset replacement investments drive significant synergy savings, environmentally friendly and resilient, all to deliver long-term value for our potentially of up to £471m. with a long-term view on the capacity customers by factoring in ‘two-for-one’ needs of the potential decarbonisation outcomes where we can create overlap pathways. Our plans continue to provide between our decarbonisation and what is needed to maintain the asset replacement investment. Doing
...and a more reliable network for our customers
RELIABILITY & AVAILABILITY
You’ve told us that the overall reliability We will deliver a step change in the of our network is also very important. deployment of automation onto our We need to install significantly network by investing £64m on the high higher volumes of remote switching voltage (HV) network, doubling our rate and network automation so that our of installation, coupled with operational customers get the service they deserve. improvements and use of innovative technology to manage our low voltage (LV) network.
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The big questions about the future: How How electrical? local?
How How flexible? fast?
We have planned for a world where there are:
941k 309k electric vehicles heat pumps by 2028 by 2028
Making the most of flexibility:
1 Monitor 2 Manage 3 Reinforce
Network Customer flexibility flexibility Deploying smart Contracted and grid solutions energy price-driven flexibility
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In all other areas of our business, we will – again – do more for less
You told us that you expected us to improve in all the other areas of our plan, which is what we expect of ourselves. In fact, wherever possible, we seek to go beyond our stakeholders’ expectations.
An outstanding level of customer service — Provide a service that is personalised, proactive and provides choice in how and when to do business with us. — Backed by the latest customer-facing systems and use of data, we will use our CUSTOMER interactions with customers to support their journey to decarbonisation and SERVICE deliver a service that is second to none. — Planned service improvements that we believe will increase our customer satisfaction rating to 93.5 per cent or more (by the end of 2028).
Vulnerable customers will be at the centre of our thinking — Use data and strong partnerships to provide tailored services. — Support customers in fuel poverty and support a socially inclusive transition to net zero by minimising barriers to enter the energy market so that no one VULNERABLE is left behind. CUSTOMERS — To support this, our customer-facing and front-line staff will have the ability to update our Priority Services Membership (PSM) in real time.
A cost-effective, efficient and personalised connections service — Our connections service will be smarter, with more flexible solutions that support the connection of low carbon technologies (LCTs) onto our network in support of the transition to net zero. — The development of our AutoDesign tool will enable customers to self-serve and CONNECTIONS generate quotations for LV demand and load increases, and budget estimates for new generation connections.
We will be energy industry leaders in safety — Our number one priority will continue to be to keep our colleagues and members of the public safe so that they can return home safely at the end of the day. — We will achieve this through being proactive in assessing and mitigating emerging safety risks, collaborating with others and exploring potential SAFETY innovation and technologies that offer opportunities to make our network and operations safer, focussing on leading causes of injuries, and continuing to reduce exposure to high-risk activities.
Proactively protecting the environment — Through our investments and operations, we will work collaboratively with partners and our supply chain to deliver innovative, cost-effective solutions that reduce or eliminate environmental risk exposure. ENVIRONMENTAL — Minimise carbon emissions, pollution and waste and, where possible, seek to ACTION PLAN enhance the local environments in which we operate. — Reduce SF₆,1 and increase the proportion of ultra-low emission vehicles/zero emission vehicles (ULEVs/ZEVs) in our fleet to 40 per cent. — We also intend to work with regional partners to implement biodiversity improvements across 200 sites to enrich and conserve the wider environment.
1. Sulphur hexafluoride, a greenhouse gas.
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Adapting our network and operations to increase resilience against the effects of climate change — Work collaboratively and use innovation to develop new solutions to address the range of potential climate change pathways and consider wider CLIMATE system interdependencies. RESILIENCE — Maintain flood defence resilience at all major substations.
Strengthening our cyber and physical security — Keep our network, assets, data and customer information safe from evolving threats by further strengthening our cyber and physical security. — Our plans to open up our network and data for the benefit of our customers PHYSICAL & will be matched by a focus on high levels of security enabled by the deployment CYBER RESILIENCE of the latest technologies. — Protect our systems from cyber and physical breaches.
A force for good in our communities
— Our position in the regional economy creates the opportunity and responsibility for our business to be a force for good in our communities. OUR — By March 2028, we will deliver tailored social impact programmes at 50 per cent COMMUNITIES of major schemes when we are undertaking major investment works.
Remain open and transparent in how we operate — Earn the trust of our stakeholders in delivering Distribution System Operation (DSO) in our region. — Continue to report on the delivery of our commitments, open ourselves up to OPENNESS & scrutiny and support new and existing markets by providing open data, taking a TRANSPARENCY flexibility-first approach and facilitating competition.
Support for our plan “I am greatly supportive of Northern Powergrid’s business plan, which helps support the drive to decarbonisation Alexander Stafford MP and offers the right balance Rother Valley between cost and investment. I urge Ofgem to approve the investment.”
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Unleashing the potential of...
Data and Innovation Our People Digitalisation 61 70% 65 >1,000 initiatives increase in no. initiatives underpinning new job underpinning data products our plan opportunities our plan and services 45% £278m >40 of data products and services of totex savings from new roles created refreshed in real time innovation to linked DSO
— Open and transparent — Charting the best course — Creating more than 1,000 jobs Enabling innovation and to net zero Renewing and growing our development of new markets Developing and deploying workforce with high-quality while delivering net zero at the technologies and creative solutions job opportunities to meet the lowest cost that enable faster, lower cost significant increase in work pathways to decarbonisation volumes driven by decarbonisation — Whole energy efficiency and to meet future energy needs Preparing for both a cost- and — Collaboratively unlocking carbon-optimised whole the value of open data — Upskilling and multiskilling energy system Working with partners to open up Increasing our skills capacity and new channels that significantly, capabilities through investment — Service excellence efficiently and effectively increase in upskilling and multiskilling to Delivering seamless, efficient the exploitation of data flows provide rewarding career paths service with more choice and across the whole energy system and develop the new capabilities personalisation required for DSO — Achieving next-level — Cyber secure energy system dependability — Increasingly diverse Responding to and mitigating Increasing the reliability, resilience and inclusive the cyber threats of increased and security of the power grid Service excellence delivering digitalisation to improve not only its own seamless, efficient service with dependability, but also that of the more choice and personalisation — Reduced cost overall energy system Driving lower cost, efficient — Increasing engagement, operations, front and back — Ensuring all customers benefit partnerships and satisfaction office Promoting and safeguarding Enhancing how we engage with the interests of customers, our colleagues and trade unions particularly those who may to continually improve our safe otherwise be significantly workplaces and operations disadvantaged or left behind in the energy system transition
To deliver the ambitions we are setting to self-serve their requirements. We Everything we plan to do relies on us out requires some very significant will provide high-quality open data to having a team of skilled, dedicated changes in the way we operate. We have enable customers to self-serve, while colleagues. The demand for new skills identified three cross-cutting capabilities upgrading our technology to improve that are greater in number and more that will be essential: cutting-edge network management, planning and diverse is key to our success. We are innovation, transformational use of data investment to increase efficiencies in proud of the team we have now – but and digital technology, and a highly operating the power network. we are aiming to build on that and skilled, diverse team. create a bigger, stronger pool of talent In our innovation programme, a particular to serve our customers. Our approach We know that we must take our use focus will be to accelerate the creation to attracting, engaging and managing of digital platforms to the next level to of next-generation energy systems that people will create an increasingly play our part in optimising the whole balance the targeted development and diverse workforce and a great place energy system, providing a resilient deployment of solutions. We will explore to work, allowing us to deliver the and efficient service for our region. potentially transformational technologies to commitments we’ve made in this plan. As part of this we will deliver an online unlock as yet unimagined benefits for platform which will bring together next-generation energy system customers. the data and tools customers require
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Our ambitious plan means we will need to attract even more talented people – many of whom don’t know us yet or may think we’re not for them. We will continue to strengthen our approach to attract and retain a diverse range of talented people, so we can deliver for our customers and provide rewarding careers in an inclusive workplace where everyone can thrive. Angie Patterson Director of organisation development
As someone who joined the industry as an apprentice in my teens, I’m passionate about investing in the growth and development of our future workforce. It’s an exciting time for the power industry as we play an increasingly important role in our region’s transition to net zero, which will bring new challenges and opportunities for our people. Andy Bilclough Director of field operations
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Major investment in decarbonisation and improved reliability
V
Decarbonisation
All credible decarbonisation pathways Open energy system data supported — 70% increase in the number of available — On track for net zero by 2050 data products and services or sooner - 45% refreshed in real — Network positioned for mass time via automated processes uptake of LCTs – by 2028: — Data portal – new analysis and — 831k more electric vehicles self-serve tools — 251k more heat pumps — Support for local authorities on the development of local area energy plans
£169m of flexibility and smart grid savings >£253m of whole system value from optimising network voltage to improve — Flexibility-first approach – monitor, energy efficiency to consumer in manage, reinforce 2023-28 and beyond — 50% ground-mounted substation-fed — LV networks covered by monitoring — C. £20 reduction in customer energy — Online flexibility platform bills and lower carbon emissions by — Dedicated team to support green market dynamically managing voltage for development customers on our LV network
Reliability Asset Resilience
12% fewer and 25% shorter power cuts — Up to £471m of synergy savings by 2028 between asset renewal and decarbonisation investment in — £64m automation programme the period to 2050 targeting the worst-performing parts of our network — £2.5m investment for 2,400 worst-served customers — Bespoke commitments to reduce multiple and long-duration power cuts
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Delivering more for less
Environmental Climate Resilience Action Plan Safety
— 20% reduction in internal — Maintain industry-leading safety — Maintain all high-risk major business carbon footprint performance substation flood defences to — On a path to carbon net neutral - 50% reduction in workforce ETR138 standard2 operations by 2040 accident rate — Collaborative work with regional — Science-based targets to - 50% reduction in contractor infrastructure providers on measure our overall impact accident rate interdependences — 15% less oil lost to ground — Improve health and mental — Compliance with PCB legislation1 wellbeing in our workforce — >60km of undergrounding cables — 55,000 school children engaged to improve visual amenity on electrical safety per annum — 200 sites with biodiversity — Fleet vehicles equipped with improvements defibrillators — 90% of waste diverted from landfill
Physical and Customer Service Vulnerable Cyber Resilience Customers
— Continued investment to — >93% customer satisfaction — Provide enhanced support maintain high levels of protection — New contact channels, greater during power cuts for our network and customer on-site support and choice — Support 100,000 customers in information in booking slots for planned fuel poverty with affordability services services unlocking up to £40m — >90% complaint resolution within of benefits one day — Support for flexibility providers and data users
Our Communities Connections Openness and Transparency
— 50% of our major investment — 20% reduction in small works — Openly report on investment schemes with tailored social lead times appraisal processes – impact programmes — More self-service options, demonstrating flexibility first — Support for science, technology, greater support and more — Retain our Customer engineering and maths (STEM) flexibility over delivery Engagement Group (CEG) to subjects and careers — Expanded capacity heat maps scrutinise the delivery of our plan — Community energy advice for — Support for smarter solutions and on-going engagement local stakeholders and expanded range of flexible — Drive sustainability standards connections throughout our supply chain
1. Polychlorinated biphenyls. 2. Energy Network Association’s Engineering Technical Report (ETR) 138, Resilience to flooding of grid and primary substations.
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A 36% step up in investment
Total expenditure (+170.9m) per annum¹
Investment in the network to add Includes £16.9m of Includes £5.2m digitalisation and smart grid solutions investment to efficiently of investment in and provide significant amounts of new add extra capacity decarbonisation-enabling capacity to cater for growth in LCTs required for the future activities in other areas of decarbonisation pathways our plan
700 Annual totex (£m) 14.2 2.3 642.1 148.1 10.9 600
500 471.2 400 9 other output areas – more for less 300 3 step-up investment areas
2015-23 Decarbonisation Asset Reliability Remaining costs 2023-28 costs plan Resilience and for other service costs Availability improvements Significant efficiencies £396m (12%)2 £471m of totex efficiency of decarbonisation synergy savings embedded Building on our efficient savings beyond 2028 cost base, which benchmarks in our plan upper quartile in the industry, — We will optimise our asset renewal we have embedded sizeable investments to deliver capacity for 4,000 £m efficiency benefits in decarbonisation pathways; investing an our plan, 70 per cent of additional £84m in the 2023-28 period which are driven to save an estimated £555m in the 395.6 by innovation. period from 2028 to 2050 3,000 £m Volume efficiencies 111 3 Unit cost efficiencies 19 £136m 2,000 Flexibility and smart 169 grid solutions of financing savings 3,209.2 — The key financial parameters for Core asset plan 66 2023-28, including cost of debt synergies and cost of equity, will reduce 1,000 allowed revenue compared to Service improvements the current period offset by efficiencies 31 Embedded efficiency 396 0 % of ED2 totex 12%
ED2 totex
1. Figures include real price effects (RPEs) and ongoing efficiency. 2. Excludes ongoing efficiencies. 3. Assuming 2.09 per cent cost of debt and 5.80 per cent cost of equity at 60 per cent gearing.
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Great value for our customers
The increase in investment we need to which is 64 pence per month, or £8 a make is driven by the additional £148.1m year. But the other savings help offset increase p.a. we are expecting to invest in 36% this. The overall impact on the bill in investment for a enabling the decarbonisation transition. 5% depends on some important decisions increase on the bill¹ We will spend an extra £10.9m p.a. to our regulator needs to make about keep our network in good condition and how to bring forth the investment that maintain its resilience. This increase is needed for decarbonisation and is primarily driven by ‘two for one’ how the responsibility to pay for that synergistic investment opportunities, investment should be shared between the average domestic where we will efficiently add extra this generation of customers and the bill will only increase by1 capacity required for the future as ones that follow. we replace or refurbish degraded +£4.59 to £94.39 parts of the network. There is also Under Ofgem’s current working an increase of £14.2m p.a. relating to assumptions, our charges in 2023-24 the investment needed to deliver the would actually be about £5 lower than significant reliability improvements our in 2022-23, falling from about £90 to +£6.63 stakeholders are looking for. around £85 p.a. to facilitate decarbonisation Set against that, the cost of delivering We don’t believe Ofgem’s approach the material service improvements in all is sustainable. It’s important that +£0.49 nine other areas of our business will fall Ofgem does not risk underinvestment by £2.3m p.a. compared to the current when upgrading the network is more to keep our network period, as we make the same promise important than ever. And Ofgem in good condition in that respect: we will deliver more for must resist the temptation to push too less. The cost of financing our business much of the costs onto our children’s +£0.64 has also fallen significantly. When that generation just to keep current bills to make the network is added to the more efficient ways artificially low. more reliable we’ve found of delivering our outputs, we take pressure off our customers’ Under our proposed approach – with an bills, which helps keep them affordable appropriate return on investment and -£0.11 at a time where a significant increase in where costs are fairly shared between delivering more investment is needed. current and future customers – our for less charges would increase by about £4.60 There’s no getting away from the reality in 2023-24, from £89.80 to £94.40. that the increased investment has an That’s a 36 per cent increase Lower financing costs impact on your energy bills. Taken in in investment for a five per cent reduces the bill by isolation, that additional investment increase on the bill. £3.06 would increase an average domestic customer’s bill by around nine per cent, We think this represents great value.
We will keep on listening
We have built this plan on an local organisations so innovative engagement programme that dwarfs thinkers and future customers Support for our plan anything we have done previously in access and contribute to our that respect. And that process will never engagement; “I have been delighted to be end. As we strike out on this journey, — provide additional ways to involved in the very broad and we will continue to work hard to engage discuss complex topics and tailor all-encompassing engagement with our stakeholders and let them communication approaches so process that Northern Powergrid shape our plans as they adapt. We will: that we deliver engagement has undertaken, which has that promotes an understanding been extremely impressive — ensure that our engagement of priority topics such as and inclusive.” reaches and includes a diverse decarbonisation and an inclusive range of individuals, groups, experts energy transition; and and locations that represent the — continue to mature the skills, Maggie Bosanquet communities we serve; processes, infrastructure, and Low carbon economic — increase the use of new capacity of communities, customers development team communications channels, remove and our own teams to ensure leader, Durham engagement barriers, and increase engagement is two-way, measurable County Council cooperation with a wide range of and transparent.
1. Under our proposed financial parameters – see page 196.
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Track Record and Business Plan Commitment TRACK RECORD AND BUSINESS PLAN COMMITMENT
Our track record underpins the Our plan involves a step change in credibility of our plan. activity levels relative to today to enable decarbonisation. Details of our delivery We believe our track record in 2015-23 plans to support this are set out in the and prior regulatory periods provides Delivery section. confidence in our business plan for 2023-28. Given our responsibility to We have a demonstrable track our customers, and the importance of record of making robust plans. the next decade in society’s transition to net zero, it is key that we deliver on We take a long-term outlook to our promises to support the needs of our planning. Distribution Network our customers and local economies Operators (DNOs) have a responsibility on this journey. to appropriately manage risks on behalf of their customers and we believe You can count on Northern Powergrid in incentive regulation as the most as a company with… effective way to ensure this occurs.
— a reputation for making robust plans The business plan we developed back in and delivering on them; 2012-13 and are delivering for the current — demonstrable adaptation to the eight-year period has proven to be changing energy landscape and robust. Our costs have tracked closely progress to Distribution System to our forecasts year-on-year and we Operation (DSO); have effectively managed risks that have — a proven track record of innovation emerged in the period. and collaboration; — evidence of strong financial management and efficiency; and — committed and responsible investors with a long-term outlook.
Customer Social Safety Reliability Service Connections Obligations Environment
58% 27% 90.5% Allowed >450 48% reduction in our fewer power customers to satisfaction connect more partnerships lower business accident rate cuts to support the carbon footprint easily than ever most vulnerable 690 +8.2 in our region 47% days without 88.9% 37% percentage satisfaction lower oil/fluid a lost time shorter power point leakage accident cuts improvement +10.2 percentage point improvement
NorthernNorthern Powergrid: Powergrid: our our business business plan plan for for 2023-28 2023-28 – – 17 17 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Track Record and Business Plan Commitment
We are on track to deliver our current business plan
We will fulfil our promise to Figure 1: actual and forecast expenditure versus allowances (2015-23)1 customers to deliver ‘more for less’.
3500 Total costs (£m) We made 53 commitments in our 2015-23 business plan and we are on track to deliver these, and in a number of cases go significantly further, keeping 2500 costs low and delivering our asset health targets (see figure 1 and 2).
Our output performance is 1500 strong, in many cases ahead of Ofgem targets.
Safety is, and will always be a priority. 500 We are proud to be exceeding our commitment to halve our accident rate, most recently achieving 690 days 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 without a lost time accident. Another highlight for us has been our Reliability ED1 allowances Actual expenditure Forecast expenditure and Availability performance. So far we have achieved reductions of 27 per cent and 37 per cent in customers Figure 2: actual and forecast network output delivery (2015-23)4 interrupted (CI) and customer minutes lost (CML), substantially outperforming what we committed to in our 2015-23 business plan (eight per cent and 20 per 100.0% Monetised risk (%) cent respectively). 80.0% We have achieved significant improvements in Customer Service performance over the current regulatory 60.0% period, securing an eight percentage point improvement that means we are 40.0% now consistently delivering satisfaction of over 90 per cent.2 We have achieved this through a significant expansion of 20.0% our digital service offerings, investment in our front-line services and responding 0.0% to customer feedback. Despite this improvement, we rank fifth in a tightly 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 grouped industry, two percentage points behind the industry leaders and ED1 target Actual Forecast we are targeting further improvement for the remainder of the period to close the remaining gap. domestic customer sites were closed. Our Social Obligations performance We have been working to recover has been consistently high performing, We have improved our Connections the backlogs during 2021 and we are ranking in the top three companies small works lead times by 18 per cent targeting significant improvements in in Ofgem’s stakeholder engagement since the start of the period,3 and our delivery lead times in the remainder and customer vulnerability (SECV) satisfaction levels with our services of the period. For major works assessment for the past three years. have increased by 10 percentage points connections, we have delivered on our Our SECV score of 6.71 out of 10 in to 88.9 per cent. Our primary focus is incentive on connections engagement 2019-20, placed third out of five DNOs on delivering a personalised service (ICE) plans and received no penalties. in the assessment and fifth out of the to maximise customer satisfaction. Continuing and strengthening this wider 13 network companies. As part of this we offer on-site visits performance is central to our approach for customers where required, which for the next planning period as we can extend lead times for quotations. accommodate more low carbon Our lead times in 2020-21 (shown in technologies (LCTs) onto our network, figure 3) were impacted by COVID-19 as is prioritising a personalised service lockdowns, in particular where non- to meet customers’ specific needs.
1. All costs shown in the track record section are stated in 2012-23 prices. 2. Based on 2020-21 performance. 3. Based on our 2015-23 average reduction versus our business plan baseline. 4. Network asset secondary deliverables.
Northern Powergrid: our business plan for 2023-28 – 18 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Track Record and Business Plan Commitment
In a similar vein, we have exceeded action plan has reduced annual losses a 47 per cent reduction to date. We the Environmental commitments in by about 1 gigawatt-hour (GWh),1 also committed to removing about our current business plan and have set and we have undertaken a number of 100km of overhead lines from Areas of stretch targets to go further. We have initiatives to further our understanding Outstanding Natural Beauty (AONB) achieved significant reductions in our and management of losses including and, following engagement with our business carbon footprint (BCF) and trialling innovative amorphous core stakeholders, we have committed a sulphur hexafluoride (SF6) losses, by 48 transformer technology, which we plan further £2.1m for an additional 20km, per cent and 23 per cent respectively. to roll out as business as usual during which has been funded from efficiencies We have continued to effectively 2023-28. We committed to reducing oil in other parts of our plan. manage losses on our network by and fluid leakage by 15 per cent and we implementing our losses strategy. Our have already surpassed this, achieving
Figure 3: 2015-23 output performance
2020-21 2020-21 2022-23 NPg Unit actual target2 Status target Occupational Safety and Health Act (OHSA) Safety Rate 0.18 0.273 0.14 accidents Health and Safety Executive Hit/miss (HSE) compliance
4 Northeast 44.10 58.60 43.60 Reliability Customer Interruptions (CI) CI Yorkshire 51.70 61.30 50.00 Customer Minutes Lost Northeast 35.00 49.20 32.00 CML (CML) Yorkshire 38.80 53.40 35.40 Customer Overall survey 9.05 8.20 9.20 Service Score Complaints metric 2.80 8.33 1.80
Connections Time to quote (LVSSA)5 6.70 4.80 3.40
Time to quote (LVSSB)6 14.20 7.80 5.50 Days Time to connect (LVSSA)5 48.70 39.30 28.30
Time to connect (LVSSB)6 78.50 47.90 36.50
ICE penalty £m Nil7 Nil Nil Social rd7 nd Obligations SECV Rank 3 N/A 2
Environment Oil leakage Litres 28,055 47,5403 27,300
8 3 BCF tCO2e 31,241 55,975 27,850
SF6 emissions kg 73.10 112.003 50.30
Fluid-filled cable replaced km (cum) 176.5 122.83 224.4
Visual amenity investment £m 11.6 9.29 13.7 (versus allowance) (%) 94% 75% (111%)
For more information on our delivery of our 2015-23 business plan commitments, see our SLC50 Stakeholder Report.
1. See page 16 of https://www.northernpowergrid.com/asset/0/document/5763.pdf 2. Ofgem targets unless otherwise stated. 3. Northern Powergrid ED1 business plan target. 4. All figures are unplanned, excluding exceptional events. 5. LVSSA customers are those seeking single domestic connections requiring no mains work at low voltage. 6. LVSSB customers are those seeking between two and four domestic connections or one-off commercial connections at low voltage. 7. 2019-20 actual, 2020-21 result not available at time of submission. 8. Figures include contractor emissions and exclude losses. 9. Cost allowances for visual amenity.
Northern Powergrid: our business plan for 2023-28 – 19 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Track Record and Business Plan Commitment
We are evolving with the changing energy system
Our transition to DSO has been in Preparing our network. We have made good progress with progress for some time. As the only active network management (ANM) DNO to submit and receive funding for a Our flagship smart grid enablers with four zones providing 433MW specific smart grid enabling plan at the programme is transforming our ability of contracted flexibility. We have start of the current price control period, to monitor, control and communicate developed an approach that can be we are confident that we are well on the with more than 860 major substations rolled out to further areas and we way to laying the foundations of a more and 5,500 distribution substations. have accepted customer connections active, flexible and dynamic digitalised We are upgrading the control units in for six further suitable areas, three of energy network. We have also kept our substations to make the network which are progressing through the pace with reinforcement requirements compatible with modern digital engineering phase. In addition, building on our network, putting us in a communications along with establishing on learnings from our customer-led particularly strong position with higher the communications network from our network revolution (CLNR) project, voltage headroom on our network. control centres to those units. we are actively managing voltages This includes: at major substations using automatic We set out our vision for DSO in controllers. This has released 3.2GW our development plan in 2018. This — upgrading or replacing remote of capacity in the period to date for was revised following dialogue with terminal units (RTU) control points multiple small-scale generators to stakeholders and our updated DSO at our substations; connect to our local network. development plan, DSO v1.1, was — upgrading or replacing automatic released in October 2019 as the basis voltage control points and We have been a key player in working for further engagement in the period transformer relays at all of with other DNOs and Ofgem to leading up to our business plan DSO v1.1. our supply points and primary mobilise the Green Recovery scheme substations; that is providing economic stimulus — upgrading our telecoms and accelerating investment for communications network from our decarbonisation. In phase one we Accommodated by 2023: control centres to our substations committed £30m of investment within (both primary and secondary our existing allowances to enable supervisory control and data domestic customers to more easily acquisition (SCADA) networks); and adopt LCTs, and in phase two, we will — installing low voltage (LV) monitoring be delivering incremental investment across our network (2,700 units across a portfolio of 14 projects with a by 2023). combined value of £53m.
This investment is giving us greater 5.8GW ability to control and analyse how our network is operating in real of distributed generation time, enabling us to respond to the (including both generators uptake in LCTs. and storage) We have also been replacing looped- service cables (the cable used when two properties share a single electricity supply). During the first half of the 2015-23 period we replaced more than 13,000 of these at a cost of over £12m. c. 110,000 electric vehicles Case study (EVs) Our innovation portfolio has also been focussed on targeting DSO-enabling capabilities. For example our Boston Spa energy efficiency trial (BEET) has been developing capabilities to optimise voltage at customers’ meters to reduce energy consumption while c. 58,000 maintaining reliability. Customer Value Propositions (CVP) Voltage heat pumps Optimisation.
Northern Powergrid: our business plan for 2023-28 – 20 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Track Record and Business Plan Commitment
Engaging flexibility markets. Alongside developing the market for flexibility we are developing our people, Examples of data and In close collaboration with the Energy processes and systems to enable us to Networks Association’s Open Networks promote and operate flexibility services tools available for our project and flexibility providers, we in a standardised manner that benefits customers have been seeking opportunities to our customers. An example of this deploy customer flexibility to maximise is our partnership with other DNOs on efficient use of the network for three the flexible power project, a system key use cases: deferral of traditional that gives flexibility providers a direct reinforcement, planned maintenance, path to participate in flexibility on and emergency support. multiple networks.
Our flexibility work to date has Data and digitalisation. provided meaningful lessons about the still-emerging flexibility market Over the course of this business plan Power cuts: that are informing our plans, although period we have made significant live maps and tabular views in our region the widespread need for improvements in our systems and of planned and unplanned flexibility has not yet been present. We data-handling capabilities. This has laid powers cuts by postcode. have experienced a reduction in peak solid foundations for our Data and demand and units distributed as a result Digitalisation plans for 2023-28. of the economic impacts on heavy industrial demand, increased energy We have made strategic investments efficiency, and increasing embedded in transitioning to a digital and fully electricity generation. While this has vectorised set of asset records. This limited reinforcement requirements multi-year programme has transitioned (and therefore flexibility) to date, in 40m asset records and 400m attributes specific areas and at lower voltages, providing a platform for future clustering of LCTs is creating constraints digitalisation initiatives. We have that require ongoing intervention either also delivered projects to make use of through flexibility or reinforcement. smart meter data and implemented Connections: And as LCT uptake continues to an end-to-end customer relationship live network information accelerate, so too will the need for management (CRM) system. This has offering views of available flexibility services. given us better access to customer capacity (heat maps), asset and network information and enabled positioning for public safety During 2019-20 we ran our first more seamless outbound and inbound and self-service for small e-auction for 100MW of emergency communications with our customers, works budget quotations support customer flexibility. This which has been reflected in our (AutoDesign). resulted in no services being procured customer satisfaction scores. as the market feedback was that there was insufficient value in this product In developing our business plan we where the use is uncertain. Instead, it have been engaging with the local is being viewed by flexibility providers authorities and other stakeholders in as an additional product that could be our region on our Distribution Future provided alongside the reinforcement Energy Scenarios (DFES) on an open deferral product that would provide a data platform enabling them to interact more certain revenue stream. and exchange data with us in a way that suits them. System planning and In late 2020 we ran a flexibility investment: expression of interest exercise for 15 technical information that substations where we saw a potential enables the security and need for intervention in the 2023-28 safety of our GB transmission period. We identified larger customers Our plan for 2023-28 builds network and views of that could engage in providing the on the smart grid enablers investment plans and load required flexibility in 20 per cent of growth by substation and local the locations tested. Further, we are in we are putting in place in authority (DFES open data). discussions with national aggregators of the current period. local network (LV) flexibility about the role that they could play.
Alex Jones Director of performance and planning
Northern Powergrid: our business plan for 2023-28 – 21 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Track Record and Business Plan Commitment
A proven track record of collaboration and innovation
Innovation is embedded Collaboration is now more — Citizens Advice and local authorities throughout our business, important than ever, and we intend – we have strong, long-standing consistently driving benefits in our to build on and expand our existing relationships to identify and offer business-as-usual activities. strong relationships with partners. support to those in areas of social deprivation. Our 2015-23 business plan promise We are proud of the role we play in — ODI Leeds, a pioneer node of the of ‘more for less’ meant improving delivering essential services to those we Open Data Institute, with which we outputs and reducing costs. In order serve across the region. Collaboration collaborate to deliver open-source to achieve this, we have been finding is integral to how we deliver for our DFES data, encouraging data- and deploying innovation across our customers and, without our partners, driven stakeholder engagement and business. Regulatory-funded innovation we would not be able to achieve the supporting future net zero planning. has generated an estimated £23m same level of impact. Some of our key — the Federation of Small Businesses of cost savings so far in the period, relationships include: and a wide range of local including the managed connections businesses, with whom we have offered to generators, which have saved — Northern Gas Networks, Yorkshire joined forces to develop the Zero our customers £14m in connection Water and Northumbrian Water Carbon Business partnership, which costs. This is based on a narrow as fellow active members of the provides information to support definition of innovation in line with Infrastructure North collaboration small and medium-sized enterprises regulatory reporting to Ofgem, with established in 2013. (SMEs) that are starting their net wider benefits being significantly more. — Academic partners, including zero journey. universities – Bath, Durham, — North East Energy Catalyst, which Our CLNR project was one of the most Hull, Newcastle, Sheffield and we are supporting as a key partner significant UK smart grid projects Strathclyde – and the Centre for as it helps interested groups and ever undertaken; it was a £31m four- Energy Systems Integration, all of SMEs develop solutions to resolve year project that generated learnings, whom underpin and contribute to energy issues in the North East. which we are using to evolve into DSO. our innovation activities. Learning from this project enabled us to — Local partners such as NHS Trust develop a smart grid route map for our Yorkshire, Affordable Warmth Hull 2015-23 business plan, and as a direct and the British Red Cross, with result we made changes to our business, whom we work to deliver our social and recommendations to other network programmes that support customers operators to do the same, so that they who need us the most. and their customers could benefit.
Innovation driving benefits throughout our business-as-usual activities:
— Safety – vehicle telematics — Environment – the use of — Social obligations – our ‘powergrid is improving driver safety in perfluorocarbon tracer cares’ programme includes a number our fleet and helping us to (PFT) additives has sped of initiatives, including our data project incur fewer accidents. We up cable oil leak detection, in collaboration with Experian that registered 33 preventable contributing to a 47 per cent combines existing priority service vehicle accidents in 2020-21 reduction in fluid/oil losses information with regional demographic in a fleet covering about in the current price control mapping. This programme has delivered 14m miles. period so far. £2.9m in financial benefits so far.
— Reliability and Availability – our — Customer satisfaction – — Connections – our award-winning Foresight fault-prediction project SilentPower, our mobile AutoDesign project has created a has made hundreds of thousands of battery generator vehicles, web-based self-service design tool, pre-fault identifications prior to them has proven useful during the offering those looking to connect EV becoming permanent faults. This, COVID-19 pandemic, helping chargers and other LCTs access to along with our network automation us get customers’ electricity high-quality designs in real time, at programmes of automated power supply back more quickly a lower cost. The system provides restoration system (APRS) and LV smart and cleanly than a traditional information in 10 minutes, as opposed to fuses are making our network more diesel generator. up to 10 working days previously. reliable for all customers.
Northern Powergrid: our business plan for 2023-28 – 22 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Track Record and Business Plan Commitment
Investing efficiently to deliver outputs
Our delivery has been consistent Tree-cutting expenditure is expected We have identified £281m of throughout the period, with our to be £12.1m (16 per cent) lower than efficiencies across the business in expenditure in the period to date the allowances due to efficiency the current planning period. tracking closely to allowances at 99 per savings from renewing our tree-cutting cent. At a cost category level there are contract and realising synergies with our To ensure we could deliver our business offsetting variances: inspections programme. plan efficiently, we mobilised a significant cost efficiency programme Network reinforcement is forecast Inspections, repair and maintenance across all areas of our business and as to be £30.0m (11 per cent) lower than expenditure is forecast to be £25.5m a result we significantly rephased our allowances driven by lower requirement (24 per cent) higher than allowances capital programme. for fault-level reinforcement and largely as a result of the cost definition deferral of a major scheme (£11m) in the changes by Ofgem reallocating costs — A key element of our programme Northeast due to generation projects from network investment alongside was re-engineering of solutions. This not progressing. This is partially offset savings from unit cost efficiencies. involved changing the scope of our by the Green Investment ‘net zero activities and identifying resource ready homes’ initiative accelerating Other network operating costs efficiencies, which has delivered low voltage reinforcement to support (NOCs) are £2.8m (13 per cent) savings of £128.4m in the period. An decarbonisation. lower than allowances due to lower example of this is our modular high substation electricity costs and contract voltage (HV) primary switchgear Replacing and refurbishing equipment efficiencies. rebuild programme which enables is broadly in line with allowances (£8.6m works to be completed 12 weeks higher; within one per cent). Within Operational support and business quicker at 10 per cent lower costs. our programme we have increased support expenditure is £18.1m (two per — We have driven £60.5m of investment in fluid-filled cable (FFC) cent) lower than allowances. Increased efficiencies across the period replacement and LV switchgear to expenditure to support customer through the application of maintain asset health and manage service improvements has been more technology such as targeting cable environmental risks. Higher expenditure than offset by lower business support repairs using innovative fault-sensing on service and cut out replacements costs including energy efficiency equipment, voltage regulation and driven by the smart meter roll-out savings at our properties, lower deployment of automatic power and greater refurbishment to manage insurance claims and reduced fuel costs. restoration systems. network safety risks has been partially — Finally, we have delivered £92.2m offset by unit cost improvements of procurement and productivity through procurement, particularly in efficiencies including the relation to LV work. Cost allocation renegotiation of service contracts changes in line with the Ofgem and internal resource efficiencies. guidance has also seen certain costs in this area reclassified as maintenance. These efficiencies have been built into baseline costs in our plan for 2023-28. Other non-load expenditure is forecast to be £35.3m (12 per cent) lower than allowances driven by efficiencies. We Figure 4: eight-year plan period totex cost category split – 2022-23 forecast have re-engineered our flood defence programme enabling us to expand Current business our programme and reduce costs. plan totex to 2022-23 We have also delivered efficiencies in (£m/2012-13 prices, £m) Forecast Allowances Variance % visual amenity projects and asbestos abatement whilst we have experienced 1 Network reinforcement 239.3 269.3 (30.0) (11%) lower levels of metal theft on our network supported by enhanced 2 Replacing and 761.1 752.5 8.6 1% security measures. refurbishing equipment
Network faults expenditure is forecast 3 Other non-load 261.5 296.8 (35.3) (12%) to be £64.2m (12 per cent) higher than allowances. Allowances set for faults 4 Network faults 581.4 517.2 64.2 12% were insufficient for this cost category 5 Tree cutting 62.1 74.2 (12.1) (16%) across the entire sector. Expenditure relating to extreme weather events 6 Inspections, repair and 133.1 107.6 25.5 24% has been higher than expected due to maintenance increased frequency of events and we have increased our use of generators to 7 Other NOCs 19.3 22.1 (2.8) (13%) meet 12-hour restoration standards. We have experienced lower than 8 Operational support 979.1 997.2 (18.1) (2%) predicted levels of faults volumes and business support on LV underground cables with the Totex 3,036.9 3,036.9 (0.0) 0% remaining costs offset by efficiencies in other plan areas.
Northern Powergrid: our business plan for 2023-28 – 23 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Track Record and Business Plan Commitment
Our cost efficiencies have enabled Figure 5: current business plan period efficiencies and additional investment us to accommodate additional investment to drive benefits for 3,300 customers in the period and offset 3,225.9 128.4 cost pressures.
We have accommodated £92.1m of 3,100 60.5 92.2 3,036.9 additional investment in the period while 15.8 12.5 absorbing cost pressures to hold our 63.8 costs steady. We have done this where efficient and required by the asset base, 2,900 responding to key stakeholder priorities. In a number of key areas this means that we can reduce costs in the 2023- 28 period. These benefits are reflected 2,700 in our plan, most notably in relation to flood defence investment, extra high voltage (EHV) cable replacement and cyber security. 2,500 2015-23 Re- Smartgrid Procurement Network Cyber Customer 2015-23 Our owners are committed Business engineering solutions and resilience resilience service forecast investors with a long-term outlook. plan productivity improvements
Berkshire Hathaway Energy (BHE), our parent company, is committed to our 1 business and our region. In the current Additional investments in 2015-23 regulatory period more than £996m has been reinvested into the business – see +£63.8m +£15.8m +£12.5m our Financing section. network resilience, cyber resilience customer service including: improvements, including: There has been significant scrutiny on network company returns in recent — 58 additional flood — to significantly — upgrading our contact years. Our returns are at the lower end defences; upgrade our cyber centre telephone of the range of UK network companies — replacement of an defences against platform to latest with our forecast return on regulatory additional 90km of the evolving threat technology; equity (RORE) for the regulatory period EHV/132kv fluid-filled of online and — modernisation of our at 6.5 per cent based on our actual cables; and software attacks. web interfaces; and — investment to address — enhancing our debt to equity (gearing) ratio (see figure safety risks on our enterprise asset 6). The primary contributor to this is network such as fire management (eAM) incentive revenue from the interruptions suppression blankets in spatial asset system and Figure 4: eight-year plan period totex cost category split – 2022-23 forecast incentive scheme (IIS) which generates link boxes. underlying data. a 1.5 per cent return. We are also forecasting to achieve around 69 per cent of the available broad measure of customer service (BMCS) reward, Figure 6: forecast return on regulated equity (RoRE) for the plan period 2015-23 generating a return of 0.4 per cent. This is offset by 0.5 per cent lower returns Notional Actual as a result of debt financing as the RoRE gearing gearing debt that we took out many years ago Allowed equity return 6.0% 5.3% at prevailing rates is more costly than Ofgem allows. Totex outperformance (0.0)% (0.0)% Information quality incentive (IQI) penalty (0.1)% (0.1)% Broad measure of customer service 0.5% 0.4% Interruptions incentive scheme (IIS) 1.7% 1.5% Incentive on connections engagement (ICE) - - Time to connect incentive 0.1% 0.0% Other incentives (0.1)% (0.1)% RoRE – operational performance 8.0% 7.1% Debt performance (0.8)% (0.5)% Tax performance (0.0)% (0.0)% 1. Excluding incremental investment committed as part of Ofgem’s national Green Recovery scheme. RoRE – including financing and tax 7.2% 6.5%
Northern Powergrid: our business plan for 2023-28 – 24 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Track Record and Business Plan Commitment
Business plan commitment and assurance
We have well-established pay, reward indicators that are directly linked to the group’s pay directly to improvements and incentive frameworks that are commitments in our plan. in the reliability of the network. We will coupled to the delivery of business plan continue to review and improve these commitments and our overall company Our collectively bargained pay deals incentive mechanisms in consultation performance. We will continue with this all feature arrangements that link with our colleagues and their trade approach in 2023-28. recognition and reward to our targets, unions throughout the period. and particularly the outcomes that For our management team, rewards customers value. We work with our We explain our approach to and incentives are determined by colleagues and their trade union remuneration in more detail in annex 5.2 both the company’s and their own representatives to focus those Workforce Resilience strategy. performance against the Company incentives on the areas that those Scorecard. Our Company Scorecard is employees can impact most directly. calibrated annually with our shareholder For example, our technical group’s BHE. It sets out targeted, measurable rewards are set in part by our Gainshare and stretching key performance incentive. This links a component of that
Assurance statement for The boards of Northern Powergrid capital structure basis (using the the business planning (Northeast) plc and Northern Ofgem working assumptions for period 2023-23: Powergrid (Yorkshire) plc, including cost of capital allowances and the sufficiently independent directors, expected incentive outperformance) confirm that the licensees would meet and the plan and associated costs Ofgem’s financeability assessment have been tested for accuracy, criteria on both a notional and actual ambition and efficiency.
Board members
Northern Powergrid (Northeast) plc Phil Jones Tom France Andrew Alison Marshall Phil Taylor Maclennan Northern President and General counsel, Commercial director, Non-executive director Non-executive Powergrid CEO, Northern Northern Powergrid Northern Powergrid chair – Gateshead director, pro (Yorkshire) plc Powergrid Health NHS vice-chancellor for Foundation Trust research and enterprise, Bristol Board of University Assuring our plan directors The business plan has been scrutinised and challenged — Regular reviews by the board and by various — Scrutiny and sign-off external groups to provide Technical panel — Sub-committees chaired assurance around its by non-executive directors accuracy, ambition and — Independent panel for innovation and risk efficiency. of industry experts to Alison Marshall scrutinise and challenge the technical aspects of our plan Plan development Assurance Customer — See annex 2.2 Technical Panel letter and engagement plans Engagement Group (CEG) — Plan development and — Structured assurance — Group of 10 independent stakeholder engagement plans in line with Data experts charged with led by business unit Assurance Guidance scrutinising our plan executives and their — See annex 2.1 Data and the quality of our teams Assurance engagement Social issues — See our CEG website expert group External challenge — Independent group of six experts to provide feedback on how well — Targeted use of external our plan addresses social consultants to challenge issues in our region our plans — External benchmarking
Northern Powergrid: our business plan for 2023-28 – 25 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Outputs and Incentives
Outputs and incentives
We are committed to delivering on our promises. Throughout our plan we clearly set out the outcomes we will deliver for our customers, with the associated benefits, deliverables and measures we will use to track our performance. In each section of our plan we show how our customer outcomes link to the range of outputs and incentives in Ofgem’s RIIO-ED2 price control framework.1
Output categories
Deliver an environmentally sustainable network
Maintain a safe and resilient network
Meet the needs of consumers and network users
Overarching framework for outputs and incentives
Licence obligations (LOs) Price control Output delivery 1 Set minimum standards of 2 deliverables (PCDs) 3 incentives (ODIs) performance that Ofgem Capture outputs directly Where these may be in the will impose associated with baseline finding interest of customers and other network users
Common: Bespoke: Output delivery Output delivery outputs and incentives outputs and incentives incentive – financial incentive – arrangements that arrangements that (ODI-F): reputational (ODI-R): apply to all DNOs are proposed by the outputs and incentives outputs and incentives DNOs that have associated of a reputational payments/penalties nature
A summary of outputs and — Our three bespoke ODI-Rs incentives in our plan. cover performance reporting commitments for our DSO, In addition to the common outputs and Vulnerable Customers and Our targets and proposed incentives in Ofgem’s framework, our Major Connections strategies to incentives support the ambitious plan contains one bespoke PCD and supplement Ofgem’s strategy customer outcomes in our plan. three bespoke ODI-Rs. delivery ODI-F. We propose this as Our proposed incentive a sector-wide mechanism to ensure framework demonstrates how we — Our bespoke PCD covers our we account for our performance will hold ourselves accountable to commitment to deliver £64m in areas that cannot be easily stakeholders for how well we of investment in HV network measured by quantitative metrics. deliver those outcomes. automation to deliver the substantial Where robust metrics are available improvement in network reliability we have proposed performance required to meet Ofgem’s IIS scorecards in our strategies, through targets, see Reliability. the common ODI-F mechanism, to Dave further incentivise our delivery Wilkins in the period. Policy manager
1. Unless specified otherwise, target dates for delivery throughout our plan are the end of March 2028. For phasing of the performance metrics, see annex 1.4.
Northern Powergrid: our business plan for 2023-28 – 26 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Outputs and Incentives
Our proposal for outputs and incentives
Output category Plan section Output/incentive Type Target/mechanism
Delivering an Decarbonisation Scenarios and environmentally - - - sustainable Investment network Performance scorecard proposed in DSO Strategy delivery incentive Common ODI-F DSO Strategy our plan in annex 4.2 DSO strategy DSO Strategy delivery report Bespoke ODI-R Annual reporting Enabling Whole - - - System Solutions Environmental action plans Common LO Included in our plan Environmental Annual environmental report Common ODI-R Annual reporting Action Plan Performance scorecard proposed in Environmental scorecard Common ODI-F annex 4.4 Environmental Action Plan Maintaining Safety a safe and Provisional targets for our plan. Final Interruptions incentive scheme (IIS) Common ODI-F resilient targets to be set by Ofgem network Guaranteed standards of performance Common LO Meet standards Reliability and £2.5m investment included in our plan Availability Worst-served customers (WSC) Common PCD to address 2,400 customers £64.2m investment included in our plan to deliver substantial improvements HV automation Bespoke PCD in network reliability, see annex 4.8 investment in HV automation
Asset Resilience Network asset risk metric PCD, ODI-F Included in our plan
Climate Resilience Environmental resilience plan Common LO Strategy included in our plan
Cyber resilience information technology Common LO Included in our plan (IT) plan £4.5m investment included in our plan Cyber resilience IT Common PCD Physical and Cyber to reduce risk by 35 per cent Resilience Cyber resilience operational technology Common LO Included in our plan (OT) plan £5.1m investment included in our plan Cyber resilience OT Common PCD to reduce risk by 30 per cent Meet the needs Customer satisfaction survey Common ODI-F Targets to be determined by Ofgem of network Customer Service users Complaints metric Common ODI-F Targets to be determined by Ofgem Obligation to treat customers fairly, Common LO Meet standards including those in vulnerable situations Vulnerable Improving service standards for Performance scorecard proposed in Common ODI-F Customers vulnerable customers annex 4.11 Vulnerability strategy
Vulnerable customers delivery report Bespoke ODI-R Annual reporting
Our Communities - - -
Time to connect Common ODI-F Targets to be determined by Ofgem
Connections guaranteed standards of Common LO Meet standards performance Connections Improving service standards for major Performance scorecard proposed in Common ODI-F connection customers annex 4.12 Major connections strategy
Major connections delivery report Bespoke ODI-R Annual reporting
Openness and - - - Transparency Enablers Innovation - - - Digitalisation Strategy and Action Plan Common LO Included in our plan Data and (DSAP) Digitalisation Data best practice Common LO Requirements reflected in our plans
Workforce - - - Resilience
Northern Powergrid: our business plan for 2023-28 – 27 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Outputs and incentives
Our approach to setting out our proposals
In the following sections of our plan we and Digitalisation and Workforce deliverables and measures to track unpack our stakeholder engagement Resilience). In each of our output our progress. We also show how the approach, our plans for the 12 output sections we set out the commitments feedback you have given us has areas of our business and the three we are making in the form of customer directly shaped our plans and the supporting enablers (Innovation, Data outcomes, supported by benefits, impact on costs.
1 Our plan 2 How engagement 3 How much it with you has shaped will cost our plans
How the output area contributes to Who we have engaged our overall vision How much How we have engaged it will cost1 Outcomes Our commitments for the 2023-28 period Wave 1 Open and formative 2023-2028 engagement findings expenditure £m Benefits How these outcomes (annual) % of totex benefit our customers Wave 2 Outcomes of testing our emerging thinking with costed versus 2 Deliverables What we plan levels of ambition 2015-2023 +/-£m to do to support the delivery of our +/- % outcomes Wave 3 Refining and finalising; and how findings have Metrics3 How we plan to been addressed in our plan, linked measure our success, including: to customer outcomes
— Output measures to track the delivery of our outcomes – shown as LOs, PCDs, ODIs (where applicable) — Indicative input measures showing underlying input/ volume assumptions (where relevant)
We will report on progress against our plan in the 2023-28 period
For mapping of our plan to Ofgem’s Business Plan Guidance please see annex 1.3 Mapping to Ofgem Stakeholders have provided Business Plan Guidance valuable input throughout our plan development, shaping the customer outcomes we are committing to deliver.
Philippa Williamson 1. All ED2 costs are in 2020-21 prices and include real price effects and ongoing efficiencies unless otherwise stated. All Planning 2015-23 costs are shown in 2012-13 prices. 2. Target dates for all deliverables are the end of the period (March 2028), unless otherwise stated. manager 3. See annex 1.4 Key measures in our plan for the phased profile of our targets and forecasts over the 2023-28 period.
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Giving Consumers a Stronger Voice GIVING CONSUMERS A STRONGER VOICE Our enhanced engagement process is central to the development of our plan.
Our plan has been developed with our customers and stakeholders. In building our plan, we have conducted our most ambitious, comprehensive and representative engagement programme ever. We have provided multiple opportunities for our customers and stakeholders to engage, shape and challenge our proposals.
We have taken on board feedback Co-creating this plan with our from over 52,000 interactions with stakeholders started with early stakeholders, customers and future engagement. We held deliberative customers. We held more than 325 sessions with an open dialogue to events, including 68 focus groups, 57 discuss what our priorities should be; panels, and seven regional conferences this shaped our thinking from the very and delivered engagement at flexible start. This led to the publication of our and varied times to enable the greatest Emerging Thinking in summer of 2020 participation from the broadest group supported by a dedicated microsite and of stakeholders. We established six the ability to ‘build your own plan’ based new, targeted challenge panels to gain on costed plan options with five levels of key insights with a particular focus on ambition to consider across each ensuring good representation from of our business plan areas. This enabled all stakeholders in our region. We our customers and wider stakeholders conducted 46 surveys, published two to design the plan they would like to consultation drafts of our business see delivered in 2023-28. We then plan, and ran extensive communication tested this insight and the emerging campaigns reaching 1.4m consumers options through further qualitative to ensure that a high proportion of our engagement. Wide-ranging efforts customers and broader stakeholders such as consumer panels, customer were aware of our engagement and research and co-creation focus groups could have a voice in developing our helped to evaluate our thinking as our plan for 2023-28. plans progressed, including the setting of stretching targets. We believe this approach has resulted in a plan that has been truly stakeholder-led.
NorthernNorthern Powergrid: Powergrid: our our business business plan plan for for 2023-28 2023-28 – – 29 29 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Giving Consumers a Stronger Voice – Our Enhanced Engagement Process
We carried out our engagement took action to engage with the digitally our proposals of £21.46 p.a. above their in accordance with our excluded as far as we could. current bill. stakeholder charter. We structured our plan into four We undertook a robust and To ensure we fully integrated broad waves of engagement activity. comprehensive acceptance research stakeholder and customer views into our A comprehensive stakeholder stage including 1,272 customers, of plan, we carried out all our engagement segmentation model supported this, whom 528 were vulnerable and 194 according to the principles set out in ensuring our engagement was fully were fuel poor. This measured our our stakeholder charter and this was representative of the customers customers’ acceptance of each of the used as a yardstick by our Customer and stakeholders we serve. This plan areas, our enablers, and the plan in Engagement Group (CEG) to assess the was supported by an ambitious its entirety. effectiveness of our engagement. communications and outreach strategy to ensure that our engagement Domestic customers gave an 89 per We built our enhanced programme was accessible and cent acceptance score for the plan. engagement approach on the would boost areas of low Further information about the research solid foundations developed from representation or participation. and acceptance levels by plan area is 2013 onwards, while becoming available in annex 2.1 Data assurance. more responsive, agile and As an important aspect of our innovative to meet the ambitions engagement programme, during wave As we finalise our plan, our wave four of our region’s stakeholders. three we conducted further research engagement will include a further stage with a representative sample of our of research and acceptability testing The COVID-19 pandemic created customers to provide assurance that to gather particular insight on areas a unique and challenging situation our business plan is both acceptable where customers have asked for further for our stakeholders, customers and and is supported by our customers information or clarification to better communities during the business plan including vulnerable customers, small understand the benefits of particular development period. In response, much and medium-sized enterprises (SMEs) areas of the business plan. This will also of our engagement activity moved and stakeholders. This followed on test the actual impact on annual bills for online – changing the pace and dynamic from our ‘willingness to pay’ research, our customers for 2023-28 and beyond. of our interactions. Where possible, we where our customers placed a value on
Stakeholder-led — We are flexible, proactive and responsive. Early deliberative engagement informs our plans and allows for testing with 1 stakeholders.
— We will not leave anyone behind. We hear all voices from across Representative the diverse region we serve. 2 and inclusive
— Explaining what, why and how we work. Encouraging active Open participation from customers and stakeholders to aid planning 3 and transparent and decision making.
— Employing a range of engagement methods designed to engage Accessible all ages and capabilities. Educating stakeholders, so they 4 understand our business, make better-informed decisions and provide a richer input.
Responsive — Best practice leads us. Experience shapes us. Our programme is continuously evolving as we learn more about the needs of 5 and adaptive others.
Northern Powergrid: our business plan for 2023-28 – 30 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Giving Consumers a Stronger Voice – Our Enhanced Engagement Process
Building our plan with you
October WAVE 1 – open engagement… 2019 — Regional model of representation and inclusivity DSO V1.1 — Key themes and priorities from ongoing engagement — Tailored engagement plans — Initial open consultation – early views and areas for further exploration >52,000
…provided us with very clear messages that helped us shape our stakeholders plan options engaged
1. Decarbonisation is top priority – facilitate the transition to net zero and provide access to energy system data 2. Safety, reliability and resilience remain highly important, increasingly so as more reliance is placed on electricity in day-to-day life 3. Show leadership on environmental protection, including reducing the carbon footprint of our operations 4. Support vulnerable customers and facilitate a socially inclusive transition >325 to net zero 5. Keep bills low events
August WAVE 2 – optioneering... 2020
Emerging — Emerging Thinking (ET) consultation launched in August 2020 Thinking (ET) — Ambitious stakeholder optioneering exercise – ‘build your plan’ 1st — Five fully costed service levels for our nine output areas DNO to publish Stakeholder feedback used to balance ambition with affordability costed plan options 1. High levels of stakeholder ambition — Most ambitious option (level E) was the preferred choice in 75 per cent of our output areas 2. Decarbonisation reinforced as the clear imperative and top stakeholder priority… 3. …but affordability remained at the forefront
250m July WAVE 3 – refinement and finalising... Permutations in 2021 our interactive optioneering tool Draft business plan submission Draft plans shared and tested for 1 support, adapting where required 89% acceptance score 10 1. Domestic customers. Challenge panels
December WAVE 4 – refreshing 2021 Further research and acceptability testing Final business plan submission
Northern Powergrid: our business plan for 2023-28 – 31 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Giving Consumers a Stronger Voice – Our Enhanced Engagement Process
We have robust processes, planning, governance and assurance in place to make sure that our business plan decisions are clearly responding to customers’ and stakeholders’ feedback and that our plans adapt to meet their needs.
— We commission an annual — We developed a weighting — Where opinions were — Our assuring partners, audit that assesses our methodology to measure changing or still unclear Sia Partners, completed work to the stakeholder engagement and insight throughout the first two independent quality engagement standard based on multiple factors. waves of engagement, assurance reports to AA1000 and ensures that The methodology helps us our citizens panel was assess engagement at the we continue to build and plan engagement and is convened over 12 sessions close of wave two and develop our engagement particularly useful for any to discuss, debate and wave three to ensure that processes. We tension or contradictory vote on some of the it was representative and commissioned additional opinions between more complex issues. aligned with the emerging audits through the plan different stakeholder The panel was made up propositions, with development period. This groups. This approach of 50 customers from feedback we received approach will continue provides an indication the consumer, future and with the emerging as an integral part of of where further testing consumer, rural and SME customer outcomes. our process throughout or discussion is required panels. They looked at See annex 3.3 Detailed 2023-28. and with which groups of the issues within the engagement findings. stakeholders. For further wider context of the detail of our methodology overall plan and helped and examples of how us to reach consensus on it has been applied our customer outcomes see annex 3.4 Our moving forward. stakeholder engagement methodology.
Building on our established rely more and more on electricity. Our governance approach engagement programme with — Stakeholders expect us to show is robust. It includes senior annual stakeholder priorities leadership in environmental management accountability and research, we found a series of protection, including reducing the responsibility in each area of the prominent priorities stakeholders carbon footprint of our operations. business for engagement planning would like us to focus on. — Stakeholders want us to continue and delivery, coupled with regular supporting vulnerable customers reporting to the board and clear Stakeholder priorities formed from early, and to go further, including escalation processes in place. deliberative engagement and became facilitating a socially inclusive richer in detail as the engagement transition to net zero. We have long-standing external expert programme progressed. These have — Stakeholders want us to consider groups who hold us to account, such shaped our business plan outcomes and affordability andcontinue to focus as our enduring stakeholder panel ambition levels throughout our plan. on keeping bills low. and social issues expert group. Within the plan development period we have — Decarbonisation is an urgent established four additional panels priority for most of our representing vulnerable customers, stakeholders and customers, community energy, future consumers, reflecting heightened concern and a collective consumer group about the impact of climate including SMEs and domestic change. As a result, we will play customers. These have now become a significant role in facilitating an essential part of our enduring the transition to net zero, including engagement approach. providing access to energy system data. — The safety, reliability and resilience of our network remains a top priority, as day-to-day life comes to
Northern Powergrid: our business plan for 2023-28 – 32 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Giving Consumers a Stronger Voice – Our Enhanced Engagement Process
Strengthening governance and challenge
The establishment of our the CEG to discuss emerging plans considered business plan that reflects Customer Engagement Group (CEG) at every stage of the development customers’ needs and preferences. in September 2019 has further process. We shared plans at the outline The CEG has published and reported strengthened our governance stage to facilitate early challenges monthly updates to ensure openness approach. through to full plan development. To and transparency. ensure a robust process, subject matter The CEG, our independent scrutiny experts took the CEG through the Ofgem’s RIIO-ED2 challenge panel, has played a crucial role in underpinning justification, supporting group has also engaged as our ensuring that stakeholder and customer data, engagement feedback and plan develops. needs have been considered and benchmarking materials and responded reflected within the business plan. directly to CEG challenges. Supporting We met with the RIIO-ED2 challenge information was provided in an agreed group as part of their formal Following a robust appointment format and at appropriate time frames engagement process. process, ratified by Ofgem and before discussion to enable the CEG to conducted openly by an independent prepare for plan section reviews. — In March 2021 members of our agency, Justin McCracken was executive, including our chief appointed chair of the CEG in July 2019. The CEG has reviewed, observed and executive officer (CEO), met with Justin then led the recruitment of the raised six challenges and 120 issues in the challenge group to discuss our wider CEG members with the group the developing business plan and the delivery track record and historical first meeting in December 2019. We engagement that underpins the plan. performance. established an independent secretariat We have fully resolved three of these — In April 2021 the executive function to provide dedicated support challenges and 112 of these issues to representatives met with the for the CEG, manage their induction and date. We will continue to work with challenge group again to discuss our provide intensive training to assist with the CEG in the period through to plan. The challenge group sought to navigating the energy industry. final submission. The group observed understand our approach, planning the broadest range of engagement assumptions and levels of ambition. The CEG held both full group meetings activities across our four waves and additional sub-group sessions of engagement, feeding back its each month to ensure sufficient experience of 102 events, highlighting focus and scrutiny on each plan area areas of good practice and areas for aligned to the expertise of the different improvement. This included scaling up group members. All CEG members our engagement with future consumers, Our Customer assessed the planning and execution challenging how we ensured Engagement Group: of engagement by directly observing propositions were understandable for activities and reporting back to the stakeholders and clearly describing full group. how bills would be impacted and over what time period. The group held us In support of the CEG’s scrutiny to account against the stakeholder roles, our subject matter experts and charter and the scope and scale of members of our leadership team joined engagement necessary to develop a
10 independent experts
102 formal interactions
Northern Powergrid: our business plan for 2023-28 – 33 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Giving Consumers a Stronger Voice – Our Enhanced Engagement Process
Delivering best practice engagement
Action required to decarbonise our introductory sessions and webinars — To raise awareness of our plans, we economy and society, coupled with in complex subjects to help with ran 17 communication campaigns, the impact of the COVID-19 pandemic, participants’ understanding. which led to more than 1.45m digital means it has never been more critical to Breakout groups were organised interactions contributing to the ensure that nobody is left behind in the based on participants’ levels of development of our plan. energy transition. We, therefore, use the understanding. We took feedback UN-approved ‘no one will be left behind’ from stakeholders at the end of — Representation: our segmentation framework approach of ‘examine, each engagement to check on and representation approach empower, enact’ as the bedrock for understanding and satisfaction ensured that we regularly our enhanced strategic approach (see with the event. We sought to updated our data, capturing new annex 3.2 Our strategy for engagement continually learn and listen to our and emerging groups to remain 2023-28) to support hard-to-reach and stakeholders’ needs. relevant and fully representative seldom-heard stakeholders. of the regions we serve. Alongside — Communication: the development domestic consumer panels, new We continually challenged ourselves of our dedicated microsite for specialist panels established to deliver a ‘best in class’ engagement engagement, Engage, provided a included SMEs, rural customers, programme for our region. We were hub for all business plan materials, future consumers and the never satisfied, reflecting on what could with event recordings as well community energy customer be better and making improvements as future events registration panel. With input from our CEG, after every interaction, supported information. Our ET document was we recruited our future fairness by feedback from the CEG. Customer published on Engage providing panel, to encompass all current and stakeholder feedback on the an interactive ‘build your own bill’ vulnerabilities in our region and to effectiveness of engagement was and dashboard for further digital help us to identify new and emerging routinely gathered and analysed, engagement with customers and issues from groups who are hard to shaping areas of focus to optimise stakeholders. Stakeholders were reach and vulnerable in nature. all engagements. able to vote on the plan priorities and on our engagement approach. — Future bill payers played an — Education: a central focus We provided a further update to important role in shaping our throughout our engagement our plan in April 2021 to feedback plan. We set up four university programme was providing tailored to stakeholders on how their views panels to gather in-depth insights and targeted educational material have shaped our priorities and to test about decarbonisation from their for customers to ensure they their acceptance and satisfaction. perspective. We also developed an could navigate the energy industry innovative future consumer online and our plan to help them feel panel of 16-21 year olds recruited confident in giving feedback on and from across our region, who challenging our plan assumptions. reviewed the developing plan, We commissioned 13 ‘What is’ and whether it aligned with animations to explain complex their ambitions and priorities for terms and topics. We also held future generations. Support for our plan
“I’ve been both surprised and impressed by the level of stakeholder engagement that Northern Powergrid has With some 52,000 interactions undertaken in developing their with our customers and future business plans, and the stakeholders to date, our business plan reflects this; extensive engagement it is easy to understand, and programme has ensured that provides a good balance between our consumers have a strong investment in the service, voice in the development of and cost-effectiveness for the our plan. consumer.”
Amy Dixon Foresight North East Siobhan Lincolnshire, member Barton of Northern Powergrid Head of Future Fairness Panel stakeholder relations
Northern Powergrid: our business plan for 2023-28 – 34 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Giving Consumers a Stronger Voice – Our Enhanced Engagement Process
— Citizens panel: as we refined our engagement leads and improving date, briefed 70 per cent of council plans, we established our enduring our materials by adding accessible leadership teams on our plans. At citizens panel, bringing together language and imagery, enabling each stage, elected stakeholders existing members of the SME panel, our customers to make informed have been given the opportunity to rural panel and consumer panels decisions based on increased ask questions, express their views to build a more diverse, collective understanding. and challenge our plans. body with 50 representative members. This amalgamation of — Responding to regional needs: — As an industrial region of the UK, panels brought together customers we serve a diverse region, taking our area contains a diversity of with very differing experiences and in large cities, post-industrial and different business interests, from alternative perspectives, which historic towns, coastal communities steel and glass making, to shipping, enabled more in-depth discussion and vast swathes of rural England logistics and manufacturing. We and robust challenge to our plans. across Yorkshire, the North East and also have a large financial sector and Over 17 deliberative sessions held northern Lincolnshire. a wide range of SME businesses. during wave three, the panel helped To ensure our plan continues to our engagement leads refine their — Recognising that engagement is meet their diverse needs, we have customer outcomes. Particular areas everyone’s responsibility and that engaged with both sectoral groups of challenge from this panel were we serve our communities better and industrial customers, through plan ambition, the bill impact of the when we are closer to them, we bilateral sessions, and set up an SME proposed plan over 45 years, and restructured our business around six panel to give a representative group how can we balance affordability geographic regions, with a greater of small business owners a chance with proactivity in support of focus on local accountability. to shape our plans. network decarbonisation. — Our engagement programme has — Energy champions: hand in also sought to uncover localised hand with our citizens panel need through our membership of and coupled with our focus on regional leadership groupings such ensuring stakeholders understand as the North East England Climate the materials and topics we were Coalition and Yorkshire and Humber sharing with them, we recruited 12 Climate Commission and regular individuals – our energy champions engagement with experts and – including domestic customers stakeholder leaders in a series of (urban and rural), SME customers, localised workshops and panels. representatives of vulnerable groups and our colleagues to improve how — Recognising that elected leaders we are educating our customers on within our region represent the energy transition. In meeting localised interests, we conducted an 12 times and reviewing 22 topics, extensive engagement programme the focus for our champions was with councillors, MPs and elected to improve complex customer mayors. We spoke directly with communications, helping us see it over 100 councillors representing through their eyes. The champions a diverse range of communities, helped us to explain our most 15 MPs attended our dedicated complex topics by coaching briefing sessions, and we have, to
Northern Powergrid: our business plan for 2023-28 – 35 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Giving Consumers a Stronger Voice – Our Enduring Stakeholder Engagement Approach
Our enduring stakeholder engagement approach
The pace of change in today’s world means customer and stakeholder engagement is becoming even more critical, especially as our customers will be living through the formative stages of the energy transition during the next business plan period.
Our plans must therefore reflect what During 2015-23, we have these key decisions and actions back to we know but also have the capacity to developed a strong core of clearly defined stakeholder insight. adapt quickly to emerging priorities. Our engagement to build upon in engagement must support and enable the future. Alongside our understanding of our ambitious economic development for customers’ priorities and needs drawn our stakeholders involved in net zero Our plan’s foundations are the from engagement and research, we and local area energy planning (LAEP). successes of our existing engagement also conduct extensive benchmarking For hard-to-reach and vulnerable programme. The advisory panels, in to identify and utilise best practice to stakeholders, it must facilitate access place for more than eight years now, sit ensure our plan is robust and future- to available support through a growing alongside new groups established as proofed. partnership network, to ensure a just part of the planning process, ensuring and inclusive transition. we reflect the diverse interests and Technology and new ways of working needs of all stakeholder voices in our have dramatically changed the way Working in an agile and efficient regions. we engage over this last year. We will way, we will continuously improve build from this, creating new channels, how we collaborate with individuals, We will further strengthen the customer engagement mechanisms, and communities and wider society, and voice in our work, and make sure that communications assets to enable our strive to include diverse voices in our our organisation remains externally stakeholders to better interact with us planning. Building strong engagement focused and accountable. Our and empower them to shape the future with individuals, communities, and engagement strategy for 2023-28 is of our services. This will be sensitively broader society helps us make better set out in annex 3.2 Our strategy for balanced with an understanding of and decisions, and it also helps us better engagement (2023-28) and more detail provision for the digitally excluded or prepare to meet their needs and around our stakeholder processes and hard to reach. aspirations. Our engagement plan for governance is set out in annex 3.4 Our 2023-28 reflects these priorities. stakeholder engagement methodology Echoing our customers’ ambition, we will accelerate and expand our To further strengthen our robust regional approach, doing even more governance approach, we will maintain to understand the granular differences the scrutiny of the annual AA1000 that make up the communities we serve audit, publish our commitments so that we can better and more swiftly The majority of stakeholders annually, report progress on our respond to their specific needs. we heard from wanted to Engage microsite and establish our discuss strategic priorities CEG as a standing body to scrutinise more regularly. We are stakeholder engagement activities and therefore proposing to expand delivery against our promises – see our our teams to provide the time Openness and Transparency section. and expertise sought – this is a key part of our stakeholders’ Throughout our organisation, our commitments. decision-making processes encompass the insights gathered from well-planned stakeholder engagement and can track Anda Baumerte Sustainability manager
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Giving Consumers a Stronger Voice – Our Enduring Stakeholder Engagement Approach
We will build on our established engagement channels. Figure 1: our engagement approach Our engagement approach during 2023-28 will combine the engagement Engagement Continuous Stakeholder- building blocks currently in place, planning feedback based decision along with the extended engagement making channels we have established in developing our business plan. We will ensure that that we do not lose our Feedback and current momentum and continue to analysis build mature relationships with our existing stakeholders and customers Understand Decision while further extending and adapt making and our reach. action Identifying Measurable Our approach will be inclusive, stakeholders, progress accessible, relevant, and continuously their needs and improving, bringing customers’ knowledge Engagement voices forward and actively enabling Learning and is optimised stakeholders to influence our plans. refining
Our engagement strategy sets out how we will engage with more than 20,000 stakeholders every year utilising our engagement channels, panels, co-creation groups, qualitative and Full details of our engagement approach and methodology quantitative research and with are available in annex 3.2 Our strategy for engagement (2023-28) a published annual engagement schedule. This forms the core of our coordinated annual programme of engagement, with the agility to respond — Identifying stakeholders, their needs and knowledge to new, emerging customer priorities Our stakeholder database maps over 6,000 stakeholders against or an acceleration in decarbonisation our segmentation model with an annual database audit to ensure activity during this period. diversity of representation.
Our engagement priorities and — Understand and adapt ambition, underpinned by our We engage with hard-to-reach, vulnerable and time-poor enhanced engagement approach, individuals adapting our approach accordingly to meet give consumers a stronger voice. their needs.
The outcomes table on page 40 sets out — Feedback and analysis how we will deliver our strategy. We record and review all feedback in an accurate and timely manner, tracking feedback, satisfaction and actions. We will continue to build and adapt our engagement on current and emerging — Decision making and action best practice, including the areas of Our stakeholder engagement leads management group (ELMG) focus for developing our plan. This review feedback and develop action plans. These are reviewed by includes our practical approaches such the executive, CEG and stakeholder panels. as the development of our no one left behind framework, introduction of — Measurable progress energy champions, future consumer Through robust project management, we report and measure panels, future fairness panel, SME panel progress including stakeholder return on investment (ROI), and engagement tailored to diverse benefits and satisfaction; and report back outcomes to our regional needs and targets. stakeholders.
— Learning and refining We operate a cycle of continuous improvement for all engagement and continually refine our processes.
— Engagement is optimised The ongoing feedback and insights gathered are fundamental to our decision-making processes and our success as a business, keeping us accountable for delivery.
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Giving Consumers a Stronger Voice – Our Enduring Stakeholder Engagement Approach
Giving consumers a voice in the energy transition
To prepare for a fully decarbonised We will actively collaborate with other Throughout our engagement process future, we will deliver a sector-leading utilities and industry partners to support customers and stakeholders have told programme of ambitious, innovative the development of an efficient and us that we need to be much more and effective engagement for our effective whole energy system for our ambitious and visible to them in order to customers and stakeholders right region. This will include a partnership effectively fulfil this enhanced support across our region. Working together, approach to engagement with our role and provide independent, impartial we will improve our existing services stakeholders to ensure future customer advice. They want us to raise our profile and innovate, developing new, inclusive needs are met with dynamic cross- and general awareness as an anchor markets to meet customer needs better, sector planning. For example, our joint organisation in the region. now and in the future, while ensuring no charter with Northern Gas Networks one is left behind. to support development of LAEPs in To respond to these challenges and our region. We see this as an approach the accelerated pace of change as our We will work collaboratively with our which will extend to support further region decarbonises, we will spend region’s stakeholders recognising decarbonisation collaborations. an additional £0.5m p.a. to increase their differing levels of ambition and the ambition, impact and scale of understanding of decarbonisation. engagement initiatives, marketing We will be best in class in providing outreach campaigns and dynamic education, guidance and data to help external communications materials that support their decision making and will promote, support and advise on planning. what changes are required.
Our channels for engagement (core pathways) are tailored and targeted to meet our stakeholders’ levels of knowledge:
Figure 2: engagement channels
Level of knowledge Expert Interested Limited
Engagement Expert panels Conferences Direct customer type engagement
Sector forums Deliberative engagement Research
Capacity-building workshops Proactive communications campaigns
Reach 500+ 2,000+ 50,000+
Future Consumers consumers SMEs Rural
70+ 64 20 30 customers young people small to medium- rural domestic represented in on our panels sized business customers contribute two panels representatives to our panel Community Future energy fairness Social issues Stakeholders
20 16 6 40+ Community energy experts give views in a leading experts at stakeholders on representatives session chaired by Voluntary our independently our representative take part from across Organisations Network chaired session panel to share the region North East (VONNE) their views
Northern Powergrid: our business plan for 2023-28 – 38 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Giving Consumers a Stronger Voice – Our Enduring Stakeholder Engagement Approach
Robust governance, accountability and reporting
Our engagement strategy and approach value for money for our customers on and published annually. This will be sets out our robust methodology for and stakeholders. Our performance scrutinised regularly by the CEG and effective engagement and ensures targets have been defined based on our citizens panel, which will receive that stakeholder voices feed strategic stakeholder feedback and built on our quarterly updates against commitments, and day-to-day decision making. Our strong track record. We define different performance targets and the impact central stakeholder team will continue metrics dependent on the engagement of our work from our engagement to oversee this process, with colleagues activity objectives or intended impact leadership team. This will hold us to throughout the business responsible of projects. These will be shaped, account for delivering our commitments and accountable for leading and challenged and delivered with and ensure we continue to reflect a delivering engagement and acting on stakeholders and scrutinised alongside strong customer voice throughout our stakeholder feedback in their plans. our engagement. plan delivery.
We have a comprehensive project To demonstrate our accountability, in management and benefit quantification addition to our established governance approach in place to measure our processes of reporting monthly to impact and the effectiveness of our executive team, our engagement our programmes in order to deliver commitment delivery will be reported
Figure 3: stakeholder-led decision making process
Insights and feedback Stakeholder engagement Senior and captured through our leads management group executive team engagement process
Challenge Action plan
Assign Stakeholder Triangulation executive panel sponsors
Business-as-usual insights Business New Feedback changes implementation Proven data insights
— Insights and feedback from customer service and engagement teams Measure return on investment and stakeholder satisfaction Regulator and government Internal and external research Report back to stakeholders on actions and outcomes from Best practice their feedback
Northern Powergrid: our business plan for 2023-28 – 39 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Giving Consumers a Stronger Voice
Output measure/1 Customer indicative input ED1 ED1 ED2 outcomes Benefits Deliverables measure to date forecast target
SE1 Inclusive: — Tailored support for SE1.1) Attend regional/municipal Independent ensure that our community groups assemblies, panels, surgeries, across our assessment of region inclusion and - - ✓ engagement — Accelerate reach reaches and decarbonisation efforts includes a — Support early SE1.2) Expand our community energy No. regional diverse range understanding of engagement offering engagement 6 6 18 of individuals, sector-specific barriers events p.a. groups, experts and enablers for and locations that decarbonisation SE1.3) Support individual communities with their decarbonisation efforts represents the — Greater level of communities we understanding of the SE1.4) Continue to develop educational serve energy transition journey resources to raise awareness of the energy Community transition energy 7 7 12 — Improved resources engagement p.a. and reach focussing SE1.5) Dedicated resources for local on emerging, hard-to- energy groups to develop plans and access reach and seldom-heard expertise across our region customers
SE2 Accessible: — Targeted advice/support Community for community and SE2.1) Facilitate community and customer and customer increase the training programmes and surgeries capacity 2 2 6 use of new customers on low carbon technologies (LCTs) and programmes communications flexible energy services channels, remove Host three cross-utility forums p.a. Cross-utility engagement — Improved collaboration SE2.2) forums p.a. 1 1 3 barriers, and and cooperation in increase engagement (reducing Industrial cooperation stakeholder fatigue) SE2.3) Expand to host more industrial representative meetings p.a. representative 1 1 4 with a wide — Increased social media meetings p.a. range of local interactions, agile organisations engagement and digital so innovative reach SE2.4) Coordinate with DNOs/GDNs to consolidate events/forums, reducing Cross DNO/GDN thinkers and forums p.a. 2 2 4 future customers stakeholder fatigue and improving outputs access and contribute to our SE2.5) Enhance digital channels to increase engagement presence on social media, SMS/text communications, and website
Provide a convening role Local energy SE3 Relevant: provide — SE3.1) Host four local energy planning for local area energy forums p.a. planning forums 2 2 4 additional ways to p.a. discuss complex planning (LAEP) topics and tailor — Regional decarbonisation SE3.2) Meet annually with each local communication roadmap supporting the authority, local enterprise partnership Formal local energy transition (LEP), and combined authority on the authority - - 100% approaches so consultation p.a. that we deliver — A regular forum for local energy transition engagement authorities to share good that promotes an practice, problem solve SE3.3) Host and coordinate quarterly understanding and co-create to support regional decarbonisation working groups their decarbonisation of priority SE3.4) Host local authority forums to topics such as plans discuss decarbonisation plans and progress decarbonisation — Building more accurate, and an inclusive detailed scenarios SE3.5) Run an annual programme to energy transition with customer input to engage on energy scenario planning Annual deliver an efficient and Distribution economic network SE3.6) Deliver tailored communications for Future Energy ✓ ✓ ✓ hard-to-reach and vulnerable customers Scenarios — Support vulnerable explaining the benefits of energy transition (DFES) refresh customers, community leaders and customers to better understand SE3.7) Introduce a digital ‘ideas board’ to decarbonisation and improve energy services and transition practical steps to take planning
SE4 Continuously — Longitudinal insight mapping of stakeholder SE4.1) Undertake economic and social improving: insight analysis to understand changing continue to needs, priorities and their needs mature the satisfaction Stakeholder — Impact-driven analysis satisfaction 85% 85% >90% skills, processes, survey infrastructure delivering increased SE4.2) Respond to innovative thinkers in and capacity of benefits for stakeholders engagement, ensuring we aren’t satisfied communities, — Build an innovative, best with the traditional ways of doing things customers in class engagement and our own programme based on SE4.3) Annually review our teams to ensure insight from experts communications assets to increase visual engagement — Communications and impact and simplify language for all community needs is two-way, engagement materials AA100 meeting the needs of all measurable and Stakeholder ✓ ✓ ✓ transparent communities Standard — Real-time performance SE4.4) Introduce a digital performance Accreditation engagement reporting scorecard to report progress and impact of to our customers and our engagement stakeholders
1. See annex 1.4 – Key targets & measures for profiled 2023-28 Innovation | Data and digitalisation | Workforce Resilience targets and further supporting measures
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Delivering an Environmentally Sustainable Network – Decarbonisation OUTPUTS – DELIVERING AN ENVIRONMENTALLY SUSTAINABLE NETWORK
DECARBONISATION SCENARIOS AND INVESTMENT
DSO ENABLING WHOLE STRATEGY SYSTEM Decarbonisation SOLUTIONS
By 2028 the energy system on the way to a decarbonised energy How much it will need to be ready to serve system to achieve this – and our will cost a different world. network is at the heart of how it will be delivered. To support these targets, 2023-28 Our network is set to play an even more the government’s 10-point plan for a expenditure £189.3m crucial part in the life and wellbeing of green industrial revolution, published (annual) 29.5% of totex our region. in November 2020, outlines significant policy ambitions, including:1 versus In one of the most ambitious national 2015-23 +£148.1m responses to the threat of climate — bringing forward the ban on the +359.5% change, the UK government enshrined sale of new fossil fuel cars and large the net zero by 2050 target in law in goods vehicles (LGVs) from 2040 2019 and accelerated it again to 78 per to 2030; cent by 2035 in response to the advice — a ban on the sale of hybrid electric of the Climate Change Committee vehicles (HEVs) by 2035; and (CCC) in setting the Sixth Carbon — 600,000 heat pump (HP) Budget. By the end of the 2023-28 installations annually by 2028 period, the country needs to be well across the UK.
Our plan delivers on the call for action from our stakeholders with an ambitious £1bn of investment to support our communities on the way to net zero emissions.
Jim Cardwell Head of policy development
1. See The Ten Point Plan for a Green Industrial Revolution – November 2020.
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Decarbonisation
Setting the scene
Decarbonising the energy system
34.4 tCO2e annual Low carbon technology emissions1 volumes by 2028 26.2 tCO2e Transport annual 941k EVs emissions Low carbon technology volumes by 2050 Transport Heat 5,015k EVs 309k HPs Heat 3,572k HPs Generation and storage Generation 7.3GW and storage Net zero 16.1GW
2023 2028 2050
It is clear that other government policies low-emissions vehicles. The precise Local authorities across the UK, are set to drive rapid change in the blend of what technologies will emerge including those in our region, have rate of low carbon technology (LCT) and at what pace is not known, but declared climate emergencies and uptake during our next price control the outcome is clear: there will a major set their own targets for establishing period. The Future Homes and Future shift in energy use, and our network Clean Air Zones and building efficiency Buildings Standards set out proposals will be instrumental in that being standards. These are in many instances to future-proof homes and businesses possible. It is also clear that, whatever more ambitious than the nationwide for net zero which are scheduled to be pathway ultimately emerges, this next target and can increase the pace of implemented from 2025; and subsidies decarbonisation phase is focussed on decarbonisation by further incentivising such as the Clean Heat Grant Scheme the growth in low carbon electricity the uptake of LCTs. to support improving energy efficiency at the local, lower voltage end of our and low carbon alternatives will work in network – be that HPs, electric vehicles conjunction with the ‘plug-in grant’ to (EVs) or community energy. incentivise the take-up of new
Climate emergency declarations and dates for net zero ambitions for local authorities
Around three quarters of our Newcastle City Council is also region’s local authorities and installing 250 HPs in homes across combined authorities have the city. 3 The industrial cluster declared climate emergencies of Humberside is pioneering – with around 60 per cent leading green innovation through having their own net zero the Zero Carbon Humber targets sooner than 2050, partnership, which plans to create some as early as 2030. 49,000 green jobs by 2027, and Associated British Ports’ In 2020 Newcastle became one completion of the UK’s largest of 88 cities to make the Carbon rooftop solar array at 6.5MW Disclosure Project’s ‘A List’ of atop the Port of Hull.4 global cities leading on climate adaptation following plans to reduce energy use in homes by 30 per cent, and install solar panels on 30 per cent of homes and 60 per cent of non-domestic properties.2
1. Tonnes (t) of carbon dioxide (CO2) equivalent (e) (tCO2e). 2. Newcastle CDP’s ‘A List’ cities: see https://www.edie.net/news/6/Which-UK-cities-are-leading-on-climate-action---and-how-/. 3. Newcastle City Council heat pump scheme: see https://www.newcastle.gov.uk/heatpumps. 4. Yorkshire net zero industry hub to create up to 49,000 jobs: see https://www.businessgreen.com/news/4023552/drax-yorkshire-net-zero-industry-hub-create-49-jobs; ABP Hull completes UK’s largest rooftop solar array: see https://www.yorkshirepost.co.uk/business/associated-british-ports-unveils-uks-largest-solar-panel-set-3041001.
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Decarbonisation
Four key questions
The answer to these questions will decarbonisation. Here we are setting ready to deliver decarbonisation and largely be driven by consumer choices out our plans to ensure that we embrace the uncertainty surrounding and government policy around manage and build our network to be these choices.
How How electrical? local? — Electricity today is increasingly generated from — In a local, decentralised energy system, low carbon sources. The UK’s renewable electricity engaged users and producers of electricity outpaced its fossil fuel generation for the first time promote efficient use of every kilowatt in 2020 with 41 per cent of electricity generated hour of green energy generated. Overall, from renewable sources, and a new record of this means that electricity should be more 67 consecutive coal-free days was reached. affordable for all. — The electrification of some sectors of the economy — We are connecting more locally distributed is a relatively straightforward way to use low renewable generation to our network and carbon energy. We will all rely on electricity connecting local buyers and sellers of more to provide energy, but we don’t yet know electricity to each other. In the next price to what extent. control period, we expect the amount of — This depends on policy decisions that are made connected generation and storage to more by the government about the energy system as a than double. whole, for example whether heat is provided by electric HPs and/or hydrogen boilers. This will be uncertain for some time.
How How flexible? fast?
— More intermittent energy generation sources such — How quickly we reduce carbon emissions as solar and wind, and more flexible customer will be heavily dependent on the rate at demand for power, means that our role is which renewables displace energy generation increasingly about controlling and optimising the from fossil fuels, and how quickly customers bidirectional flow of low carbon energy through take up LCTs for transport and heat. our network. — Different parts of our region will transition at — The amount of customer flexibility will drive different speeds based on a range of factors, how much additional capacity we need to add including the location of carbon intensive to our network, and how big the whole energy industries and population demographics system needs to be (for example, the number and which are likely to affect people’s willingness type of power stations), by flattening peaks in and ability to adopt new technologies. demand and generation. — Total greenhouse gas emissions – the ‘area — We have a flexibility-first mindset. This entails under the curve’ – are more important than prioritising flexibility solutions where we can the point in time when net zero is achieved. and only implementing network solutions where flexibility is not viable.
Figure 1: illustrative impact of customer Figure 2: illustration of annual carbon flexibility on gross peak demand (GW)1 emissions (tCO2e) 40.0 13 Without customer 12 flexibility 30.0 Net zero by 2050 11 scenario 10 20.0 9 With customer 8 flexibility 10.0 Accelerated 7 scenario 6 0.0
2020 2050 2020 2049
1. Gigawatt (GW). Northern Powergrid: our business plan for 2023-28 – 43 OUTPUTS EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Decarbonisation
Optimising our investments
To optimise our investment to remaining able to adapt our plan to investment in activities to facilitate 2050, we are taking a flexibility- changing requirements in the longer and optimise customer and network first approach to our investment term. Our challenge is to make rapid flexibility ahead of more costly strategy for decarbonisation. progress but remain able to adapt to an traditional reinforcement. All routes evolving decarbonisation landscape. to decarbonisation require significant The next five-year period marks a key investment in our network. Taking phase of the low carbon transition. Our As we shared with our stakeholders in a flexibility-first approach is a means overall objective is to deliver efficient our Emerging Thinking report published to ensuring that this investment is investment in our network to set us in August 2020, flexibility first means targeted where our network needs on the right track for achieving the UK that, wherever it is possible and it most and delivered efficiently to government’s net zero goals, while cost-effective, we will prioritise maximise value for customers.
1 Monitor 2 Manage 3 Reinforce
Monitoring Network flexibility Build additional capacity (deploying smart grid solutions) — Leverage investment in monitoring to provide visibility of capacity constraints — Operate an active local network, — Where there is most certainty for — Allows us to know exactly what is using real-time data to automatically future growth, we reinforce our happening on the network reconfigure or adjust settings and physical assets by replacing or release capacity when it is needed upgrading cables, switchgear and substations to expand the capacity of our network in response to load growth Customer Distribution Network Operator- — This could be after exhausting steps flexibility contracted customer flexibility one and two at a given location on the network, or it could be the first — Incentivise customers directly (or and most economic solution indirectly) to either increase or reduce — Reinforcement supports customer their electricity use or production flexibility and whole-system — Includes active network management solutions by providing capacity (ANM) flexible connections for low carbon energy to be moved to where it is needed locally, and to enable customers to optimise their usage Energy price-driven — Customers respond to information and price signals in their electricity bills from energy customer flexibility suppliers by flexing their consumption patterns
Distribution System Operation (DSO) enablers
To ensure we are equipped to continue to keep all options open on the decarbonisation pathway to 2028 and beyond, we are also planning investment to enable our region to go further, faster.
In our decarbonisation plan... In our plans to maintain our assets...
— This means spending to stimulate the flexibility — This means upsizing our equipment to fit larger cables market for future price controls to optimise how much when we are already intervening to make repairs or traditional reinforcement we can defer or avoid. replace our assets. — Investing in the development of a deep and liquid — This ensures that our assets are ‘net zero ready’. Where market for flexibility today will ensure efficient possible, we plan to only intervene with our assets once investment and option value in managing our network between now and 2050. For further details see our Asset as decarbonisation accelerates into the 2030s. Resilience strategy plan section. — This is described in more detail in the Scenarios and Investment and DSO Strategy sections that follow.
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Decarbonisation
Our investment plans for 2023-28 To respond to the four key questions we transition to a low carbon energy are geared to facilitate our region’s (how fast, flexible, electrical and local system. In order to do this, we have plans to decarbonise. will the energy transition be?), we need created a plan with three key elements to invest in our network, our people of decarbonisation investment: for and our systems to revolutionise the further detail see our decarbonisation service that we offer our customers as scenarios and investment.
Enabling Whole Scenarios and Investment: DSO Strategy: System Solutions: £589m £87m £16m 2023-28 2023-28 2023-28
Consideration of the possible Investment in systems and skills Alongside an investment energy pathways that could to harness data and flexibility of strategy that favours solutions unfold in our region our network and our customers, that optimise the whole energy In response to these pathways, to facilitate optimised investment system where efficient, we set we set out what investment we in the grid out our plans to collaborate need to make on our network to and explore initiatives to deliver keep all pathways open to ensure whole energy systems benefits our network is ready for LCTs to customers into future price being connected in the future controls
We have also made provision for costs Our plans to prepare our network for Over the following pages we set out the to support decarbonisation across our decarbonisation have been devised details of these stakeholder-led plans plan, including in Asset Resilience to fit through working with a wide range of for Scenarios and Investment, DSO ‘net zero ready’ equipment when we customers and stakeholders, building Strategy, and Enabling Whole Systems are already intervening on our network; on our DSO v1.1 development plan Solutions. At £189m per annum, our Connections to support the uptake of published in October 2019, Emerging decarbonisation across 2023-28 low carbon technologies (LCTs) being Thinking in August 2020, and represents a 360 per cent increase connected to our network; Customer Distribution Future Energy Scenarios on what we have spent in the 2015-23 Service; and indirect support costs. This (DFES) in December 2020. period on decarbonisation enabling additional investment, totalling £110.5m activities. See our Costs section for in 2023-28, is essential for preparing our more information. business for transformational change in order to facilitate decarbonisation.
Figure 1: decarbonisation investment summary per annum, 2023-28
Scenarios Indirect costs and DSO Whole Total associated with Decarbonisation Other output £m annual Investment Strategy System decarb. decarbonisation plan areas Total
Flexibility first: monitor and 2.3 17.5 3.2 22.9 manage
Reinforce 114.8 - - 114.8
Go further faster 0.6 - - 0.6
Total 117.7 17.5 3.2 138.4 50.9 189.3 22.1 211.4
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Decarbonisation – Scenarios and Investment
Scenarios and Investment DECARBONISATION We will embrace and manage uncertainty to enable all credible pathways to decarbonisation
by taking a flexibility-first approach and SCENARIOS AND staying ahead of the decarbonisation curve INVESTMENT through a blend of smart grid and Distribution System Operation (DSO) enablers, smart grid solutions, customer flexibility and targeted network reinforcement.
IMAGE
Our role in the energy transition. Our network is key to facilitating To respond to these changing demands the country and region’s efforts on our network, the objective of our We will efficiently open up all credible to decarbonise, regardless of the investment strategy over 2023-28 pathways to decarbonisation in decarbonisation pathway that is to set us on the right track for 2023-28 and beyond by embracing materialises. All forms of the low carbon achieving the UK government’s net uncertainty and remaining adaptable transition see an increase in the number zero by 2050 goal while remaining to change, helping our customers of people who actively manage their flexible to the unfolding uncertainty realise the best value from their energy use and generation. Moreover, of the ongoing energy transition. assets while optimising value across all decarbonisation pathways also see the whole energy system. varying levels of more electric vehicles (EVs) and heat pumps (HPs) on our local, low voltage (LV) network, resulting in an increase in demand and potential for network constraints, requiring more capacity to be made available.
NorthernNorthern Powergrid: Powergrid: our our business business plan plan for for 2023-28 2023-28 – – 46 46 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY OUTPUTS
Decarbonisation – Scenarios and Investment
A comprehensive response to the transition
Our response to the transition Putting a flexibility-first mindset We want all of our customers to be has been developed through into practice. able to financially benefit from offering comprehensive engagement flexibility to the energy system. with our customers and We’ve already made it clear that we see From a whole energy system other stakeholders. the use of flexibility as a fundamental perspective, effective use of network means to efficiently manage and customer flexibility will also To deliver a business plan that meets the well-targeted network utilisation and enable customers’ energy bills to be wide-ranging needs of our stakeholders reinforcement needs. Optimising kept as low as possible on the low we have engaged with as broad a flexibility enables us to manage peaks in carbon transition by optimising the use range of stakeholders as possible, generation and demand on our network, of existing infrastructure and driving including not only those in the energy which means we can get the best value efficient investment across the whole sector (regulator, Electricity System out of our existing network and the energy system. Operator (ESO), other Distribution investments we make, maximising cost Network Operators (DNOs)) but also efficiency for all customers. Ongoing stakeholder engagement the heat and transport sectors, local will help develop our understanding authorities, and a range of industrial, Flexibility will manifest itself in different of market needs and help us provide commercial and residential customers. forms – and we need to be ready to targeted support to stimulate deep We recognise that the transition will be harness them all. and liquid local markets for flexibility. customer-driven and we have, therefore Effectively adapting our business and sought feedback from our customers driving this market development is at in particular to ensure that our strategy the heart of our DSO Strategy. will empower them to lead the change. In planning our investment, we will continue our effective coordination across stakeholders to ensure efficient Types of flexibility investment from a whole system perspective. You can read in more detail about our plans in this area in the DSO Strategy and Enabling Whole System Solutions sections.
Our stakeholder engagement has revealed a high level of ambition DNO-contracted Price-driven customer for decarbonisation. A significant customer flexibility – flexibility: majority of our customers support flexibility services: customers respond to price signals that we should pursue an accelerated customers contract with in their energy tariffs to flex their decarbonisation pathway, reaching net us and we pay them to turn energy usage patterns. For example, zero by 2050 at the latest. Given the up or down their demand time-of-use tariffs for domestic uncertainty of national and local energy or generation at specific and commercial customers will developments, as well as diversity in times or under particular incentivise energy usage to off-peak local net zero targets, stakeholders circumstances. periods when demand is lower, are overwhelmingly in favour of us or the use of smart charging for choosing a scenario in our investment EVs to shift consumption patterns planning that would facilitate any to when there is a surplus of green decarbonisation pathway that emerges. electricity available. They have conveyed an appetite for us to be ambitious in our net zero planning to enable a faster transition to net zero that is socially equitable and does not put vulnerable and fuel-poor customers at a disadvantage.
We have incorporated our stakeholders’ feedback when considering possible DNO-contracted customer future scenarios for our region, in flexibility – flexible Network flexibility: determining our assumptions around connections: we will continue to invest in smart customer flexibility, and in designing we offer customers a cheaper, grid solutions and field-based sensitivities to test the robustness of our faster connection in a constrained equipment that will allow us to investment plan. area of the network using operate the local network in a more techniques such as active network active manner, allowing us to use management (ANM), which near real-time data to automatically enables us to curtail generation at reconfigure or adjust settings to peak times. We will have four ANM optimise the power flows on our zones in operation by 2023 with an network and release capacity estimated 540MW of flexibility. where needed.
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Decarbonisation – Scenarios and Investment
Our progress so far
We have already taken £300m available for investment in vital sets on Load Index (LI) utilisation bands, significant steps in preparing electricity networks across the country which assess peak demand versus for this transition. following the economic impact of the firm capacity at major substations. COVID-19 pandemic and will enable Our strategy has been to maintain A number of our current initiatives are the region to accelerate a number of our overall risk position, dealing with supporting the transition to net zero. projects, including regeneration highest risk substations (those closest In the current price control period and development at the Humber to capacity). Our forecast for the end of we are investing in our flagship smart Freeports, large scale solar and wind 2015-23 has been updated to align with grid enablers programme, creating generation, and rapid EV charging on our new planning scenario and the latest the backbone of a smart grid, which our motorway network. network impact assessment done as is transforming our ability to monitor, part of this plan. control and communicate with our Network utilisation is increasing field-based equipment. It allows us to as consumption and generation Our forecast LI position at our major operate the local network in a more patterns evolve. substations is: active manner and to use near real-time data to automatically reconfigure or Net maximum demand has dropped — 88 per cent are less than 80 per cent adjust settings to release capacity to by around 24 per cent since its peak in utilised; where it is needed. This has improved 2005-06. This trend has been driven — 10 per cent are 80-99 per cent our ability to respond to the take-up by increased energy efficiency and a utilised; and of low carbon technologies (LCTs) and series of economic events such as the — two per cent are >99 per cent allowed us to operate our network global financial crisis, which affected utilised. more flexibly with smarter, more heavy industrial demand, and increasing efficient and cost-effective practices amounts of domestic generation such You can find further detail in the and technologies. as solar photovoltaics (PV) embedded Scenarios and Investment annex. within our network. Looking ahead, the projected increase Through this increased monitoring in EVs and heat pumps discussed below we have improved data capture Commercial generation on our network are expected to increase the utilisation about our network and improved that operates at times of peak demand quite significantly. processes for using this data in our has also increased each year, which has decision making, enabling us to target contributed to the widening difference For generation, we provide information network investment efficiently. We are between net and gross peak demands to customers setting out the network committed to further modernising our year-on-year. This has not, however utilisation for our major substations. We data management practices and sharing happened in a uniform fashion across currently have the capacity to connect information about our network with our network. We still have challenges a typical smaller (5MW) generator to stakeholders, building on what we share to address, particularly with notable 88 per cent of our primary substations today through our embedded capacity load growth occurring in some of (this would only be possible at 39 register and our open data platform for our metropolitan areas and (where per cent without customer flexibility our Distribution Future Energy Scenarios embedded generation patterns have solutions such as ANM. Ninety-five per (DFES), which are published annually changed) an increase in net demand. For cent of our largest substations could through ODI Leeds.1 You can read more this reason, we need to understand and accommodate a typical generation about our plans to share and combine manage the changing nature of demand connection of 25MW when customer our data with external sources (such as and generation at a more local level. flexibility is used (51 per cent without). smart meters) in the DSO Strategy and This means that capacity exists for Data and Digitalisation strategy. Network utilisation, measured at a more cost-effective new generation granular level than network-wide peak connections on around 90 per cent Since 2015 we have facilitated more demand, has remained relatively stable of our extra high voltage (EHV) and than 45,000 LCT connections including throughout the current price control high voltage (HV) network. HPs, EVs, solar and other distributed period. We monitor this using large data generation across our primary and secondary networks, totalling at least 1.5GW, and ensured that our network is ready for this additional demand and generation load. Our network is at the heart of our region’s ability to reach net zero. In May 2021 we published our Green Our decarbonisation plans will Recovery plans to invest a further deliver transformational change £53m to unlock network capacity for to support our communities on green-growth-boosting projects across this low carbon transition. our region. This is part of a national Green Recovery Scheme, making
Jen Whiteman 1. ODI Leeds is a pioneer node of the Open Data Institute. Our DFES are published on its site here: https:// Business odileeds.github.io/northern-powergrid/. performance manager
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Decarbonisation – Scenarios and Investment
Planning the journey towards a low carbon future
1. The potential needs: 2. The baseline need: 3. Solutions: Scenarios and Planning Scenario Investment plan pathways
A set of credible future pathways to We model our Planning Scenario Network impact assessment driven enable us to picture possible energy to test our hypothesis against the by the assumptions in the Planning futures and explore the issues they principles that we have identified for Scenario about network load raise, including: what constitutes our best view. growth in the 2023-28 period and customer-connected LCTs. — Three National Grid Future Energy It is aligned to latest government Scenarios (FES),1 and our DFES.2 policy and adopts a balanced Optioneering around solving network (Note: one of the FES does not approach over the 2023-28 period constraints by a mix of price-driven meet net zero by 2050 and, in line with recommendations and DNO-contracted customer therefore, is discounted.) from the CCC. flexibility, network flexibility and conventional network reinforcement, — Three pathways described in to determine network investment the Climate Change Committee required in 2023-28. (CCC)’s Sixth Carbon Budget.3 Testing of investment across Each scenario is made up of a range range of potential scenarios and of inputs about variables in the capturing synergies with other energy system including low carbon investment drivers. technology (LCT) uptake, generation, OUTPUT: a set of input energy efficiency, etc. assumptions, LCT projections and gross maximum network Input assumptions are informed demand for a Planning Scenario by government policy, stakeholder OUTPUT: a set of network engagement, regional knowledge and intervention costs required market information. to address network needs presented by the Planning From this range of inputs identified, Scenario in the 2023-28 we create a hypothesis about the set — Sensitivity testing to help period of input assumptions that we believe us understand the impact of represent our best view based on a set uncertainties around key scenario of principles (described below). This is input assumptions, and how they our Planning Scenario. drive different LCT projections and — Sensitivity testing to determine the gross peak demand cost impact of changing scenario We are able to design this hypothesis — Testing helps refine and iterate our input assumptions as a result of the iterative ongoing input assumptions as we test our — Analysis to cost up the reference feedback loop process of DFES Planning Scenario hypothesis scenarios and stakeholder engagement over — Deliverability assessment a number of years, refining and updating our range of assumptions regularly.
OUTPUT: a set of input assumptions LCT projections and gross maximum network demand for a range of scenarios
1. See: https://www.nationalgrideso.com/future-energy/future-energy-scenarios. 2. See: https://www.northernpowergrid.com/asset/0/document/5836.pdf. 3. See: https://www.theccc.org.uk/wp-content/uploads/2020/12/The-Sixth-Carbon-Budget-The-UKs-path-to-Net-Zero.pdf.
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Decarbonisation – Scenarios and Investment
Step 1 Scenarios and pathways
We have developed a range of scenarios Our range of scenarios includes: — Three additional scenarios based to forecast possible decarbonisation on pathways identified in the pathways to net zero. These scenarios — Four DFES scenarios, covering three CCC’s Sixth Carbon Budget range from high electrification in the regional scenarios based on the (Balanced Net Zero, Widespread heat and transport sectors to other National Grid FES developed at the Engagement and Headwinds). possible states of the world where national GB level, and one scenario Three of the CCC scenarios are very alternatives to natural gas such as developed by us. similar so we have modelled the hydrogen are expected to play ends of the CCC range, therefore a greater role. covering all five scenarios.
Speed of decarbonisation Net Zero Early was a scenario against level of societal devised by us for DFES 2020 in change response to our stakeholders’ desire for rapid decarbonisation. We consider this to be the fastest viable pathway to decarbonisation
NET ZERO EARLY — Fastest regional net zero scenario HIGH (approx. 2040-45) LEADING — Highly accelerated THE WAY electric heat and — Fastest (national) credible transport CONSUMER decarbonisation — Highly decentralised TRANSFORMATION — Significant lifestyle change and distributed — Electrified heating — Mixture of hydrogen and renewable — Consumers willing electrification for heating generation to change behaviour — High energy efficiency — Demand side flexibility
SYSTEM TRANSFORMATION Three of National Grid’s Future Energy LEVEL OF SOCIAL CHANGE SOCIAL OF LEVEL — Hydrogen for heating Scenarios. The fourth — Consumers less inclined scenario, Steady to change behaviour Progression, does — Lower energy efficiency not meet net zero by — Supply side flexibility 2050 and, therefore, is discounted LOW
LOW SPEED OF DECARBONISATION HIGH
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Decarbonisation – Scenarios and Investment
Widespread Engagement Tailwinds — Higher level of societal — A highly optimistic change scenario with success in — Lower demand for infrastructure, innovation and high-carbon activities societal change — Increased climate — Goes beyond the Balanced mitigation activities Pathway, reaching net zero in the early 2040s — Represents an upper bound
FURTHER BEHAVIOUR CHANGE BEHAVIOUR FURTHER on what is feasible
Balanced net zero pathway — Designed to drive progress through the 2020s while creating flexibility to keep the other scenario options open Widespread Engagement — The CCC’s ‘recommended’ scenario and Headwinds represent the two Headwinds Widespread Innovation ends of the range presented by the CCC — Lower level of societal — Greater reductions in the scenarios. Tailwinds and change and innovation costs of LCTs Widespread Innovation — More reliance on the — Widespread electrification eventual use of hydrogen — High levels of energy are therefore inside and carbon capture and efficiency the range that we have storage to achieve net considered in modelling zero these three scenarios HIGH BEHAVIOUR CHANGE BEHAVIOUR HIGH
HIGH INNOVATION FURTHER INNOVATION
These seven scenarios have helped The DFES scenarios use inputs from Our scenario development has inform our Planning Scenario and National Grid’s FES in conjunction with been influenced by regional together comprise the set of future regional knowledge and bottom-up knowledge, stakeholder input and energy pathways that we have assumptions to build a regionalised view other published data. considered as part of our business of the scenarios. The range of CCC planning process. scenarios has been translated from We have worked with industry partners national pathways to our region. As part and undertaken extensive customer Our scenarios are built by considering of this process, we scaled down the engagement and industry consultation assumptions about a range of building CCC’s nationwide EV and HP uptake to ensure that the scenarios meet blocks, including EVs, HPs and energy scenarios to our licence areas to create local aspirations. To ensure national efficiency and applying them to our scenarios applicable for our region. coordination in the delivery of the electricity network between now and decarbonisation agenda, we engage 2050, to create a scenario-based load You can read in more detail about the regularly with the ESO, in particular growth model. approach we took to modelling the through the annual FES and DFES scenarios, the assumptions used and feedback loop, which ensures national outputs of the range in the Scenarios and regional projections are iterated and Investment annex (4.1). and aligned regularly. Additionally, feedback from regional stakeholders, including local authorities and industrial customers on our assumptions, informs our scenario modelling.
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Refining our view through stakeholder engagement
Stakeholder engagement
Energy scenarios: Making it local: Engage on Launch and Stakeholder industry representation analysis informed by scenarios: inviting validation: in the ENA’s Open wide range of local engagement and feedback: virtual workshops Networks and FES sources (as below) feedback on Emerging show outputs and to explore Thinking net zero seek feedback scenarios scenarios
Defining the Capture Production of Forecast Publication scenarios regional growth forecasts outputs in each scenario
— Evidence base Stage 1: — Demand, — DFES report and stakeholder — Baseline (historical generation, — Open data – ODI engagement data, base year) storage website — Customers — Seasonal outputs — Heat map — Local authorities Stage 2: — Daily/half-hourly visualisations — Local enterprise — Pipeline (planned profile — Regional data partnerships developments, availability — Local housing connections, planning network planning — Local energy information) strategy Stage 3: — Local economic and industrial — Long-term growth strategy (zero carbon targets, local area energy plans)
Establishing our scenarios and pathways
The results of our modelling present a range for the expected load growth on our network from now to 2050. The uptake of EVs and HPs are the primary drivers across the range of scenarios.
Figure 1: gross peak demand without customer flexibility Figure 2: EVs trajectory to 2050 Gross peak demand without customer flexibility EVs trajectory to 2050 13,000 6,000,000 12,000 11,000 5,000,000 2 10,000 1 4,000,000 9,000 8,000 3,000,000 Number 7,000 2,000,000 6,000
Gross peak demand (MW) demand peak Gross 1,000,000 5,000 4,000 - 2020 2030 2040 2050 2020 2030 2040 2050 2019 2024 2029 2034 2039 2044 2049 2019 2024 2029 2034 2039 2044 2049 DFES 2020 - Consumer Transformation DFES 2020 - System Transformation DFES 2020 - Consumer Transformation DFES 2020 - System Transformation DFES 2020 - Leading The Way CCC 2020 - Balanced Net Zero DFES 2020 - Leading The Way CCC 2020 - Balanced Net Zero CCC 2020 - Headwinds CCC 2020 - Widespread Engagement CCC 2020 - Headwinds CCC 2020 - Widespread Engagement NPg DFES Planning Scenario 2021 NPg DFES Planning Scenario 2021
Figure 3: heat pumps trajectory to 2050 1 The Planning Scenario is at the higher end of the Total heat pumps trajectory to 2050 range during the 2023-28 period, ensuring we are
4,000,000 prepared for an accelerated pathway and minimising
3,500,000 deliverability risks in the 2030s
3,000,000
2,500,000 3 2 Internal combustion engine (ICE) ban: the Planning 2,000,000 Scenario takes into account the government’s 10-point Number 1,500,000 plan policy decision to ban the sale of new ICE 1,000,000 vehicles from 2030, with a ban on hybrids from 2035. 500,000 None of the National Grid FES account for this - policy as the scenarios were published prior to this
20202019 2024 20302029 2034 20402039 2044 20502049 announcement
DFES 2020 - Consumer Transformation DFES 2020 - System Transformation DFES 2020 - Leading The Way CCC 2020 - Balanced Net Zero The Planning Scenario follows the CCC’s Balanced CCC 2020 - Headwinds CCC 2020 - Widespread Engagement 3 Pathway for heat pump assumptions, the CCC’s NPg DFES Planning Scenario 2021 recommended path to achieve net zero
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Step 2 Key building blocks Our Planning Scenario Planning Scenario — In line with the government’s 10-point plan, it assumes a ban on ICEs by 2030 and hybrids by 2035 Electric vehicles Next, based on the range of possible — In line with the CCC’s Balance Pathway future pathways and the assumptions scenario, it meets the government’s used to build them, we have developed 10-point plan targets of 600,000 heat a single Planning Scenario that aligns pumps being installed annually by 2028 with our stakeholder feedback and — It assumes a ban on the sale of new gas helps achieve their aspirations and boilers from 2025 plans for decarbonisation across our Heat pumps region. This chosen scenario enables Figure 4: overview of our planning scenario a predominantly electrification-driven decarbonisation strategy, and is based End of ED2 on targets set by the government’s Category period (2028) 2050 10-point plan to reach net zero by 2050. We have ensured that this Planning Total electricity demand (TWh)¹ 37.9 64.2 Scenario meets the following criteria: Total demand from HPs (TWh) 1.4 19.1 — it keeps all future credible pathways open, ensuring that we are not an Total demand from EVs (TWh) 2.4 7.8 obstacle to any decarbonisation Peak demand (GW) 6.8 12.4 pathways; — it is within the range of Ofgem’s Number of HPs (thousands) 309.0 3,572.0 reference scenarios, the three net zero compliant FES scenarios by Number of EVs (thousands) 941.0 5,015.0 National Grid and the CCC’s Sixth Carbon Budget scenarios; CO2 emission savings facilitated (tCO2e) 255.3 447.0 — it is aligned with the latest government policy; and will be in a position to effectively keep it is sensibly robust against a wide — it reflects what we have heard pace with any pathway that emerges range of assumptions and possible from local stakeholders about the by 2028 and, therefore, represents decarbonisation pathways. desire to facilitate an accelerated the most efficient way of keeping all decarbonisation pathway. pathways open. We can enable our region to save 255.3 tCO2 by 2028 by investing to facilitate Our Planning Scenario is at the higher If we were to plan for a slower transition the LCT uptake assumed in our Planning end of the range of pathways since in 2023-28 we would risk not being Scenario. Planning for a pathway that it accounts for government targets able to keep up with an acceleration in meets the requirements of the CCC’s that were set after the 2020 FES future periods and, therefore, becoming Sixth Carbon Budget means we are were published. It assumes that we an obstacle to our stakeholders making our essential contribution to will connect about a further 830,000 achieving their decarbonisation tackling global climate change. EVs and 251,000 HPs to our network ambitions. Additionally, we would risk over the course of the next price not being able to deliver on new policy Figure 5: carbon emissions enabled by control period. It is also in line with our developments from the government in our Planning Scenario (tCO2e) stakeholder vision of an accelerated the coming years. electrification-heavy pathway to 400 decarbonisation. The 2023-28 period provides an opportunity to focus on making a high The Planning Scenario has been proportion of low-regrets investments, informed by sensitivity analysis and i.e. investments that are needed in 300 stress testing to see how changes any of the scenarios over the next two in assumptions impact demand regulatory periods (i.e. to 2033). The levels and corresponding investment grouping of pathways is tighter in the 200 requirements. While this results in the early years which reduces the level Planning Scenario coming close to of uncertainty around the investment providing a ‘best view’ envisioned in we are planning today for the 2023-28 100 Ofgem’s business plan guidance, it is period. Developed in this manner, our important to emphasise that it is not the Planning Scenario ensures that we are most likely scenario, rather the one best an enabler of effective decarbonisation 0 optimised for the inherent uncertainty in the 2023-28 period, keeping all in planning for all decarbonisation options open to achieve net zero. pathways. It ensures that our network As revealed by sensitivity testing, 2020 2030 2040
1. Terrawatt hour (TWh).
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of the technology. The investments This is an extremely important Step 3 we are making now are extensible – and valuable – feature of the in functionality, scalable in volume outlook. It means that digitalising Investment plan and capable of integration with the and strengthening the network investment to follow on later as we infrastructure at this local level is a manage increased levels of low carbon low-regret investment because it has a electrification in local energy systems. high probability of requiring additional capacity regardless of the pathway. We have developed an investment Notwithstanding the £87.4m investment Delivering these improvements for our strategy and plan that presents in flexibility enablers described in the customers allows them to maximise our assessment of costs, driven by DSO Strategy, significant investment their use of LCTs and provide them assumptions on the uptake of LCTs is required across four key areas of with the ability to provides flexibility and network load growth in our network reinforcement, namely: services to the wider energy system. Planning Scenario. Our investment Investments in monitoring the low plan takes a flexibility-first approach, — load-related reinforcement voltage networks will provide us first investing in and optimising the at EHV level; greater visibility of evolving network use of network monitoring to identify — load-related reinforcement at conditions and allow us to modify our where constraints may arise; then HV/LV level; investment strategy accordingly. managing potential constraints through — fault level-related reinforcement; network and customer flexibility; and and Fault level-driven reinforcement: we deploying traditional reinforcement — looped services. conduct a network analysis of the fault- where economic and efficient, aiming level duty and capability across all our to maximise the rate at which we Our approach: substations sites to identify constraints. can facilitate decarbonisation. It also Traditionally we have applied prepares for us to go further, faster, Load-related reinforcement EHV: operational routines or alternative stimulating flexibility markets for future at EHV, we assess the impact on our network running arrangements to price control periods, and factoring in network from the load growth in our manage these constraints. Our plan synergies with other investment drivers Planning Scenario and across the range going forward is to target the removal of in our Asset Resilience section. Overall of potential decarbonisation pathways. operational restrictions on the network this ensures our investment plan is well Our load growth model provides to increase fault-level headroom and targeted and efficiently delivered. future demand profiles that we use in network flexibility, thereby removing conjunction with equipment ratings to barriers for the connection of low To manage the data from the increase in determine the nature and magnitude of carbon generation. sensors we will invest in new ingestion, network constraints. We then undertake storage and analysis tools that provide detailed options analysis to establish the Looped services: we assess the impact enhanced insight and decision- optimal solution for the network area. of LCT take-up specifically on the low making capability. This monitoring voltage services to properties that are – in conjunction with operational Load-related reinforcement HV/LV: shared between customers. These are technology platforms – then forms the at HV/LV, we use our LCT planning known as looped services and they infrastructure necessary to implement tool (developed by engineering can be a barrier to the connection of customer and network flexibility. consultancy WSP) to model, using LCTs due to the limited capacity on Monitoring also provides the ability to a techno-economic approach, the these shared cables. Approximately 25 assess whether customer price-driven network impacts and optimal solutions per cent of our domestic customers’ flexibility is having the impact we for resolving constraints across the services are looped or shared between predicted and provides the basis for network. This has been used to inform premises and we have assessed the better informed investment decisions. our investment plan assumptions on coincidence of this type of connection This all has the effect of improving our solutions and costs for developing this with the installation of LCTs over the management of network risk. part of the network. 2023-28 period. The optimal solution for these situations is to de-loop the We see a clear maturity progression We see more constraints appearing services with new cables. This activity in how we will increase digitalisation on our LV circuits and to a lesser can be disruptive for our customers on our network. Our 2015-23 activity extent on our distribution HV to LV and our experience is that this is best is delivering the building blocks of a transformers over the next price control done when a customer wishes to digital network with more sensors, period. This outcome is a consistent connect an LCT. advanced control devices in substations, theme across a range of the potential and centralised data stores combined pathways. Although there is a range of Our flexibility-first approach drives our with data analytics for both planning possible future scenarios, we can say investment plan, which comprises a and operational decision making. with a high degree of confidence that blend of smart solutions, price-driven This progression will take us through demand at the lower voltage end of the and DNO-contracted flexibility, and increasingly sophisticated stages of data network is set to increase significantly conventional network reinforcement. management and digitalisation through as the national programme of transition 2023-28 and on into the 2030s. The towards electrification of heat and pace of change will be determined by transport proceeds. the need and the availability and cost
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Our flexibility-first approach
Intervention category Activity Monitor DSO Strategy — We plan to invest £87m (of which £21m relates to LV monitoring, below) in skills and – people and systems to enable us to optimally harness data and flexibility on the network, ensuring systems reinforcement investment is efficient and well-targeted (See DSO Strategy, annex 4.2)
LV monitoring — By using LV monitoring on our ground-mounted secondary distribution substations, we will have much greater data to analyse demand and demand-growth, thus enabling investment decisions on confirmed data, as well as the ability to re-rate assets based on the nature of the load observed — We plan to install LV monitoring on a further 10,000 ground-mounted distribution substations by 2028 (See DSO Strategy, annex 4.2)
Manage Price-driven — Based on findings from our Customer Led Distribution System (CLDS) innovation customer project and other market intelligence, we assume that customer price-driven flexibility flexibility1 will reduce demand by about six per cent and five per cent at EHV and HV/LV respectively during peak hours on the network from 2025 at no cost to our customers — Price-driven customer flexibility is dependent on time of use tariffs being offered by suppliers, expected to be driven by half-hourly settlement — We assume that customer price-driven flexibility will reduce the required investment by up to £113m at all voltages over 2023-28
DNO- — We assume that we will spend £2m to procure customer flexibility at 25 per cent of our contracted EHV substations that are expected to be constrained in 2023-28, driving net savings of flexibility £12m in conventional reinforcement — We also plan to invest £3m in flex procurement to stimulate the flexibility market, seeking to prepare sites expected to be constrained in the 2028-32 period for flexibility deployment in the future — Our use of ANM as a form of flexible connection is described in the Connections section of this plan
Smart grid — Our smart solutions involve us deploying innovative solutions to use more of the inherent solutions capacity in our network. By investing £10m in our smart solutions, we expect to deliver net benefits of £22m (compared to conventional reinforcement)
Reinforce 132kV and EHV — Once all customer flexibility and smart grid solutions have been considered, we turn to load-related asset-based interventions to install new assets of higher capacity. Our projections show reinforcement that we will need to invest £65m at EHV
HV/LV — We will install additional circuits to provide capacity and network flexibility and load-related prioritise the replacement and upgrade of assets in areas where we also have a need for reinforcement condition-related investment — A significant proportion of this investment is expected to be low regrets given the greater likelihood for reinforcement needs at the lower voltage levels to provide for the increasing penetration of LCTs — We expect to invest £406m at HV/LV in 2023-28
Fault-level — We are targeting the removal of operational restrictions on the network to increase reinforcement fault level headroom and network flexibility, removing barriers for the connection of low carbon generation — We expect that our investment in this area will be £74m
Looped service — Driven by LCT volumes assumed in our Planning Scenario, we plan to invest £34m to unbundling target the replacement of 21,600 looped services to customer properties — This assumes that two per cent of the properties where LCT connections are deployed will require the service to be de-looped to minimise customer disruption
Go further, DNO- — We also plan to invest £3m in flexibility procurement to stimulate the flexibility market, seeking to prepare sites expected to be constrained in the 2028-33 period for flexibility faster contracted flexibility deployment in the future
Asset upsizing — We have revised our investment strategy to deliver capacity for future periods, installing and synergies assets sized to take into account load growth through to 2050, therefore ensuring we touch assets once where possible between now and 2050 — We will invest £12m EHV and 132kV of load-related and £21m of fault level-related expenditure, which will provide synergistic benefits, where the investment for decarbonisation also addresses other issues such as equipment condition
1. Ofgem and energy suppliers are in the process of implementing market-wide half-hourly settlement. Enabled by smart meters, it will provide the means for more cost-reflective pricing to encourage and reward customers for using power when it is cheap and plentiful from low carbon sources such as the wind and the sun.
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Significant investment, significant benefits
Investment of £87.4m in flexibility- Figure 6: the impact of customer flexibility on gross peak demand in our Planning Scenario enabling actions drives potential net benefits of £169.2m in conventional The impact of time-of-use 13,000 tariffs is assumed to suppress reinforcement over the course of MW gross peak demand from 2025 2023-28. These net benefits are onwards, with the arrival of described in figure 9. half-hourly settlement for domestic tariffs, completion 10,000 of the smart meter roll-out Forecast range Our investment to enable and the deployment of flexible decarbonisation, as well as innovation domestic devices such as smart electric vehicle chargers spend, yields synergies across a number NPg DFES Planning of areas of our plan. These are detailed Scenario 2021 7,000 further in the Costs section and NPg DFES Planning the Scenarios and Investment annex Scenario 2021 (TouT+) Note: TouT = time of use (annex 4.1). tariff, i.e. customer flexibility 4,000 Our planned investment will provide extra capacity on our network to meet 2020 2030 2040 2050 the needs of the additional demand. Figure 8 shows that our network utilisation would be significantly Figure 7: network intervention costs and volumes higher by 2028 without our planned interventions at both our major and Fault Looped 132/EHV HV/LV Total1 distribution substations. Further, level services we will mitigate the need for further reinforcement with 35 projects to Network intervention costs (£m) create fault-level headroom at our DNO-contracted major substation sites for generation flexibility 1.8 - - - 1.8 and 15 projects to combat fault level Smart solutions 2.8 0.7 6.0 - 9.5 constraints on the HV network. Our DSO Strategy and Major Connections Traditional Strategy detail our intent to increase reinforcement 65.2 406.1 68.2 34.4 573.9 our capability to accommodate more Total 69.8 406.8 74.3 34.4 585.3 flexible customer connections of generation or demand via solutions DSO flexibility enablers – DSO Strategy costs 87.4 such as ANM. Total 672.7 Network intervention volumes (#) DNO-contracted flexibility 5 - - - 5 Our planning scenario facilitates Smart solutions 4 1,433 7 - 1,444 accelerated uptake in wind and solar generation, electric Traditional vehicles and heat pumps reinforcement 13 12,000 43 21,637 33,693 towards net zero carbon Total 22 13,433 50 21,637 35,142 emissions.
Figure 8: network utilisation – forecast 2023-28
Mary Black 2028 Senior policy and standards Without With Difference engineer % substations 2023 investment investment (% points) 132kV and EHV substations <80% utilised 87.9% 82.7% 84.8% 2.1 80-99% utilised 9.6% 14.4% 14.5% 0.1 >99% utilised 2.5% 2.9% 0.7% -2.2 HV/LV substations <80% utilised 94.1% 82.4% 87.1% 4.7
80-100% utilised 2.9% 8.4% 8.9% 0.5
>100% utilised 3.0% 9.2% 4.0% -5.2 1. Excludes £3.2m of flex procurement to prepare for the 2028-33 period.
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Figure 9: the impact of flexibility-based solutions on reinforcement costs1
Reference LV monitoring Price-driven Smart solutions DNO-contracted flexibility point As part of the DSO flexibility spend £3.2m of ‘go further faster’ investment is Network costs Strategy, the roll- At no cost to us, £9.5m investment spent to stimulate market development and before flexibility out of 10,000 LV time-of-use tariffs in smart solutions prepare for the significant uptick in extra savings include monitors enables are assumed to alongside £20.8m high voltage (EHV) sites that will require DSO Strategy price-driven and enable £113m in LV monitoring intervention in 2028-33 from a deliverability fixed flex enabling DNO-contracted of traditional roll-out facilitates perspective costs of £66.6m flexibility savings reinforcement reinforcement cost Go further faster investment in asset upsizing to be harnessed, as savings deferral of £74.1m well as contributing is made through synergies with the asset to £74.1m of smart replacement programme. Further investment solution savings in exploring and stimulating flexibility markets will be funded through innovation funding allowances, estimated at £2-5m
£900m Total Total Total £841.9m 20.8 £672.7m £675.9m1 Net benefit Net benefit 66.6 1.8 9.5 -£169.2m -£169.2m 775.3 -113.2 -14.1 -74.1 3.2 £600m 66.6 66.6 606.1 609.3
LV monitoring DNO-contracted investment drives smart £300m customer flexibility solutions saving £1.8m spend on DNO-contracted flexibility enables £14.1m deferred reinforcement
£0m ED2 network LV Price-driven DNO- DNO- Smart Smart ED2 Going ED2 intervention monitoring flexibility contracted contracted solutions solutions network further network costs saving flexibility flexibility spend saving intervention faster – intervention reference spend saving cost DNO- cost point contracted flexibility
We have considered the total Figure 10: sensitivity testing: total network costs 2023-2028 by scenario investment that would be required for each of the reference scenarios we Without flexibility With flexibility have modelled both with and without £m solutions solutions2 flexibility solutions. Our Planning Scenario is relatively central to the full DFES System Transformation 297.8 241.3 range of possible costs of all scenarios, taking into account the impact of all CCC Headwinds 570.0 flexibility solutions on the range of NPg Planning Scenario 775.3 585.3 pathways. Several of the electrification scenarios are closely clustered together DFES Leading The Way 790.5 during 2022-28, and our Planning Scenario is at the lower end of that DFES Consumer Transformation 791.1 group. The lowest cost scenario for our CCC Balanced Net Zero 799.1 network is the System Transformation scenario, which assumes high level of CCC Widespread Engagement 842.8 727.9 decarbonisation from hydrogen and lower uptake of EVs being connected, giving rise to a lower impact on the electricity network. It is also important to recognise that some of these DFES scenarios created from the ESO FES 2020 do not align with the 10-point plan and are therefore less ambitious. 1. Total for network investment costs and DSO Strategy only; does not include Whole System. 2. Excludes £3.2m of flex procurement to prepare for 2028-33 period.
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Embracing uncertainty
We recognise the need to manage We embrace this uncertainty by building Should price-driven flexibility not uncertainty. an investment plan that is designed to materialise at the levels forecast, or be flexible to an evolving landscape. load growth be greater than forecast, It is clear that our network is at the heart we will need to increase our investment of the UK’s net zero journey, but the — By adopting a flexibility-first in DNO-contracted flexibility, smart extent of the impact on the network will approach to planning network network solutions and conventional remain unclear for some time. There are intervention we defer the need for reinforcement, in that order. many considerable uncertainties in the reinforcement and give option value pathway towards decarbonisation: for the decarbonisation pathway that The projections and cost forecasts emerges. in our plan are based on the existing — The extent of electrification of — At EHV level where interventions national connection charging framework heat and transport versus other and upgrades are the most whereby the customer requesting alternatives such as hydrogen – how costly, we will assess the need for a connection pays for a share of the electrical? intervention across multiple future system reinforcement required to — The amount of locally distributed energy pathways to minimise the risk accommodate their new demand or renewable generation connected to of stranded assets. generation. In summer 2021, Ofgem is our network – how local? — At the HV/LV levels, the expected to publish its draft decision — The speed at which renewables and infrastructure has a high probability on changes to these charging rules. LCTs will be adopted – how fast? of need regardless of the pathway, There is potential for a shallower — The extent to which customer providing customers with the charging regime whereby more of flexibility will be taken up –how infrastructure necessary to maximise the costs of changing the network to flexible? use of low carbon energy and accommodate new uses will fall on the provide flexibility for management general customer base rather than the The answers to these questions will of the whole energy system. The connectee. If this were to occur, it would affect how we manage the network. For foundation of this approach is an likely lead to an upturn in connection instance, we are aware of the possibility investment in 10,000 additional requests and system reinforcement. that there might be significantly less LV monitoring units (as part of the This is also explored in the connections electrification of the heat sector than DSO Strategy, annex 2.4). This will section of our initial plan and the is currently assumed in our Planning enable us to monitor the emergence impact of Ofgem’s draft decision Scenario in a world where hydrogen and of flexibility response among our will be re-evaluated for the final existing gas networks play a greater role customers and see when and where version of this plan. in decarbonising space heating. the need arises for investment on our network. It is, therefore, essential that we — Installing extra capacity on our continue to monitor the policy network has the added benefit of landscape and modify our planning improving energy efficiency by Support for our plan assumptions at least annually to reducing electrical losses, which reflect the most recent developments. delivers economic benefits for “Collaboration between business, Although the scenarios we have customers from the perspective industry and local government considered are tightly bunched in the of the total cost of their energy, is crucial for York to meet its 2023-28 period, greater divergence is by reducing the need to install zero carbon ambitions. As a likely in the 2030s as uncertainty around additional generation assets. traditionally carbon intensive policy and the uptake of LCTs increases. — In addition to harnessing synergies sector, energy has a huge role The commercial viability of LCTs, with asset replacement, our to play in enabling a more technological progress and challenges, decarbonisation investment plan sustainable future that we as a regional characteristics such as building is underpinned by our principle city are actively working towards. stock, and customer behaviour will to take the opportunity to upsize Northern Powergrid’s ambitious continue to drive uncertainties in assets when we are investing in plans would not only support our the adoption of LCTs. As more LCTs them. This adds additional capacity local decarbonisation work, but are taken up and more data is gathered, at low marginal cost, ensuring that would also tackle such urgent this uncertainty will reduce. wherever possible we are installing issues as fuel poverty, prioritising ‘net zero ready’ assets in order to a socially inclusive transition to a minimise the likelihood of the need carbon zero future.” to intervene at the same location again before 2050. — If the pathway that unfolds during Cllr Paula Widdowson 2023-28 is not as steep as we Executive member anticipate, we still have the for environment and option to invest to prepare for climate change, City the faster pathway, enabling of York Council us to efficiently reduce delivery risks in the early 2030s.
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We are mindful of the impact of We will ensure a continuous changes in the energy system dialogue with stakeholders as part on customers. We will create of our annual planning process. opportunities for customers to be active participants and will ensure We expect our plan to keep evolving a just transition towards net zero. as part of our annual planning process as society continues on the low carbon As a key facilitator in the net zero energy transition. We will use this annual transition, we will enable our customers process to capture broad developments to become active participants in the in the policy environment, insights from energy system, allowing them to system monitoring and data capture, maximise the financial value of their and discussions with a broad range energy resources. Our plans for building of stakeholders. This will enable us to our own capabilities to harness flexibility ensure that our plan reflects the latest and stimulate flexibility markets are set developments and stays relevant in the Support for our plan out in our DSO Strategy (annex 4.2). context of the national decarbonisation agenda. In particular, we will continue “We look forward to working It is also important that we develop a to engage with local and combined closely with Northern Powergrid clear view of what is needed to ensure authorities in our region on their local on the many challenges that we that the transition not only happens area energy plan (LAEP) development face together. The promise of but that it happens in a fair way for (for further detail see our DSO Strategy). increased collaborative working customers. We will ensure a just and early, strategic engagement transition by: As part of this, we will also continue is exactly what we need in order participating in the National Grid FES to support our carbon reduction — ensuring we keep our investment process, engage with local authorities work as, without Northern as efficient as possible to minimise and other stakeholders, and reflect their Powergrid on board and actively increases in customer energy bills; feedback in the development of our supporting our work, we will — embracing digitalisation and open DFES and investment Planning Scenario. not be able to achieve our data to enable transparency in our We will also undertake activities net zero targets.” decision making, giving customers highlighted in our DSO Maggie Bosanquet the information they need to Strategy and Enabling Whole Systems Low carbon economic support their own decarbonisation plans to ensure that our forecasts development team agendas and benefit from the are continually updated based on leader, Durham opportunities that the low carbon stakeholder input. County Council energy transition brings; — actively finding ways to ensure that the less wealthy and less well-engaged are able to access benefits from the energy transition as well as being particularly mindful of the impact on Vulnerable Customers; and — harnessing talent by creating green jobs and developing skills in our region. (See Workforce Resilience.)
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Output measure/1 Customer indicative input ED1 ED1 ED2 outcomes Benefits Deliverables measure to date forecast target
SI1 Efficiently put — All pathways to Ensure capacity is ✓ ✓ ✓ the network in a decarbonisation available position to support will be kept open LCT uptake and — Increased Investment in £17.5m £19.5m £117.7m ensure all credible capacity for creating capacity decarbonisation customers to SI1.1) Publish our DFES annually and use it p.a. scenarios in our connect LCTs to continue the dialogue with our regional region remain open stakeholders to keep refining and updating Network utilisation 0.5% 2.5% 0.7% for delivering net our views about possible decarbonisation – % major zero by 2050 or pathways in our region substations > LI3 sooner2,3 EVs accommodated 31,000 110,000 941,000 (cumulative)
HPs accommodated 34,000 58,000 309,000 (cumulative)
SI2 Deploy a flexibility- — Increased SI2.1) Run flexibility tender exercises where first approach, capacity we will seek to use flexibility to defer always choosing — Efficient reinforcement at our major substations network and decarbonisation and continue to seek to harness flexibility customer flexibility to defer reinforcement across all voltage solutions where — Quicker levels cost-effective decarbonisation and viable ahead — Increased SI2.2) Invest in market development to of network customer stimulate the use of flexibility so that we reinforcement4,5,6,7 and network can defer future reinforcement costs across flexibility various network areas that will require See flexibility metrics under our DSO Strategy — Customers and intervention in the 2028-33 period stakeholders more actively SI2.3) Invest in smart grid solutions engaged with the including LV monitoring energy system SI2.4) Deploy DNO-contracted flexibility to shift peaks in demand on our network to enable deferment of traditional reinforcement
Innovation | Data and Digitalisation | Workforce Resilience
1. Numbers shown may be subject to rounding. See annex 1.4 key measures for profiled targets. 2. Cross Reference Asset Resilience AR1) Enable an efficient long-term transition to net zero through maximisation of synergies between load-related and asset renewal expenditure. 3. Cross-reference Whole Systems WS2) Ensure our customers’ future needs are met through cross-sector and cross-vector planning. 4. Cross-reference DSO Strategy DSO4) Enhance processes and systems for network operations to enable a step change in our capability to optimise a system with increasing customer and network flexibility. 5. Cross-reference DSO Strategy DS05) Enable significant uptake of customer flexibility and facilitate development of new markets for customers providing services to networks 6. Cross-reference DSO Strategy DS03) Unlock new capabilities and benefits for customers through provision of open energy system data and engaging in joint planning with our stakeholders. 7. Cross-reference Whole System WS2) Ensure our customers’ future needs are met through cross-sector and cross-vector planning.
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Decarbonisation – Scenarios and Investment
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 54 dedicated events Stakeholders engaged: 4,762 total – 1,300 unique interactions Wave 1 findings Details — Stakeholders were interested in understanding the emissions impact of the different Different net zero targets have been set DFES energy pathways and how local developments are reflected in the modelling. locally and should link with FES modelling More decentralised pathways were preferred Existing and future network capacity was a — Stakeholders wanted to share decarbonisation plans and exchange the relevant data, key area of interest for stakeholders and to understand where capacity is available for low carbon projects — Stakeholders believed we have a leadership role in decarbonisation and should enable net Stakeholders believed we have a key zero targets to be met. Any movement towards net zero should be socially equitable and leadership role in the net zero transition not put vulnerable and fuel-poor customers at a disadvantage
Wave 2 Events: 135 total – 75 dedicated events Stakeholders engaged: 15,475 total – 10,765 unique interactions Wave 2 options A B C D E
Options were Delivering the same Enhanced Net zero by 2050 Net zero by Net zero by 2050 costed to help service but at a performance for driven by largely 2050 or earlier or earlier – high customers lower cost the same spend network solutions, with increased customer flexibility understand the assuming only low customer flexibility, means lower benefits and (Not on track for net (Not on track for levels of customer reducing network reinforcement costs potential bill impact zero by 2050) net zero by 2050) flexibility are reinforcement costs of the service levels available proposed
Customer ambition A significant majority of customers supported us pursuing an accelerated decarbonisation pathway, reaching net and broader zero by 2050 at the latest. Stakeholders’ ambitions were somewhat tempered by the need to balance the pace of findings decarbonisation with the associated bill impact and the need for the net zero transition to be fair. Overall, 75% of our customers supported option C – ‘Major upgrade’ to option E – ‘A new world’; and 88% of respondents in the ‘have your say’ survey believed we should seek to achieve net zero before 2050
Wave 3 Events: 91 total – 33 dedicated events Stakeholders engaged: 32,500 total – 2,154 unique interactions Wave 3 tested our draft initiatives for balancing ambition to meet the net zero target as early as possible with the need to minimise the bill impact, guiding and refining the development of our planning scenario Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Need to prepare for net zero with a planning approach that is — We will prepare for net zero and the SI1 Link responsive to deal with an uncertain future differing levels of decarbonisation Majority of customers recognised the climate emergency and ambition across our region through were comfortable to spend more to accelerate decarbonisation. collaboration and proactive network Given the uncertainty of national and local energy developments, planning to enable the emerging pace as well as diversity in local net zero targets, stakeholders of LCT uptake were in favour of a planning scenario that would enable any decarbonisation pathway that emerges
— Support for a flexibility-first approach to support LCT uptake — We will actively prepare and manage SI2 Link Stakeholders supported our flexibility-first approach. Most of the decarbonisation of the energy them would be willing to be flexible in using their energy as a network by developing our flexibility response to time-of-use tariffs. Stakeholders recognised this capabilities and approach might be limited where customers’ schedules are fixed and that the region requires additional investment in network capacity to enable widespread use of LCTs
— Overall acceptability was high for Scenario and Investment delivery with — Scenarios and Investment acceptance score: 72% - Link trust equally important to customers at 72%
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Decarbonisation – DSO Strategy
DSO Strategy DECARBONISATION We will deliver an even smarter and more flexible energy system for our customers to decarbonise efficiently.
DSO STRATE GY
We are expanding our capabilities and We face the challenge of facilitating taking on the functions of Distribution an overall increase in demand for System Operation (DSO) to actively electricity as well as managing greater manage the increasingly complex power volumes of intermittent generation Our DSO Strategy sets out our flows on our network that result from connecting directly to our network. To plans to upgrade our data decarbonisation, reduce the need decarbonise efficiently and make the capture, analytics and data for conventional reinforcement, and transition affordable, we have to enable sharing with stakeholders and ensure the transition to net zero is a smart, flexible energy system where invest in our systems and efficient and affordable. Distribution Network Operators (DNOs) processes to develop customer actively manage the more complex flexibility markets. power flows on the distribution grids to optimise the value of the system by taking on the functions of DSO.
Mark Nicholson We are now looking towards These priorities have informed our DSO Head of the future and have developed Strategy which has a twin focus on data smart grid our DSO Strategy for 2023-28 and the use of flexibility. implementation by engaging with our customers and stakeholders, and ensuring We recognise that we need to develop alignment with regulatory our DSO functions and capabilities in requirements. a manner that is coherent with other stakeholders in the energy system, Our DSO Strategy has been informed and have hence sought to align our by the needs of our customers and DSO Strategy with recommendations stakeholders. Since publishing our coming out of the Energy Networks Our plan is set to get the best 2023-28 Emerging Thinking document Association (ENA)’s Open Networks out of our existing assets in August 2020, we have been engaging project, particularly the work streams through improved visibility of on our further developed DSO focussed on flexibility services and the low voltage network by transition plans through stakeholder DSO transition. For example, the metrics deploying more monitoring. panels, industry forums, and bilateral we will use to measure our progress are discussions with industry and experts. being developed in collaboration with Our stakeholders have told us that two- other DNOs and Ofgem. way sharing of network data through Aisha Ahmad self-service tools is crucial to helping Finally, Ofgem has set a clear direction Smartgrid them with their own decarbonisation for the transition to DSO with a view development plans, understanding our network to reducing uncertainty and ensuring engineer and managing flexibility. Stakeholders consistency in approach across have also emphasised the need for the sector. Our strategy has been transparency and standardisation developed to ensure we meet of flexibility products to stimulate regulatory requirements. participation in new energy markets.
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Decarbonisation – DSO Strategy
The DSO transition
The transition to DSO requires us to Figure 1: our energy system is changing operate our network for the evolving needs of our customers on the low carbon transition, ensuring we are a trusted and neutral platform Traditional energy through open, transparent and system technology-neutral decision making. To deliver reliable electricity supply A centralised system where the to our customers, we must manage network is designed around increasingly complex power flows on single-direction power flowing our network through whole system from large (often fossil fuel) engagement and optimisation, and generators into homes and proactively share data and insights businesses. Here generation has about our network to facilitate effective to meet peak demand. decision making across the energy supply chain.
We must incentivise customers to be The energy system of the flexible in their energy generation and future consumption, and enable them to play a more active role in supporting the A decentralised system where network, including by facilitating their small-scale energy generation units participation in existing and new market- deliver energy to local customers. based solutions, such as flexibility Customers utilise renewable energy markets and local energy markets. In when the wind is blowing and the performing role of DSO we will strive to sun is shining. Electric vehicles (EVs) ensure that customers are empowered and community energy storage to participate in a smarter and more are charged up at favourable rates, flexible energy system, and adverse based on real-time supply and impacts on vulnerable customer demand data. Users flex groups are mitigated to make sure that their demand and the network no one is left behind in the ongoing facilitates this. energy transition.
Figure 2: what DSO means for our customers
Data and information provision ‘Fit and forget’ passive Keeping the Providing network lights on connections assets
Customers pay for receiving
DSO – today a service
Data and information provision
Keeping the Providing Flexing Local energy lights on connections demand and markets generation Active customers Customers pay for receiving a Customers are Competitive market and network service – less than without DSO paid to provide providers deliver new
DSO – future a service services to customers
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Decarbonisation – DSO Strategy
We have already embarked on Figure 3: investments in our DSO capabilities in 2015-23 the transition to DSO and have made progress over 2015-23, working with our customers Modernising Our smart grid enablers project is the UK’s most comprehensive and stakeholders to develop our and digitalising network upgrade programme. It is transforming our ability to monitor, thinking, and investing in our our network control and communicate with more than 860 substations, giving us capabilities. and operations the ability to respond to real-time information about power flows on our network. While we have laid solid foundations for the transition to DSO in recent years, it is We have advanced our internal readiness for the smart meter roll-out crucial that we build on this to meet the programme, which has continued to face delays at the national level. challenges and needs of the changing We have been preparing our internal systems to integrate smart energy system. To do this we are setting meter data with our customer, network and operational data so that out our plan here to invest £87m across we can proactively respond to outage alerts and enhance demand 2023-28 in developing the functions forecasting on our low voltage (LV) network. and capabilities required for DSO. This will unlock benefits for customers Focussing our Our £1.8m customer-led distribution system innovation programme is and the community by allowing us to innovation on exploring how to accommodate large volumes of new technologies, decarbonise our network at lower cost. preparing our such as local generation and electric vehicles (EVs), at least cost, By taking a flexibility-first approach to network for while enabling customers to earn income by selling energy or our network investment strategy we the future services to balance the network. will reduce the need for conventional network reinforcement and ensure that We are developing our commercial and technical skills to every kilowatt hour (KWh) of renewable operate a more flexible system. We have been working to build energy is utilised. As described in the our data analytics skillset in house by developing the right processes scenarios and investment section, and tools. net benefits of up to £169m could be delivered by avoiding conventional Exploring and Our active network management (ANM) solution is providing reinforcement costs over the course of preparing for scalable capability to connect more generation at least cost, as an 2023-28. The DSO transition will also flexibility alternative to conventional reinforcement by offering customers a enable system benefits that go beyond flexible connection. We expect to have deployed ANM across four our network and will continue to enable areas by the period to 2023, with an estimated 540MW of contracted us to optimise the value of the system to flexibility from generation curtailment within these zones. We intend deliver savings into the period 2028-33 to roll out further ANM zones where there is high customer interest in and beyond. connecting to the network, limited capacity and high reinforcement/ flexibility costs. Since 2017, we have been explicitly exploring the DSO transition with We have conducted market testing for customer flexibility services a broad set of stakeholders in the and have run three expressions of interest for reinforcement deferral context of addressing decarbonisation. as well as an e-auction for emergency support. This has allowed us Following an extensive programme of to develop our processes and work with the market to gauge interest stakeholder engagement we published and identify potential providers. our first DSO v1.0 thinking in 2018, with 84 per cent of our stakeholders In 2020, we commenced implementation of the flexible power supporting that plan. We then updated operational system to manage the purchase and operation of this with our development plan (DSO flexibility services. This collaboration now includes the majority v1.1) in October 2019, and again with of DNOs and offers flexibility providers an easier, lower cost, our 2023-28 Emerging Thinking (ET) standardised route to market. document in August 2020. Working with We are participating in the ENA’s Open Networks project, including We have made significant investments our peers, work streams pertaining to flexibility services and DSO transition, to in our DSO capabilities in the current other industry collaborate with other DNOs, as well as the energy system operator period to date (see figure 3), which parties and (ESO), the market and policy makers, to standardise customer have laid the foundations to enable the stakeholders experiences and align processes. transition to DSO over the next price control period (2023-28). Our DFES assumptions and results are shared through an open data platform,1 which includes a view for local authorities, and are accessible to a broad range of stakeholders to use and comment on our assumptions.
We share a large amount of network data publicly and with the ESO and wholesale and retail markets to facilitate its use towards a whole electricity system optimisation.
1. See: https://odileeds.github.io/northern-powergrid/.
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Decarbonisation – DSO Strategy
A smarter and more flexible network
Our region will need to be well on the Our strategy links our vision for the DSO Strategy and will continue to way to a fully decarbonised energy future with the tangible DSO actions guide our decision making as we system by 2028. We, therefore, need we will undertake to get there and sets transition to DSO. to make significant investment in the out the investment required to deliver DSO transition over 2023-28 to ensure these actions, and the benefits that will Our strategy will deliver on five strategic that we are able to facilitate potential flow from this. It is geared around our objectives (see figure 4) that have been decarbonisation pathways at the most flexibility-first approach, ensuring we informed by the needs of our customers efficient cost to customers. As outlined are able to identify and deploy flexible and stakeholders and by regulatory in the Scenarios and Investment section, solutions instead of conventional requirements. These were tested, we are aiming to open up all credible reinforcement when it is efficient to do reviewed and refined through numerous pathways to decarbonisation in the so. To do this, we will need to invest in engagements we had with customer next five-year period and beyond, and updating our systems and skills as well and stakeholder groups, particularly implementing more DSO functions is as enhancing our data capture, use and over the past six months. fundamental to achieving this. sharing to enable optimal use of our assets and facilitate the most cost- These strategic objectives are linked effective route to decarbonisation. to and supported by other parts of our 2023-28 business plan. They have We have five strategic objectives shaped the development of our DSO – guiding principles that have Strategy outcomes and the tangible shaped the development of our activities we are committing to undertaking in 2023-28.
Figure 4: our five strategic objectives
Develop and deploy agnostic flexible solutions as an alternative to network Flexibility reinforcement where it is economic and efficient to do so, ranging from energy first efficiency solutions to dispatchable generation and demand turn-down. Promote and establish markets for deep and liquid flexibility with investment in systems and processes that enable growth in our use of flexibility as the markets mature. This strategic objective links to and supports the Decarbonisation Scenarios and Investment section of our business plan.
Enable whole energy system solutions by engaging with the wider Whole system market on our network investment, system management, and flexibility collaboration requirements and capabilities. This strategic objective links to and is supported by the Enabling Whole System Solutions section of our business plan.
Facilitate fast, efficient and optimised decarbonisation through open data, Data and insight capability and digital tools, without losing sight of data safety and digitalisation security. Invest in software and hardware that allows us to closely monitor the network, capture more relevant data and execute solutions to constraints as they materialise. This strategic objective links to and is supported by the Data and Digitalisation section of our business plan.
Earn trust through open and transparent decision making by publishing Openness and our investment decisions, flexibility needs and procurement results, and transparency collaborating in joint planning with our local stakeholders. This strategic objective links to and is supported by the Openness and Transparency section of our business plan.
Workplace Build regional and national skills and value through developing knowledge, and transferable skills and an innovative culture. workforce fit This strategic objective links to and is supported by the Workforce Resilience section of our business plan. for the future
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Decarbonisation – DSO Strategy
The five objectives lead to five for and deploy flexibility. These build outcome is directly applicable to groups of outcomes that will on our significant progress to date in the strategic objective, while deliver benefits to customers in embedding data and flexibility at the indicates that the outcome is an 2023-28 and beyond. heart of how we operate today. We will enabler of the objective. invest in each of these outcomes over Our DSO Strategy (annex 4.2) will 2023-28. Each outcome enables us to deliver outcomes in five areas (see deliver across a number of the strategic figure 5), focussed on how we gather objectives, as indicated by the symbols and use data, and how we prepare (see overleaf). indicates that an
Figure 5: the outcomes
DSO 4 DSO 5 SYSTEM OPERATION CUSTOMER Flexibility AND OPTIMISATION FLEXIBILITY Enable a step change in Enable a significant uptake our capability to operate of customer flexibility and and optimise a system with facilitate development of increasing customer and new markets for customers network flexibility providing services to networks
DSO 1 DSO 2 DSO 3 Data DATA CAPTURE ANALYSIS OPEN DATA AND Significantly expand CAPABILITIES JOINT PLANNING our network and market Transform our analysis Enable open energy data capture capabilities system data sharing and joint planning with stakeholders
Enablers
WORKFORCE INNOVATION DATA & RESILIENCE DIGITALISATION
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Decarbonisation – DSO Strategy Flexibility first Whole system collaboration andData digitalisation Openness and transparency and Workplace workforce fit future the for
DSO 1 We will significantly expand network and market data DATA capture to establish a vital building block for a smarter CAPTURE and more active energy system. This will improve the volume, availability and accuracy of the information that we track and share about our network, which underpins the transition to DSO.
DSO 2 We will transform our analytical capabilities to enable ANALYSIS more data-driven decision making in planning and operational timescales. Better data and analytics will CAPABILITIES drive more accurate forecasting and better informed investment decision making, leading to more efficient investment to enable a range of decarbonisation pathways as explored in the Decarbonisation Scenarios and Investment section.
DSO 3 We will enable open energy system data sharing and OPEN DATA engage in joint planning with our stakeholders. Joined- up working with regional stakeholders and two-way AND JOINT data sharing will enable more dynamic systems and PLANNING robust regional planning, facilitating whole systems decarbonisation as envisioned in the Enabling Whole System Solutions section.
We will enhance processes and systems for network DSO 4 operations to enable a step change in our capability SYSTEM to operate and optimise a system with increasing OPERATION & customer and network flexibility. Preparing our business OPTIMISATION operations, network and people will enable us to maximise our ability to identify and deploy customer and network flexibility over 2023-28 and beyond.
DSO 5 We will facilitate the development of new markets CUSTOMER for customers providing services to networks in order to enable significant uptake of customer flexibility. FLEXIBILITY Stimulating the flexibility market and procuring flexibility will optimise the use of the existing network and support cost-effective decarbonisation.
To successfully deliver the DSO system that is more efficient, reliable that is generated to be used. Our transition, we will need to invest and cost-effective. It is estimated approach will allow our customers £87m in 2023-28, which will that up to £201m of conventional to earn revenue through participating unlock benefits for our customers reinforcement costs would be avoided in flexibility markets facilitated by our and our region. over the course of 2023-28, delivering DSO activities. net benefits of £169m, as we embed Transitioning to DSO will ensure that a flexibility-first approach to network The DSO transition will also enable we are equipped to facilitate potential investment. In addition, where we do system benefits that go beyond our decarbonisation pathways at the most have to invest to repair and upgrade our network, as data and analytics made efficient cost. We plan to invest £87m in network, better data and analytics will available for other participants in the DSO activities across our five outcome drive more efficiency as we are better energy and related sectors unlock areas over the next five-year period, as able to identify and predict areas in further whole system value in the shown in figure 6. need of investment, ensuring we spend future by optimising regional planning. customers’ money efficiently. In addition, by enabling the efficient We will enable total energy costs to be decarbonisation of our network, kept as low as possible as our region We will maximise the value of existing our DSO Strategy will help to decarbonises by unlocking cost savings infrastructure and enable every low achieve emissions reductions across for customers as we build a smart carbon kilowatt hour of electricity our network.
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Decarbonisation – DSO Strategy
Figure 6: investment in DSO Strategy outcomes – 2023-28 (£m)
Data and Network Ref. Area Outcome digitalisation costs Workforce Total
DSO1 Network and market data capture 7.2 20.8 1.2 29.2
DSO2 Transform analysis capabilities 18.7 - 2.7 21.4 Data Enable open energy system data sharing 7.9 - 3.7 11.7 DSO3 and joint planning
Operate and optimise a system with increasing customer and network 12.7 - 5.5 18.1 DSO4 Flexibility flexibility Enable significant uptake of customer 2.6 - 4.5 7.1 DSO5 flexibility
Total 49.1 20.8 17.5 87.4
Our total planned investment of £87.4m Our DSO Strategy defines how to how we and other energy sector in DSO activities is described below and we will use the systems that will parties operate. For example, we are described in full in our DSO Strategy be delivered by the data and planning to build on our Boston Spa annex (annex 4.2). Our DSO outcomes digitalisation strategy to deliver our energy efficiency trial (BEET) project are underpinned by significant DSO outcomes. to rollout voltage optimisation investment in the cross-cutting enablers — Workforce – we plan to spend technology on a larger scale, as of our business plan: £17.5m over five years for training, outlined in the Enabling Whole upskilling and recruitment in order to System Solutions section and our — Digitalisation – we plan to invest arm our workforce with data science Customer Value Proposistions (CVP) £49.1m over five years to upgrade and commercial skills, alongside section. We will also use innovation and install new information enhanced engineering expertise, as funding allowances to explore technology and operational outlined in the Workforce Resilience flexibility product development technology systems, as outlined section. and procurement and to harness in the Data and Digitalisation — Innovation – we will build on flexibility at low voltage to resolve section, which is key to delivering successful innovation activities in constraints on our LV network. our data and flexibility outcomes the current price control period to (see figure 7). continue to find new approaches
Figure 7: interaction of data and digitalisation (D&D) strategy with DSO
Investment Stakeholder driver Distribution System Operator Other plan sections engagement
Business function Business function specifies user £49m £63m level tests requirements stakeholder and customer 44% of total D&D investment supports 56% of total D&D investment supports appetite for use outcomes DSO Strategy delivery other areas of the business, including cases broader activities to support delivery of decarbonisation
D&D team D&D team tests designs and Data and digitalisation strategy data use cases delivers and technical technical £112m1 appropriateness solutions to drive the right solutions
1. Capex only.
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Decarbonisation – DSO Strategy
Our investment will enable 28 DSO and meeting Ofgem’s regulatory requirement for us to fulfil the three deliverables and initiatives. requirements. roles of a DSO:
We will undertake deliverables and In figure 8 we outline eight of our — Role one: planning and network initiatives over the next five-year period. most significant deliverables that development. These are tangible actions that will demonstrate the scope and scale of — Role two: network operations. help us to achieve the five outcomes of our ambition. In our DSO Strategy — Role three: market development. our DSO Strategy and unlock benefits annex we detail a complete account for customers and our region. While of all 28 deliverables and initiatives we deliverables are measurable activities, are planning to undertake in 2023-28, initiatives cannot be measured but including cost and benefits, and how are integral to delivering our strategy they will allow us to meet Ofgem’s
Figure 8: examples of key deliverables
DSO1.3 Install targeted LV monitoring DSO 1 We will invest £21m over 2023-28 to install 10,000 LV monitors across our network, prioritised based on sites anticipated to require intervention first, allowing us to monitor power flows and network performance and DATA enhancing visibility of our LV network. This will enable us to use our existing network assets more efficiently CAPTURE (by identifying and releasing capacity) and target investment in asset condition and reducing network losses, as well as provide network data that we will share externally and use internally to facilitate the development of flexibility services and markets.
DSO2.1 Build low voltage datasets using DSO2.4 Create a ‘digital twin’ analytics and machine learning of our network for strategic planning We will invest £4.6m to upgrade our data analytics We will invest £7.2m to create LV and HV planning capabilities, by investing in software and data models of the network which integrate historical scientists, so we can make forecasts and undertake and real time data. These ‘digital twins’ will enable DSO 2 scenario analysis on our low voltage network which extensive analytics on network data, allowing us is changing rapidly with increased penetration of low to test connection of anticipated volumes of LCTs ANALYSIS CAPABILITIES carbon technologies (LCTs) and distributed energy and DERs, providing insights to identify where and resource (DERs). We will develop statistical analyses when we should target investment in flexibility or for different types of data (e.g. smart meters and reinforcement so that it is timely and efficient. data captured through DSO1.3 LV monitoring roll-out), which will help us plan for reinforcement needs and identify and size flexible connections and flexibility service requirements.
DSO3.1 Open insights data portal DSO3.2 Recruit local area energy plan We will invest £6.6m to develop a free online portal, (LAEP) advisors which will allow customers and stakeholders to We will invest £2.3m to recruit six LAEP advisors who access network data and analytical tools through will work in collaboration with local authorities and DSO 3 a centralised, spatial platform. The portal will be the wider energy sector – using knowledge of the OPEN DATA an application layer that gives public access to network, customers and the wider environment – to & JOINT network datasets and our ‘digital twin’ strategic provide useful input and feedback to local authorities PLANNING planning tool DSO2.4. It will be aimed at customers on their plans. These advisors will also support our and stakeholders who do not have electrical network planning by generating better and more engineering expertise, supporting them to make comprehensive local insights. To ensure a level of investment decisions about demand and granularity and local knowledge, we will employ one generation and connections. advisor in each of our six operating regions.
DSO4.1 Flexibility services, DSO4.2 Enhanced enterprise active processes and dispatch system network management (ANM) We will invest £3.7m to develop a customer We plan to invest £5.1m to enhance our use of flexibility system that enables automatic ANM to manage constraints on the network by dispatch of flexibility services by integrating integrating our enterprise solution and allow ANM DSO 4 existing systems with our flexibility platform. to become a core function that is integrated with SYSTEM OPERATION & This will include the automatic billing and our network management and customer flexibility OPTIMISATION payment for services (currently a manual dispatch systems. This will allow real-time data process), allowing for a fully automated exchange and enable a more secure and resilient procurement, dispatch and settlement of system with efficient and cost-effective scalability flexibility services, generation and connections. of ANM where there is high customer interest in connecting to the network, limited capacity and high reinforcement or flexibility costs.
DSO5.3 Develop a flexibility information provision and engagement platform DSO 5 We aim to spend £2.1m to develop an external-facing platform that gives third parties such as flexibility CUSTOMER FLEXIBILITY providers and aggregators single-point access to flexibility services related information. Users will also be able to express interest in providing flexibility services and register assets or meterable units. This will support the procurement of flexibility services and flexibility market development.
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Decarbonisation – DSO Strategy
We will need to measure and other DNOs and Ofgem to produce on the metrics can be found in the evaluate our performance an outline of relevant metrics for DSO Strategy annex. We will use against our DSO outcomes 2023-28, which will ensure there is these metrics, alongside stakeholder and deliverables in order to a level of comparability across the engagement, to evaluate our progress continuously improve. sector. A long list of metrics has against our DSO Strategy and foster been developed, from which we continuous improvement. They will A clear set of metrics will allow us to have adopted a subset tailored to also be used by Ofgem on behalf of transparently measure progress against our strategy. These are shown at customers to financially incentivise the the deliverables and outcomes of our the outcome level in the summary delivery of our plan – see DSO Strategy DSO Strategy. We have worked with the table overleaf. Further information (annex 4.2) for more details.
Output measure/1 Customer indicative input ED1 ED1 ED2 outcomes Benefits Deliverables measure to date forecast target
DSO1 Significantly — Increased data DSO1.1) Build on existing information expand our availability management capabilities to expand network data and integrate datasets delivering capture of — Improved data LV ground- network and quality capabilities by the end of 2025-26. Capture more detailed data more regularly, purchase mounted market data to — Improved data substation establish a vital data to enhance network visibility, and cleanse, accuracy structure and store data more effectively networks 4% 10% 50% building block directly — Stakeholder-led for a smarter monitored decision making and more active DSO1.2) Work with stakeholders to improve (ODI-F) energy system information exchange and understand flexibility service requirements
DSO1.3) Deliver targeted installation of LV LV load monitors load-monitoring equipment and harvest data installed 1,250 2,700 12,700 from other monitoring sources and integrate to (cumulative) form new datasets
DSO2 Transform — Consolidation of DSO2.1) Use analytics and machine learning to our analysis network data to emulate high quality and granular time-series capabilities to make it single- data sets for LV networks enable data- point accessible DSO2.2) Utilise analytics engines and machine driven decision — Increased network learning to enhance and verify time-series data making in knowledge sets for HV and EHV networks planning and — Techniques DSO2.3) Refine power flow models, and operational developed supplement forecasting and scenario modelling timescales to to mitigate (such as DFES), using analytics engines to drive value incomplete predict future power flows under different for customers datasets scenarios and therefore improving network while working planning and gaining operational insights in collaboration — Improved losses monitoring with others in Standardised through smart - - 2023 the industry DFES inputs to improve the meter and LV data DSO2.4) Create a static strategic planning format and — Improved model of the network which integrates historical Accurate consistency of forecasting and real-time data from various OT/IT systems forecasting of DFES and energy system delivering a complete set of capabilities by the network needs 2 DFES DFES annual data end of 2025-26 (reconciliation report of outturn vs. forecast) DSO2.5) Improve the format and consistency Historical of our forecasting information, in collaboration operational and with other DNOs, and publish this via our outage planning - - >90% network development plans, and expanded data shared – LTDS we share with stakeholders ESO/DSO DSO3 Unlock new — Increased open Availability of data energy system capabilities - - +70% and benefits — More dynamic and data products robust regional DSO3.1) Build enhanced functionality on top (ODI-F) for customers of our open data platform to unlock additional plans through Network asset Annual through provision customer benefits. This will include a set of free two-way sharing data stakeholder survey of open energy analytical tools to help processing data and - of relevant and feedback survey and system data and enhance self-service delivering capabilities by rich data and report report engaging in joint the end of 2026-27 CVP planning with New network our stakeholders, asset data self- - 2026-27 including service (ODI-F) providing support for local DSO3.2) Provide assistance and expertise to authorities on the support the design of LAEPs in collaboration development of with local authorities and the wider energy LAEPs sector, utilising knowledge of the network, loading projections, customer activity and the wider environment to provide feedback, feeding insights into our own plans
1. Numbers shown may be subject to rounding. See annex 1.4 key measures for profiled targets. 2. Cross-reference Openness and Transparency – OT1.1) Publish and report on our internal processes for investment appraisal of flexibility solutions and network reinforcement in such a way that demonstrates our flexibility-first approach and ensures the best outcome for the long-term planning of the network.
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Decarbonisation – DSO Strategy
Output measure/1 Customer indicative input ED1 ED1 ED2 outcomes Benefits Deliverables measure to date forecast target
DSO4 Enhance — Increased network DSO4.1) Create a customer flexibility system Error flexibility corrections processes with network operation processes that enables - - <10% and systems — Effective dispatch us to automatically dispatch flexibility services issued for for network of flexibility by integrating systems (such as Power on dispatch (ODI-F) operations to services Fusion) with our flexibility platform (Flexible Late issuance of enable a step — Improved Power Platform). Planned to deliver capabilities change in our dispatch data - - <10% flexibility services by the end of 2025-26 (ODI-F) capability to processes optimise a system DSO4.2) Enhance our ANM coordination with increasing and control to manage thermal, voltage and customer fault level constraints using a central and/or and network local management system to control flexible 2 flexibility customer assets. Planned to deliver capabilities by the end of 2025-26
DSO4.3) Establish network flexibility and customer flexibility solutions enabled by control systems to manage thermal, voltage and fault level constraints
Constrained data exchange - - >90% ESO-DSO (ODI-F)
DSO4.4) Collaborate with the wider energy Operational industry (via the ENA) to establish flexibility data exchange - - >90% processes, communication and architecture to ESO-DSO avoid conflicting operations (ODI-F)
Common flexibility - - 2025 dispatch principles
DSO4.5) Upskill and recruit engineers to use whole energy system thinking to provide increasingly complex solutions to address decarbonisation
DSO5 Enable a — £169.2m benefits DSO5.1) Collaborate with the wider energy significant uptake from flexibility industry (via the ENA) to facilitate non-DSO of customer and smart grid services and network access rights flexibility investment No. EHV and facilitate — Increased substation areas customer and in flexibility development 23 25 80 of new markets network flexibility DSO5.2) Develop, cost and procure flexibility market for customers — Increased products that are fit for purpose, taking a evaluation providing services engagement with ‘flexibility first approach’ (ODI-F) to networks flexibility market Common participants registration - - 2024 — Increased processes capacity Flexibility — Increased provider reliability registration - - >95% DSO5.3) Develop a flexibility services acceptance time communication, engagement and trading <30 days (ODI-F) platform that allows third parties such as Procurement flexibility providers and aggregators to keep events response - - >95% track of flexibility services related information time <3 months such as service requirements, procurement (ODI-F) methods, contracts and outage visibility Local flexibility stakeholder - - 120 engagements (ODI-F) DSO5.4) Create a system to automatically validate flexibility service provision, calculate remuneration and issue relevant invoices or compensation DSO5.5) Create a team of knowledgeable Flexibility Relationship Managers to actively engage with customers (such as service providers, aggregators etc.) to facilitate and support flexibility market development
Innovation | Data and Digitalisation | Workforce Resilience
1. Numbers shown may be subject to rounding. See annex 1.4 key measures for profiled targets. 2. Cross-reference WS2) Ensure customers’ future needs are met through cross-sector and cross-vector. Planning; cross-reference WS3) Develop the blueprint for the next-generation network.
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How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we
engage... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 54 dedicated events Stakeholders engaged: 4,762 total – 1,300 unique interactions Wave 1 findings Details Effective communication and education — The transition from DNO to DSO was believed to demand more proactive is important because DSO was seen as a communication of increasingly complex information, framing conversations around complex topic for customers to understand individual topics instead of the broad subject of DSO Transition to net zero needs to be socially — Customers believed that the transition to DSO roles must be socially inclusive in terms inclusive of protecting vulnerable, fuel-poor and rural customers Stakeholders supported our future role and — Stakeholders supported our vision for delivering DSO and believed we could be our DSO vision well-placed to act as the neutral and trusted facilitator to optimise the energy system
Wave 2 Events: 135 total – 75 dedicated events Stakeholders engaged: 15,475 total – 10,765 unique interactions Wave 2 options A B C D E
Options were Delivering the same Enhanced Net zero by 2050 Net zero by Net zero by 2050 costed to help service but at a performance for driven by largely 2050 or earlier or earlier – high customers lower cost the same spend network solutions, with increased customer flexibility understand the assuming only low customer flexibility, means lower benefits and (Not on track for net (Not on track for levels of customer reducing network reinforcement costs potential bill impact zero by 2050) net zero by 2050) flexibility are reinforcement costs of the service levels available proposed
Customer ambition A significant majority of customers supported us pursuing an accelerated decarbonisation pathway, reaching net and broader zero by 2050 at the latest. Stakeholders’ ambitions were somewhat tempered by the need to balance the pace of findings decarbonisation with the associated bill impact and the need for the net zero transition to be fair. Overall, 75% of our customers supported option C (‘Major upgrade’) to option E (‘A new world’); and 88% of respondents in the ‘have your say’ survey believed we should seek to achieve net zero before 2050
Wave 3 Events: 91 total – 33 dedicated events Stakeholders engaged: 32,500 total – 2,154 unique interactions During Wave 3, we further refined our propositions by engaging with flexibility and energy market participants to understand how national and local neutrally performing DSO flexibility markets might develop, and how we should be adapting our service offering to deliver value and demonstrate neutrality performing DSO Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Open and proactive data sharing will underpin a successful — We will work with stakeholders and DSO1 Link energy transition partners to understand their future DSO2 Stakeholders were eager to explore methods to share data more data needs to aid the development of a actively to facilitate the transition to DSO comprehensive network data offering
— Stakeholders urged us to explore ways to share data more — We will develop new data capabilities to DSO3 Link actively and in real time aid the proactive sharing of existing and future network data
— We have a key role in developing local flexibility markets — We will prepare for an increasing and DSO4 Link The ESO and other energy market actors believed we have a accelerating role for flexibility in a DSO5 key role in developing local flexibility markets and the tools and dynamic, smart energy network techniques to facilitate them. Stakeholders were supportive of the development of a smart network if it reduces costs to customers and increases efficiency
— Stakeholders supported our flexibility-first approach — We will implement a flexibility-first DSO4 Link Stakeholders supported planning to enable high levels of approach, enabling customers to DSO5 flexibility. They recognised that that customer flexibility would be maximise their benefits from these predominantly market-driven, followed by the DNO-contracted services and markets flexibility. Strong support from ESO for continued collaboration on the detailed specification and implementation of our propositions to enable growth in coordinated actions on flexibility to benefit customers
— Collaboration and joint energy planning is needed — We will continue to collaborate and DSO2 Link There was a strong appetite for an even closer working share data with stakeholders and DSO4 relationship with us and a recognition of the need for more customers to develop new services, and collaboration at a strategic level to ensure effective planning undertake joint energy planning and increased confidence in deliverability of projects to enable greater coordination
— This area was harder to navigate for — DSO Strategy acceptability score: 68% customers and they felt it was not - Link directly relevant for them
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Decarbonisation – Enabling Whole System Solutions
Enabling Whole System Solutions
We will advance optimisation of the costs, functionality DECARBONISATION and performance of energy services for customers through widespread collaboration to improve the whole
energy system. ENABLING WHOLE SYSTEM SOLUTIONS
IMAGE
Electricity networks are investment in the network. As described assets. We will also help drive improved at the heart of the ongoing in the Scenarios and Investment section, service and cost in other sectors such transformation of the we are exploring the range of credible as transport and heat to help achieve energy system. decarbonisation pathways that could a net zero carbon economy. Given the materialise and have developed our challenge associated with quantifying All credible decarbonisation pathways Planning Scenario in relation to a broad these system-wide benefits, a subset that deliver net zero by 2050 see range of plausible outcomes. of the direct benefits that we are able electricity playing a central role to quantify, indicates that our plan will in decarbonising society’s energy Underpinned by our network investment deliver in excess of £253m of value to needs across transport, heating and plans and DSO transition, our whole customers in 2023-28 and beyond.1 industry. But the optimal pathway to system plan focuses on how we are This value is consistent across the decarbonisation is unlikely to involve integrating whole system thinking into various decarbonisation pathways just electricity. Hybrid, cross-vector our business, as well as the specific described in the scenarios and technologies such as hydrogen could actions we will take to facilitate whole investments section. Studies conducted be vital in enabling decarbonisation system solutions. by National Grid ESO and the Carbon across all sectors. Trust with Imperial College show By embedding whole system that the scale of wider benefits is We need to ensure that the electricity approaches, and investing £16m on significantly greater. More detail on the system is ready to play its part in this specific initiatives, we will help deliver benefits delivered by our whole system whole system decarbonisation. This is a a greener, lower-carbon electricity plan can be found in the Enabling Whole challenging undertaking, underpinned system at a lower cost for customers as System Solutions (annex 4.1). by the transition to DSO and significant we make more efficient use of existing
1. £28.6m in 2023-28 and £225.0m in 2028-33 (assuming a five-year price control period). We anticipate annual net benefits of around £63m p.a. thereafter.
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Defining the whole system and our role in it
Defining the whole system and our Joining up the role within it. system from sources of Historically, our industry has focussed energy to the on the whole system at the level of customer Generation Distribution Customer the electricity networks. But the Transmission Buildings whole system captures many other sectors and industries that are seeking Breaking down to decarbonise. silos between different parts Whole of the energy Our work with customers, other system energy system parties (e.g. the ESO, system gas networks and energy suppliers) Electricity Heat Transport and stakeholders outside the energy sector (e.g. in transport and industry) Joining up has demonstrated that there are whole physical system opportunities to deliver even requirements of greater efficiency, emissions reductions, the system, with and better value for customers. policy, market and digital Physical Digital Market Policy system system system We will improve the whole energy arrangements system through widespread collaboration, lowering costs and network and in the wider system. This also been working with other improving quality of the energy also supports our strategy to optimise DNOs through the ENA’s Open services our customers receive. whole system losses while facilitating Networks project on network net zero (see annex 4.5 Losses Strategy capacity, procurement, use of To achieve this, we are working to for more information). flexible resources, and maintaining ensure that whole system thinking system operational limits. (See DSO is integral to all of our operations in Progress made in 2015-23 has Strategy). two ways. given us a strong foundation — Data and Digitalisation: we are to take forward wider, more taking a more coordinated approach First, in understanding and playing our innovative whole system solutions. to gathering and sharing data role within the whole system transition. with other networks (including This involves proactively managing the In the 2015-23 period we made Independent Distribution Network uncertainty around the decarbonisation significant progress in a number of Operators (IDNOs)) and local pathway, understanding the potential areas, improving coordination and authorities, including through the roles of other vectors within the system, whole system thinking across electricity Distribution Future Energy Secnarios and investing in our network in a way networks. Work is still ongoing in these (DFES) consultation process and that ensures we keep open all possible areas, but some key examples of the open data access.2 decarbonisation pathways. progress made so far include: — Innovation: we have established the Integrated Transport Electricity Second, on a more day-to-day level, — Planning: our investment planning and Gas Research Laboratory we are fostering a whole system way processes now consider ESO’s (InTEGReL), a whole system test site of thinking within our organisation and Future Energy Scenarios (FES) built in collaboration with Northern reflecting that in everything we do. In and Climate Change Committee’s Gas Networks and Newcastle practice, this means identifying issues (CCC’s) forecasts for GB as a University. InTEGReL is the UK’s affecting the wider energy system, whole (see scenarios section). Our first test site that enables large- and proactively exploring our part in involvement in the ENA’s Open scale testing of whole system ideas addressing those issues. In some cases, Networks engagements has also bringing together the transport, our role will be to lead on innovative improved our Network Development electricity and gas sectors. solutions, coordinating across sectors. In Process (Capacity Signposting — Optimising the value of the system others it might be to collaborate under Report). In March 2021 we also for customers and customer assets: the guidance of another sector, and published our Local Area Energy we have progressed the roll-out of elsewhere it will simply be to maintain a Plan (LAEP) Charter with Northern active network management (ANM), watching brief. Gas Networks, setting out four voltage reduction at bulk supply principles to which we will commit points (BSPs), and static voltage Achieving our vision is important for to support local authorities in optimisation at HV/LV. wider sustainability as well as for developing LAEPs.1 customers. By enabling more efficient — Operations: we have improved We can now build on our experience use of assets and helping unlock sources coordination with the ESO through with further whole system innovations of both generation and demand-side the summer 2020 COVID-19 and broaden our view of the whole flexibility, we can minimise the need pandemic lockdown system- system beyond electricity networks and to build new infrastructure on our own balancing arrangements. We have into other sectors.
1. See: https://www.northernpowergrid.com/asset/0/document/6056.pdf. 2. See: https://odileeds.github.io/northern-powergrid/2020-DFES/.
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Building whole system plans
Our stakeholder engagement has — The need for sharing data and Driven by what we have heard shaped our vision. technical understanding (e.g. with from our stakeholders, there are local authorities to help develop four strategic objectives guiding We have engaged with a broad set LAEPs). our whole system planning. of stakeholders within the energy — The desire for a collective approach sector and across other sectors (heat, to explore solutions to regulatory These strategic objectives have shaped transport, water and industry), including and commercial barriers. our whole system plan for the next regulatory bodies, consumer groups, — That stakeholders have a wide range price control period. Guided by these and industry representatives, including of energy-related interests, many of objectives, in the next two sections we energy equipment manufacturers. See which are about energy use rather set out: annex 3.3, our detailed stakeholder than energy systems. Therefore engagement annex. initiatives that improve demand — the whole system approaches we and generation, customers’ lives or are taking across our business, to The key messages we heard from our finances are of more interest than ensure that our strategic objectives engagement include: initiatives that improve the network. are reflected in our day-to-day decisions; and We have put a plan together to respond — the whole system outcomes we will to these stakeholder needs. deliver through specific initiatives.
Our whole system strategy objectives
Drive whole system As increased use of our network facilitates decarbonisation, we will use whole system decarbonisation solutions to optimise carbon reduction and improve performance at an affordable price.
Unlock value for Customers will be able to realise value from their assets by actively engaging, customers providing services to the energy system and to each other, releasing whole energy system cost savings.
Create a network for We will set out the blueprint for a next-generation local energy network the next-generation that links up energy sources and vectors, energy system balancing in real time, to ensure a reliable and dependable energy service for customers.
Collaborate through Customers’ future needs will be met through cross-sector planning, both across the energy proactive whole system and with suppliers and developers system planning of technology, allowing customers to take advantage of new opportunities.
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Whole system thinking drives structures carrying multiple utilities), services. We will aim to ensure planning and decision making understand the changing needs of that the specification and design of across our business. other sectors and our impact on these services enables participants them, and improve resilience on to provide their flexibility into Our strategic objectives will ensure that our network (ref: annex 4.1 Climate transmission and distribution a whole system approach features in our resilience strategy). We will invest markets that efficiently coexist. operational decisions day-to-day and around £2m, including contributions that whole system thinking is central to collaborative projects. We will undertake more specific to all areas of our business. Below we — Using data and partnerships to whole system deliverables to describe some of the key approaches enhance support to vulnerable achieve four customer outcomes, that we are implementing across our customers. Targeted support generating value and enabling business to achieve this. through data sharing will make decarbonisation in collaboration priority services and support tools with other sectors. — A flexibility-first approach to asset available among trusted partners. strategy. In investing in our network Information on our enhanced service We have identified four specific to enable decarbonisation, we will offering, access to affordability customer outcomes that we will aim to take a flexibility-first approach. services and social indicator deliver in order to achieve our strategic This will help us optimise the value mapping tools will be made available objectives. Each of these outcomes of our own and our customers’ and shared to support the most will be delivered through a number assets. As explained in the Scenarios vulnerable within society, also of deliverables, such as targeted and Investment section, we will allowing for collaboration referrals innovation projects. invest £87m on flexibility-enabling and targeted support for hard-to- actions in 2023-28, to deliver £169m reach and seldom-heard customers. We plan to invest £16m to deliver these of benefits for customers in the See our Vulnerability strategy (4.11). initiatives, resulting in £253m of savings period (see DSO and Scenarios and — Continuous data exchange with the for customers over the next 10 years Investment). ESO. We will build on established (around £29m in 2023-28 and £224m in — Understanding and managing data- and information-sharing 2028-33). cross-sector interdependencies. processes to continue identifying We will collaborate with other and using opportunities for more Here we set out each of the four regional infrastructure operators efficient operation of the whole outcomes and provide examples of (e.g. gas network operators, system. We will implement near- some of our deliverables. A full list of water companies), together with real-time two-way data exchange our deliverables can be found in the the Environment Agency and with the ESO to enable efficient Whole System outcomes table overleaf, regional bodies such as local short-term market operation. By and further details can be found in the resilience forums, to build a better providing two-way visibility of our Whole System strategy.1 understanding of cross-sector actions to trigger flexibility, we interdependencies. We will work can ensure that our actions are together to formulate regional plans complementary. (see DSO Strategy) to mitigate the highest risks (both We will also continue to explore from and to our network such as alignment in the way that the DNOs flooding causing the failure of bridge and ESO implement new flexibility
Our plan recognises that the power distribution is only one part of our region’s energy systems, albeit a critical one to optimising customer value.
Patrick Erwin Policy and markets director
1. See: Annex 4.3 Whole Systems strategy.
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A progressive set of outcomes
Figure 1: Whole System customer outcomes Drive whole system whole Drive decarbonisation for value Unlock customers Create a network for generation next the system energy Collaborate with system whole proactive planning
Remove barriers for customers to use their equipment to support the whole energy system. To deliver this outcome we will identify barriers, such as informational gaps and coordination challenges, that limit the ability of customers to connect, invest, use their assets efficiently, or use the energy system efficiently. We will work with these customers to understand their needs and then develop and implement solutions accordingly. This will enable customers to benefit more from the efficient use of their own assets and the existing system, facilitating cost savings WS1 as well as quicker and cheaper decarbonisation. For example, a solar farm looking to connect to our network might require a costly connection based on its generation capacity in the summer, despite much lower generation in the winter. At the same time, a battery operator might be seeking a connection in the same area. If the two could coordinate and connect jointly, there could be significant synergies in the form of reduced utilisation of the network and lower connection costs. One of our whole system initiatives is designed to overcome this coordination challenge. We will invest £0.4m to collaborate with other network operators in our region to create an open register and a process that allows interested parties with complementary energy needs to find each other – ‘energy matchmaking’.
Ensure our customers’ future needs are met through cross-sector and cross-vector planning. We will work closely with energy industry parties and other stakeholders to ensure that network planning, as well as planning of wider investments such as storage and generation, is carried out as efficiently as possible from a whole system perspective.
For example, we will undertake annual workshops to ensure the widest range of WS2 stakeholder input (including heat networks, hydrogen and transport sector) is factored into forward plans, and collaborate to develop cross-vector energy storage technologies to allow energy optimisation between vectors.
We will also continue to participate in processes already in place with the ESO and other DNOs to promote coordinated network planning, e.g. around further developing FES, DFES and network development plans.
Develop the blueprint for the next-generation network by rolling out proven innovation. As society becomes more dependent on electricity, we will seek ways to maintain and improve reliability, availability, and efficiency throughout the seasons. Many of these innovative solutions will require coordination with other energy sector stakeholders, and/or may be more expensive than traditional solutions but can deliver net benefits when costs and benefits are assessed on a whole system basis.
For example, building on our ED1 Boston Spa energy efficiency trial (BEET) project,1 we will invest £8.1m to pilot voltage optimisation technology that uses smart meter data to safely reduce the supply voltage that consumers receive, and reduce their energy usage as a result. If successful, WS3 we will start deploying this technology more widely across our network. From a whole system perspective this will deliver £231.8m of net benefits over the next 10 years (at which time the roll- out will be complete)2 and could help customers save £20 p.a. on the average domestic energy bill (see Customer Value Propositions (CVP) section). Beyond this, these initiatives could deliver an estimated net benefit of £63m p.a.
We will also invest £7.4m to roll out microgrid technology to 30 of our most vulnerable low voltage networks on a fixed basis (see CVP section), and six mobile microgrid vans.3 This will deliver £9.8m whole system net benefits for our customers and wider society over the next 10 years,4 initially through the societal value attributed to the improved system resilience as experienced by customers, and increasingly through the support the microgrids provide to wider system security as the network loading increases as we approach net zero – see our Vulnerability strategy. Beyond this (out to 2050), this initiative is forecast to deliver an estimated net benefit of £19.5m.
Exchange knowledge with those specifying future low carbon technology (LCT) and low carbon use cases. We will work with partners beyond the energy system to foster whole system thinking in product and service design. If future products can be designed in a way that optimises their WS4 performance, reflects whole system needs, and minimises their impact on the electricity system, this will help contribute to low-cost decarbonisation.
For example, we will work with industrial and transport manufacturers and their trade bodies and standards bodies to contribute to the design and specification of future equipment.
1. In 2015-23 we will also have deployed this technology in three primary substations to manage energy efficiency. 2. £31.6m in 2023-28 and £200.2m in 2028-33 (assuming a five-year price control period). 3. In 2015-23 we will also have rolled out two microgrids on low voltage networks. 4. £0.7m societal benefits; £5.8m total net benefits in 2023-28, and £15.7m total net benefits in 2028-33 (assuming a five-year price control period). Northern Powergrid: our business plan for 2023-28 – 77 OUTPUTS EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
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Our business plan enablers are essential to delivering these four outcomes and achieving our whole system objectives:
— Innovation: as well as building — Data and Digitalisation: we will There is inherent uncertainty in how on recent successful innovation invest in our systems, as well as decarbonisation will unfold, with new projects, we will explore, test and sharing data and information to technologies and policy decisions challenge new ideas to enable whole facilitate cross-industry and emerging frequently. The optimal system decarbonisation through cross-sector collaboration. whole system solutions are, therefore, both incremental and large-scale — Workforce: we will train and recruit changing – both as new challenges innovation projects. colleagues to embed a whole system emerge, and as technological mindset in our business culture. developments present opportunities for new solutions.
Collaboration is key to unlocking whole system benefits
Ongoing collaboration with other Throughout the next five years we will forward mainly through our interactions industry parties is, therefore, key to continue to engage with stakeholders with stakeholders on improving ensuring that we are unlocking whole and refine our whole system approach. DFES. Please refer to the Scenarios system benefits as new challenges and Investment section for further and opportunities arise. For example, We will continue to track factors that discussion of how we will manage this engaging regularly with energy could impact our assumptions about uncertainty. suppliers will mean that we are aware of the possible energy pathways and developments around time of use tariffs the implications for whole system and can plan our network accordingly. decarbonisation. We will take this
We plan to use smart meter data to optimise voltage improving the energy efficiency of customers’ equipment, with a view to saving each customer up to £20 p.a. on their electricity bill.
Mark Callum Smartgrid development engineer
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Output measure/1 Customer indicative input ED1 ED1 ED2 outcomes Benefits Deliverables measure2 to date forecast target
WS1 Remove barriers for — Customers will be WS1.1) Undertake an NIA-funded innovation able to maximise project informed by inter-seasonal energy customers to use value from requirements (ref WS2.3) to determine the Date of NIA their equipment to their assets by system impact of commercial options for inter- project learnings - - End of support the whole providing services seasonal storage. This will provide commercial publication period energy system, to the energy and technical energy policy insights to drive this launching an open system or to each future market register and energy other matchmaking — Lower whole WS1.2) Collaborate with other network process that system costs operators in our region to create an open register and a process that allows interested enables parties — Cheaper parties with complementary energy needs to to work together connections costs find each other – ‘energy matchmaking’. We Energy to reduce costs — Quicker will facilitate the initial engagement between matchmaking - - 2025/26 and deliver whole connections parties, who can then work together to produce scheme go-live system benefits whole system benefits, such as reduced utilisation of the network, reduced probability of constraints and greater value that is possible through enhanced coordination
WS2 — Quicker, cheaper WS2.1) Undertake annual workshops to ensure Annual Ensure our decarbonisation the widest range of stakeholder input (including workshops for customers’ future heat networks, hydrogen and transport sector) heat networks, needs are met — Increased service - - ✓ performance is factored into forward plans, and that our DFES hydrogen through cross- becomes the focal point for regional ‘energy’ and transport sector and cross- — Reduction in costs scenarios sectors vector planning, including annual WS2.2) Develop new network planning tools to workshops with improve our modelling of the impact of flexibility a wide range of and mobile loads, and therefore improve our stakeholders network planning process. Work with other such as the heat, DNOs and build on previous learning hydrogen and transport sectors WS2.3) Undertake an NIA-funded innovation to develop our project to develop techniques to understand regional DFES2 the differing summer and winter loads as Date of NIA electric heat develops and generation becomes project learnings - - End of dominated by renewables, and the requirement publication period for summer-harvested energy to be stored for winter use3
WS2.4) Building on Northern Gas Network’s (NGN) Winlaton hydrogen project and our joint InTEGReL projects, we will collaborate No. cross-vector with Northern Gas Network and other partners innovation to develop cross-vector energy storage projects across 0 0 ≥2 technologies to allow energy optimisation the period between vectors and provide additional value to our customers offering these services
WS3 — £243.2m of WS3.1) Undertake the first-stage deployment Develop the net benefits of the blueprint for the next-generation No. fixed blueprint for the from voltage energy system to enhance system resilience, microgrids next-generation optimisation over particularly for remote customers, by rolling out rolled out on 0 2 30 network by 10 years: £20 bill innovative microgrid technology in some of the low voltage (LV) rolling out savings p.a. most remote parts of our network (CVP) networks proven microgrid — 424,000 tCO2e technology savings over 10 and deploying years network voltage — £9.8m of net optimisation to benefits from microgrids over WS3.2) Optimise network voltage to improve No. large- deliver energy energy efficiency, delivering a reduction in efficiency savings 10 years scale sites customer energy bills and carbon emissions with voltage for customers — More resilient by dynamically managing voltage on our LV optimisation to 0 3 196 supplies network (CVP) manage energy — Dependable efficiency energy as the no. alternative energy sources reduces (even during storms)
WS4 — Lower overall WS4.1) Collaborate with organisations Facilitate costs and supplying equipment and solutions to industrial No. low carbon knowledge optimised and commercial (I&C) customers and their equipment exchanges with performance due trade bodies. This will ensure that standards for supplier 1 5 ≥50 organisations to future energy future I&C customer equipment and network consultations in specifying future use concepts and infrastructure are specified for optimised period LCTs and low designs being performance and costs carbon use cases developed with whole energy WS4.2) Collaborate with organisations systems in mind supplying equipment and solutions to domestic customers for use ‘behind the meter’ and their associated trade bodies. This will ensure that standards for network optimisation and home optimisation complement each other, and that system planning keeps pace with changing customer demands
1. Numbers shown may be subject to rounding. See annex 1.4 key measures for profiled targets. Innovation | Data and Digitalisation | Workforce Resilience 2. Cross-reference DSO Strategy annex 4.2: local area energy planning. 3. Cross-reference enabling inter-seasonal storage WS1.1.
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Decarbonisation – Enabling Whole System Solutions
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we
engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 54 dedicated events Stakeholders engaged: 4,762 total – 1,300 unique interactions Wave 1 findings Details Total energy transition costs are — Stakeholders wanted to understand and minimise the cost impacts from different important to aid effective future investments needed to facilitate decarbonisation (including the uptake of LCTs, delivery of decision making infrastructure and bill impacts from switching away from cheaper fossil fuels) Innovation will be key for delivering — Innovation continued to be a key area of stakeholder interest. Innovators wanted to decarbonisation within the agreed work closely with us, be part of our network innovation projects and to test their time frames proposed solutions — We continuously heard there was appetite to do more beyond traditional investment planning Collaboration was recognised as a and to demonstrate a more joined-up approach across the industries. Stakeholders urged critical enabler for achieving net zero collaboration with manufacturers of smart products, EVs and autonomous vehicles to ensure design of their products is inclusive and conducive to future needs of customers Wave 2 Events: 135 total – 75 dedicated events Stakeholders engaged: 15,475 total – 10,765 unique interactions Wave 2 options A B C D E
Options were Delivering the same Enhanced Net zero by 2050 Net zero by Net zero by 2050 costed to help service but at a performance for driven by largely 2050 or earlier or earlier - high customers lower cost (not on the same spend network solutions, with increased customer flexibility understand the track for net zero assuming only low customer flexibility, means lower benefits and emissions by 2050) (Not on track for levels of customer reducing network reinforcement potential bill impact net zero by 2050) flexibility are reinforcement costs. Significant of the service levels (Not on track for net available costs, with investment to proposed zero by 2050) investment brought enable accelerated forward to go pathways further, faster
Customer ambition A significant majority of customers supported us pursuing an accelerated decarbonisation pathway, reaching net and broader zero by 2050 at the latest. Stakeholders’ ambitions were somewhat tempered by the need to balance the pace of findings decarbonisation with the associated bill impact and the need for the net zero transition to be fair. Overall, 75% of our customers supported option C – ‘Major upgrade’ to option E – ‘A new world’; and 88% of respondents in the ‘have your say’ survey believed we should seek to achieve net zero before 2050
Wave 3 Events: 91 total – 33 dedicated events Stakeholders engaged: 32,500 total – 2,154 unique interactions Wave 3 tested our draft proposals and customer value propositions, further exploring the opportunities for coordination and collaboration to create an efficient and effective energy system, minimise customer disruption, and support the development of local area energy plans
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Whole energy system collaboration and planning is a priority — We will work with customers to WS1 Link Stakeholders recognised the decarbonisation challenge and understand how to enable their the need for the whole energy sector, including customers, participation in and anticipated benefits to work together, to address the total costs, benefit the local from the future energy system communities, and ensure a sustainable energy supply
— Stakeholders expect cross-vector and cross-sector — We will collaborate with energy WS2 Link coordination sector partners to develop shared Stakeholders expect utility companies (particularly, whole system solutions and common distribution, transmission, and gas) to work together and scenarios with other organisations, to ensure that future energy needs are both understood and met in a cost-effective and well-organised manner
— Innovation is a priority in shaping the development of a future — We will continue to identify WS1 Link network opportunities to find innovative WS2 Technical experts believed that the roll-out of smart, solutions in developing a resilient future WS3 community-level energy solutions will accelerate the net zero network transition and improve energy efficiency
— Collaborating with early adopters, LCT experts and — We will collaborate with early adopters WS4 Link community energy groups will help shape an effective energy and LCT supply chain stakeholders to transition gather practice and learning to actively Stakeholders thought collaborative innovation was important, shape the future network and services especially in the context of rapid decarbonisation, widespread for customers uptake of LCTs, and changing future energy uses
— Customers found this area generally — Enabling Whole System Solutions acceptability score: 69% less relevant to their own needs and - Link more difficult to navigate
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Environmental Action Plan
Environmental Action Plan
ENVIRONMENTAL We will proactively seek to protect the environment ACTION PLAN through our investments and operations, working collaboratively with partners and our supply chain to deliver innovative, cost-effective solutions that reduce or eliminate environmental risk exposure. In doing so we will minimise carbon emissions, pollution and waste and, where possible, seek to enhance the local environments in which we operate.
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We play a key role in facilitating society expect high levels of ambition when it to deliver a 47 per cent reduction by to decarbonise and we are preparing comes to managing the impact of our the end of 2015-23 against our 10 per the network to enable all credible network and asset base; both protecting cent target;2 pathways on the transition to net zero. the environment and reducing our — Similarly, SF₆ losses are 23 per cent Whilst supporting our region on this business carbon footprint (BCF). lower since the start of the current journey we will take action to reduce Environmental protection was in the price control period; the environmental impact of our own top quartile of stakeholder priorities; — We have reduced oil and fluid lost network operations. specifically, we have heard: to the ground by 47 per cent to date through investment in our network Environmental protection is — we should lead by example in and deployment of innovative important to our stakeholders. reducing our own emissions; solutions, surpassing our 2015-23 — reducing SF₆ emissions and oil leaks target of 15 per cent;3 and The nature of our business means is important;1 — By the end of 2023 we will have we have a responsibility to protect — we should reduce our BCF but via removed 120km of overhead lines the environment and minimise our the most cost-effective means; in Areas of Outstanding Natural impact where we can. This presents — biodiversity initiatives should be Beauty (AONB). opportunities to utilise innovation increased in terms of scope and to drive change and overcome scale; and challenges. Societal shifts will deliver an — visual amenity is valuable but not improvement in carbon emissions driven essential. How much by the overall carbon intensity factor it will cost falling, for example reducing building Our plans build on strong and substation energy emissions and performance in the 2015-23 period. 2023-28 losses. In support of this, legislation is expenditure £25.7m forcing progressive societal changes During the current price control (annual) 4% of totex towards the net zero target including the period we have performed strongly on ban on sale of new fossil fuel vehicles by environmental measures compared to versus 2035. We have an obligation to protect our own targets and we benchmark well 2015-23 -£2.2m the environment, support society’s path compared to other networks. -7.9% to net zero and minimise long-term costs to consumers. — Our BCF has so far in the period One of our 9 plan areas, reduced by 48 per cent, meaning taken together, delivering Our stakeholders have told us that they we have achieved our stretch target more for less.
1. Sulfur haxafluoride, a greenhouse gas. 2. Including contractors and excluding losses, relative to our current business plan baseline (59,700 tCO2e). 3. Relative to our current business plan baseline (53,245l).
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Environmental Action Plan
An ambitious set of outputs
Our Environmental Action Plan Reducing our internal BCF is a By 2028 we will target a 20 per cent (EAP) delivers an ambitious key priority and our plan will set reduction in controllable internal set of outputs at a lower cost us on a path to be carbon net BCF by: to customers through the neutral by 2040. use of innovative technologies — reducing building and substation and solutions. While we play a vital role in supporting emissions by 20 per cent. We will society to decarbonise, we must begin to introduce renewable The total cost of our plan is £25.7m also work to decarbonise our own generation onto our property estate, p.a., which is £2.2m (7.9 per cent) lower operations and reduce our greenhouse optimising the most cost efficient than we currently spend each year. gas emissions. We have set ambitious solutions, and we will introduce For this expenditure we will achieve targets to reduce our internal BCF BREEAM2 initiatives to make our significant output improvements while delivering value for money for sites more sustainable; while also accommodating £8.2m p.a. stakeholders. Our plan is carefully — increasing the number of ULEVs and of unavoidable costs relating to the calibrated to ensure that we make ZEVs on our fleet to 40 per cent and removal of polychlorinated biphenyls strong progress while ensuring efficient developing the required charging (PCBs) – 32 per cent of the expenditure costs for customers that will come from infrastructure across our property in our EAP. We achieve these outcomes future developments in technology. portfolio; efficiently by harnessing innovative — leveraging adjustments to our solutions, most notably perfluorocarbon Our stakeholders showed strong operations made during the tracer (PFT)1 technology, allowing us support for an ambitious plan that pandemic to support reduced to generate a saving of £8.2m p.a. in achieved internal carbon net neutral business mileage; and cable replacement while achieving operations by 2040. This puts us ahead — reducing SF₆ losses by 15 per cent comparable fluid loss outcomes. of the government’s commitment to through targeted asset replacement. be net zero by 2050 and represents a trajectory that aligns with the Building and energy substation use government’s interim commitment accounts for nearly 50 per cent of to reduce emissions by 78 per cent our total controllable internal BCF.3 from 1990 levels by 2035. Our plan During 2023-28 we will introduce LCTs, balances ambition with long-term costs, including renewable generation across taking measured but progressive steps our properties, with a view to matching between 2023 and 2028, while allowing generation with our own consumption. low carbon technologies (LCTs) such as ultra-low emission vehicle (ULEV) and zero emission vehicle (ZEV) technology, charging infrastructure and renewable generation to develop and further reduce in cost, ensuring long-term value for money for customers.
Figure 1: make-up of our operational fleet
Commercially viable Fleet numbers ULEV fleet Type ULEVs available? (2021) numbers (2028)
Light small vans ✓ 19 19
Car ✓ 13 13
Heavy goods vehicle ✕ 27 0
Light commercial vehicles ✓ 743 316
Specialist plant ✕ 38 0
Total 840 348
41%
1. Perfluorocarbon tracers: an additive put into fluid-filled cables that can detect leaks by ‘sniffing’ the specific chemical structure of the additive in the ground above the leak, locating leakage from above the ground to target repair. 2. Building Research Establishment Environmental Assessment Method (BREEAM) is a sustainability assessment method that is used to masterplan projects, infrastructure and buildings. 3. In 2020-21.
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Environmental Action Plan
Reducing our business carbon footprint
We have already begun introducing COVID-19 pandemic, leverage We do not plan to offset our carbon ULEVs/ZEVs onto our fleet and we technology and promote more flexible emissions at this stage in our path to plan to scale this up with the addition working, as shown in our Workforce net zero operations. Our stakeholders of a further 265 vehicles to 40 per cent Resilience strategy to target a 15 per have told us that they would rather we ULEV/ZEVs by the end of 2028. This cent reduction. focussed on reducing our own physical will support us in reducing the impact carbon emissions than offsetting. An of our operational transport emissions. SF₆ is 22,800 times more potent than extra £1 of investment in our network We considered options for various levels CO₂ and is a key component of grid to enable decarbonisation offers of penetrations of ULEVs and ZEVs to infrastructure with limited viable much better value to customers than our fleet. Our 40 per cent target aligns alternatives currently available.1 Our incremental spend on carbon offsetting with our fleet replacement cycle (five to SF₆ strategy targets a 15 per cent for our own emissions. seven years), balances costs of charging reduction in SF₆ through targeted asset infrastructure and provides time for the replacement and continued use of We will enhance our work availability of public charge points to our thermal imaging Forward Looking with suppliers to promote increase to ensure reliable operation of InfraRed (FLIR) cameras to pinpoint environmental stewardship. our fleet (see our CBA-46, ULEVs/ZEVs and target leaks on the network. on Fleet). We will look for opportunities We have begun trialling the use of Our contractor emissions account to go further in the next price non-SF₆ alternatives on our network as for about half of our overall carbon control period where technological we innovate to tackle fugitive emissions footprint (excluding losses).2 Without developments, infrastructure and with a view to adopting alternatives proactively working with our suppliers funding allows to make this a beneficial when viable and cost efficient to do to reduce their emissions there is a risk proposition for our customers. so. For more details, see our SF₆ this won’t happen fast enough with our strategy in our Environmental Action many are at very different stages of To address business transport Plan (annex 4.4). their own carbon reduction transitions. emissions, which are made up of We will work with our supply chain to employees travelling to site or for reduce their carbon emissions while business meetings, we will retain being mindful of associated costs of benefits from the adjustments new technology requirements that made to our business during the may hinder their ability to operate
Figure 2: components of our business carbon footprint (BCF) Figure 3: our path to internal carbon net neutral operations
Internal BCF 78% reduction by Net zero: Buildings energy usage 11% 2035 (relative to by 2040 Business transport 2015); in line with assuming the government’s Operational transport 11% low level target (relative to offsetting Fugitive emissions 1990) (2,575 tCO2e) 50% Emissions (TCO2e) 30,000 28%
Overall BCF 20,000 Internal BCF Contractors Losses 3% 3% 10,000
54% 46% 0 2015 2040
94% DNO DNO DNO DNO building business ops. fugitive energy transport transport emissions usage
1. Defra figure used as this is what we report via the reduction and recycling plan (RRP) process, noting that the strictly standardised mean difference (SSMD) states SF₆ is 23,500 times more potent than CO₂. 2. In 2020-21.
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Environmental Action Plan
efficiently. We will target 90 per cent of that the majority of our existing network Our losses approach is to optimise our suppliers (based on contract value) will continue to operate well into the whole system losses while facilitating to be compliant with our Responsible future1 losses will generally increase.2 net zero: Procurement Charter – which will We will, therefore, only be in a position require them to report annually on their to directly influence a small percentage 1. Optimise Fully integrating losses actual and forecast emissions and to of the losses on our network, primarily into asset management decision monitor their progress towards net zero. when we make changes to our network making and planning processes See Openness and Transparency. and install new equipment. means that management of losses does not always mean minimising The increased levels of network Nonetheless, we recognise there is a losses, but instead, optimising investment in our plan required to significant opportunity for influencing losses. support decarbonisation in our regions customers and their energy usage (and (about 70 per cent higher than now) will therefore, losses). We will work closely 2. Whole System A whole system inevitably bring with it an increase in with our customers and stakeholders approach is imperative, where activity levels from our supply chain and as part of our commitment to provide increasing distribution network thus supplier emissions. We consulted support to communities to become losses to obtain a reduction in with stakeholders regarding bringing more energy efficient. See communities transmission losses and wider contractor emissions in line with our customer outcomes CO3.1 and CO3.2. carbon reduction is a positive own. However, they were not supported outcome. through our ‘willingness to pay’ testing. Our track record illustrates our We will report on our supplier emissions commitment to managing losses. We 3. Facilitating net zero Through our annually as we embed standards and, have undertaken a range of innovation transition to Distribution System as technology advances, we expect to projects that have sought to better Operation (DSO), we are committed be able to support further accelerated understand losses, and have explored to a flexibility-first approach. The decarbonisation of our supply chain in new technologies (such as very low use of customer flexibility and the future. loss amorphous core transformers) that smart solutions will often lead to an could produce a step change in losses increase in network losses. From a We will optimise whole system performance. We have undertaken whole system perspective this is the losses while facilitating net zero. actions that are improving losses right outcome as this in turn unlocks performance now, and will continue to wider decarbonisation at the lowest Losses are simply the difference do so in the future; such as the use of cost to customers. In turn, the between the amount of energy entering lower resistance cables at low voltage carbon impact of network losses will the network and the amount of energy (LV) and 11kV, and the implementation diminish over time, as we facilitate drawn out of it. No system can be of static voltage optimisation to reduce increasing volumes of low carbon 100 per cent efficient and losses are energy use behind the meter. We will generation required for net zero. unavoidable in distributing electricity. be upgrading this to dynamic voltage The main type of losses are technical optimisation during the 2023-28 as part Our plan to manage losses is detailed in losses resulting in electricity converted of our Whole System Solutions plan. our Losses Strategy in annex 4.4. These into heat on the network. See plan section for more details. actions range from the deployment of low-loss technologies to enhanced For Northern Powergrid, the magnitude use of data for improved planning and of losses equates to roughly 2TWh per operation of the system. As part of year (94 per cent of our total carbon the significant decarbonisation footprint). When expressed as a investment in transformers, and our percentage of the total energy entering environmental investment to remove the network, losses are approximately PCB-contaminated transformers; six per cent. This energy that is ‘lost’ we will be adopting amorphous core needs to be generated, and, therefore, technology where it can provide a has a financial and carbon impact. We net benefit to our customers, which is work to ensure losses are as low as roughly 80 per cent of all units.3 reasonably practicable. We will report on our progress in Losses are mainly determined by the delivering our losses strategy annually. energy requirements of our customers where the higher the loading, the higher the losses. Decarbonisation will result in a significant increase in network loading, so, when taking into account
1 Consisting of roughly 63,000 substations and over 60,000 miles of circuit. 2 ENA working group project: Impact of Low Carbon Transition – Technical Losses. 3 Subject to final review of learnings from our amorphous transformer (AMT) trial.
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Environmental Action Plan
We are adopting science-based Figure 4: Scope 1 and 2 (excluding losses) emissions against SBTs targets to measure our emissions in line with net zero. 16,000 tCO2e Science-based targets (SBT) provide a clearly-defined pathway for companies to reduce tCO₂e emissions, helping prevent the impacts of climate change and future-proof business growth. 8,000 Targets are considered ‘science- based’ if they are in line with the goals of the Paris Agreement – limiting global warming to well below 2°C and pursuing efforts to limit warming to 1.5°C. A carbon budget is calculated 0 that identifies levels of emissions 2019-20 2034-35 consistent with limiting global warming temperatures. BCF scope 2 BCF scope 1 SBT Scopes 1 and 2 To meet the carbon budget, our (ex losses) target (2020 base) emissions need to reduce annually by 4.2 per cent relative to our baseline of 2019-2011. Our SBT (covering Scopes Figure 5: Scope 1 and 2 emissions SBTs (including losses) showing range of 1 and 2) is to reduce our emissions by future pathways for losses 63 per cent by 2035, at which point we would emit 208,470 tCO2e p.a. 600,000 tCO2e Our plan is set to achieve our SBTs. They have been developed with the support of an external consultant and will be verified by the science-based target 1 initiative (SBTi). 300,000
Projected emissions within Scope 2 are dominated by losses. As losses emissions are not directly within our control and are heavily dependent on 0 the rate at which the grid decarbonises, there is significant variability in the 2019-20 2034-35 future projections. Figures 4 and 5 show our forecast emissions reductions Future planning scenario range SBT against our SBTs excluding and including losses.2
We will report on our BCF reduction We will assess and report on accountability in our operations and and progress towards our SBT based embodied carbon in new projects. to collaborate with suppliers to deliver a common methodology. Within our downstream benefits and transparency. reporting we will include progress on We are developing a model that will We will use the data to support our Scope 3 emissions.3 allow us to calculate a baseline for investment decisions based on the embodied carbon and then measure the whole life carbon cost associated with impact of new projects. The method has work on our network. been developed based on industry best practice sources and methodologies. This gives an opportunity to give greater
1. We are in the process of submitting our science-based targets to the SBTi to be verified. 2. Scope 2 emissions for distribution losses. 3. Scope 3 emissions are all indirect upstream and downstream emissions that occur in the value chain of the reporting company, excluding indirect emissions associated with power generation (Scope 2).
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Environmental Action Plan
Reducing the environmental impact of network activity
Oil and fluid loss from our network 70 per cent and increase PFT injection Recent legislation requires poses an environmental threat that rates by 400 per cent. We will introduce decontamination or disposal of we must continue to reduce. self-healing cable fluid additive to our equipment containing PCBs from network subject to successful trials and our network by 2025. Reducing fluid lost to ground is a adjust PFT investment accordingly. priority for our stakeholders and an area Polychlorinated biphenyls (PCBs)3 where we will continue to have a strong This blended approach delivers output could potentially exist in all ground- focus. By maintaining and managing performance for 2023-28 equivalent and pole-mounted transformer oil if our fluid-filled cable (FFC) network we to that targeted for 2015-23 while the transformers were manufactured reduce fluid leaks to ground preventing delivering an annual net cost saving prior to 1987. New legislation requires environmental damage and minimising of £8.2m. removal of all PCB-contaminated oil risks of cable failures. from our network by the end of 2025 due to its high levels of toxicity. We have significantly outperformed our current plan in this area. By 2023 we By testing our ground-mounted will have replaced over 220km of cable Figure 6: investment options for transformer population we have compared to our original plan of 134km. fluid-filled cables identified 461 transformers confirmed to This puts us in a strong position, despite contain PCB oil, which will be addressed having one of the largest FFC networks by either replacing the oil or the unit. in the country. 400 Km Pole-mounted transformers, however, are sealed units making testing for PCBs Our investment options to minimise fluid currently impossible. To overcome loss during 2023-28 include: 300 this, we have been working with the ED2: 267 Energy Networks Association (ENA), — replacement of the FFC with new our industry trade body, to develop a ED2: 40 solid cables containing no fluid; statistical model based on historical — refurbishment of the FFC; 200 data to support network operators in — injection of PFT directly into the estimating the number of pole-mounted FFC; and1 ED1: 224 transformers that might contain PCB oil. 2 — injection of self-healing cable fluid. 100 We currently have a total of 16,925 Replacement of the fluid-filled cables ED1: 109 pole-mounted transformers that were has traditionally been the main method manufactured prior to 1987 that could of reducing fluid loss. While this 0 potentially contain PCBs. Through the FFC – replacement FFC – dosing (PFT) provides a long-term solution to the risk statistical model we estimate that the posed by FFC it is costly. Refurbishment Investment approach number of pole-mounted transformers often does not provide good value for we need to address is over 8,400 – a money to our customers as the costs significant challenge. We will be taking associated with refurbishing a FFC the opportunity to reduce PCB risk in circuit can be almost as much as cable a way that maximises synergies and replacement. PFT dosing and tracing supports decarbonisation including by is now a widely available and has installing amorphous core transformers become a proven technology, which to reduce our energy losses whilst is significantly less expensive than cable sizing our assets for future forecast load replacement and allows us to detect growth in our investment scenarios. Through consultation with our leaks faster. Self-healing cable fluid stakeholders we have set is currently undergoing live trials on Given the large volumes involved, ambitious targets to drive our our network and the technology, PCBs are the largest cost driver within environmental performance. although promising, is very much our environmental plans with an still in its infancy. unavoidable annual cost of £8.2m p.a. However this will be almost entirely Our target to reduce our fluid loss by 15 offset by the savings we have planned per cent leverages the significant asset through our blended FFC strategy. replacement programme completed in the current price control period, to maintain focus on fluid loss reduction Gordon Walker but with much lower investment levels Environmental than we’ve seen to date. Our plan will manager reduce cable replacement annually by
1. The length of circuits dosed with perfluorocarbon tracers. Perfluorocarbon (PFT) tracers are an additive put into fluid-filled cables that can detect leaks by ‘sniffing’ the specific chemical structure of the additive in the ground above the leak, locating leakage from above the ground to target repair. 2. Self-healing cable fluid solidifies upon contact with air and can stop very small leaks from becoming larger. 3. PCBs are synthetic organic chemicals that were manufactured for use in various industrial and commercial applications – including oil in electrical transformers, plasticisers in paints, plastics and rubber products – because of their non-flammability, chemical stability, high boiling point and electrical insulation properties.
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Environmental Action Plan
Managing our wider environmental impact
We will manage our wider Noise and other effects from our Our EAP supports our environmental impact and take activities such as dust, smoke, odour long-term ambition to minimise opportunities to bring about and disruption caused by digging our environmental impact positive benefits. up roads can be a nuisance to the while ensuring value for money communities we serve. We will continue for our customers. Waste management is imperative when to ensure that we comply with noise considering the protection of our wider and statutory nuisance legislation and Our EAP carefully balances ambitious environment. Our plan will set us on a respond swiftly to all complaints to output targets with affordability for our path to achieve zero waste to landfill by reduce, minimise or eliminate noise customers. By the end of the 2023-28 2035. We will aim to divert 90 per cent from our equipment. Our deployment period we will be well positioned of waste from all of our operations by of SilentPower battery vehicles will for net zero operations by 2040. We 2028, managing the greater quantity assist in this area. will have significantly expanded our of waste generated from the additional environmental management standards network activity required to deliver Within our region we have four National within our supply chain, achieved our overall investment plans and Parks and five AONBs. By 2023 we double-digit reductions in pollution in decarbonisation objectives. Additionally will have put underground 120km of our local environments and delivered on we will target a recycling or reuse rate overhead lines in these areas. Our legislative obligations for PCBs, all while of 85 per cent of total materials by 2028. stakeholder engagement highlighted reducing total costs to customers. an appetite for us to continue this We have an opportunity to enrich local programme and we pride ourselves We keep the environmental impact habitats through our activities. Our plan on being industry leaders in this area. of our network and operations is set to deliver biodiversity initiatives to We will continue this programme – at under continual review. promote natural habitats and increase the same run-rate, with up to 10 per the variety and variability of species cent outside of designated areas – to Our ISO14001 accredited environmental and ecosystems at 200 of our major improve the visual amenity in our region. management system (EMS) sites. This relatively low cost initiative provides a robust framework against (£0.1m p.a.) carried support from our which we continually assess our stakeholders and includes working with environmental impact, performance partners such as Natural England and against our environmental plans and engaging our local communities. We associated risks and opportunities. will also monitor our impact from new A summary of these risks, challenges connection and network projects to and opportunities is set out in our assess our impact on ecosystems. Environmental Action Plan (annex 4.4).
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Environmental Action Plan
Customer Output measure/1 ED1 ED1 ED2 outcomes Benefits Deliverables indicative input measure to date forecast target
EP1 Reduce — Reduction EP1.1) Install renewable energy at Controllable internal BCF 14,722 14,300 11,430 in carbon 50 sites, remaining receptive to (tCO2e) controllable emissions technological advances (excluding losses) internal BCF by 20% keeping us — Improved air Science-based target in line with the quality Scope 1 and 2 emissions 12,866 11,740 8,920 government’s — Contribution to EP1.2) Adopt a verified science-based (excluding losses) (tCO2e) 2035 target and wider climate target to reduce Scope 1 and 2 emissions change agenda in line with net zero (4.2% annual Science-based target on a path to reduction to 2035, achieving a 21% Scope 1 and 2 emissions 539,775 492,450 374,130 being a carbon- reduction in emissions over 2023-28) and (including losses) (tCO2e) neutral operation report on progress for Scope 3 emissions Report on Scope 3 BCF by 2040, and 2 ✓ ✓ ✓ introduce a annually (tCO2e)
science-based 3 Building and substation target to measure EP1.3) Implement BREEAM, gaining 7,312 6,480 5,520 accreditation at 10 sites energy use (tCO2e) our impact (ODI-F)
Operational transport 4,186 4,110 2,750 EP1.4) Increase ultra-low emission emissions (tCO2e) (ODI-F) vehicles (ULEVs/ZEVs) on fleet to 40% by 2028, reducing fleet fuel by 40% Business transport 1,558 2,560 2,160 emissions (tCO2e) (ODI-F) EP1.5) Reduce sulphur hexafluoride (SF6) losses by 15% including replacing SF6-filled equipment with a leak rate in SF6 losses (kg) 73.1 50.3 42.7 excess of 5kg over a four-year period
EP2 Efficiently — Reduction EP2.1) Develop and report on our losses in carbon strategy annually manage and emissions optimise EP2.2) Install super low-loss amorphous losses from our core transformers network4 EP2.3) Install low-loss (i.e. oversized) LV 1,582 2,240 1,400 and HV cables Circuit km
EP2.4) Improve the energy efficiency of - - 100% our substations No. substations assessed EP3 Promote — Reduction in EP3.1) EP3.1) Introduce a Responsible energy and fuel Procurement Charter achieving >90% % of suppliers compliant - - 90% environmental use compliance management in our supply chain, — Reduction in EP3.2) Introduce an embodied carbon achieving 90% waste to landfill model in 2023-24 for new projects, and compliance with monitor and report on our embodied our responsible carbon through appropriate channels procurement EP3.3) Publish an annual environmental charter5 report for our stakeholders covering the delivery of our 2023-28 EAP commitments (ODI-R) 28,055 27,300 23,200 EP4 Reduce oil lost to — Lower levels of EP4.1) Replace 40km of fluid-filled Oil/fluid loss (litres) pollution ground by 15% cables (FFC) to reduce fluid leaks FFC replaced (km) 176.5 224 .4 40 — Improved ecosystems and EP4.2) Dose >250km of FFC with PFT to FFC dosed with PFT (km) 81.9 109.2 267 biodiversity reduce fluid leaks6 EP4.3) Subject to successful trials, roll out self-healing cable solution EP4.4) Undertake bund replacement and refurbishment to minimise pollution sources EP5 Remove PCB- — Removal of Ground- 0 12 4498 contaminated hazardous PCB units mounted materials and EP5.1) Remove PCBs from equipment removed/ transformers equipment from risk 7 remediated our network Pole-mounted 0 4158 8,400 9 transformers EP6 Take proactive — Improved visual EP6.1) Improve visual amenity by amenity undergrounding 61km overhead lines Overhead lines removed 74.9 120.0 61.2 action to protect inside and outside designated areas (km) and enhance — Increase the the environment variety and EP6.2) Enrich local habitats through numbers of flora biodiversity initiatives to enhance No. sites with net in which and fauna 0 8 200 we operate conservation of our environment and biodiversity gain (ODI-F) delivering — Reduction in species waste to landfill over 60km of % of waste diverted from undergrounding 75% 80% 90% EP6.3) Increase the number of recycling landfill(ODI-F) to improve stations in our business visual amenity, % of total materials 75% 78% 85% biodiversity recycled (ODI-F) improvements EP6.4) Undertake site enhancements to at 200 sites and mitigate noise from our assets 90% of waste EP6.5) Publish an annual environmental No. noise pollution 28 39 33 diverted from interventions landfill report for our stakeholders covering the delivery of our 2023-28 EAP commitments (ODI-R)
1. Numbers shown may be subject to rounding. See annex 1.4 key measures for profiled targets. Innovation | Data and Digitalisation | Workforce Resilience 2. We will factor in increased activity levels in 2023-28 to deliver net zero investment when reporting on our performance in this area. 3. Building Research Establishment Environmental Assessment Method (BREEAM) is a sustainability assessment method that is used to master-plan projects, infrastructure and buildings. 4. Cross-reference Communities C03.2) Community energy advisors. 5. Cross-reference Openness and Transparency OT2) Governance and sustainability frameworks. 6. Perfluorocarbon tracers (PFT). 7. Polychlorinated biphenyl (PCB). 8. Volumes completed in 2015-23 as part of our reinforcement programme due to high levels of utilisation. Northern Powergrid: our business plan for 2023-28 – 88 9. Includes 5oo units delivered synergistically via reinforcement. EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY OUTPUTS
Environmental Action Plan
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 14 dedicated events Stakeholders engaged: 4,762 total – 721 unique interactions Wave 1 findings Details Collaboration with communities and — There was a desire from the community and external environmental bodies to receive industry experts will enable environmental more communication to reduce carbon footprint and support for our approach to action reducing air, noise and visual pollution Customers and stakeholders support a — There was support for development of a net-biodiversity agenda biodiversity focus Minimising our environmental impact is — Once made aware, customers are concerned about fluid leakages and SF₆ gas emissions important to customers and feel these should be addressed
Wave 2 Events: 135 total – 18 dedicated events Stakeholders engaged: 32,500 total – 14,861 unique interactions Wave 2 options A B C D E
Options were Net zero operations Net zero operations Net zero operations Net zero operations Net zero operations costed to help beyond 2050 by 2050 by 2045 by 2040 by 2035 customers understand the Continuing to reduce Expansion of our Improvements in oil Innovative self- Expansion of all benefits and our environmental environmental loss, visual amenity healing cables, environmental potential bill impact impact, focussing on programmes to and plastic use in reduce oil loss and programmes of the service levels visual amenity and include biodiversity our supply chain environmental proposed oil loss improvements improvements
Customer ambition Customers supported us reducing our environmental impact and felt we should “lead by example”. High levels and broader of ambition (‘A new world’ – Option E) was the most selected option for reducing our BCF and environmental findings impact. Stakeholders supported ambition in meeting our internal net zero target as soon as possible and sought an expansion of all environmental programmes. 62% of future customers supported investment to make the network greener and more sustainable, urging us to be mindful of the environmental impact of our operations. There was a clear push from the stakeholders to be mindful of the costs associated with environmental improvement
Wave 3 Events: 91 total – 8 dedicated events Stakeholders engaged: 15,475 total – 2,628 unique interactions With a mandate from customers to support initiatives to improve our business carbon footprint and environmental impact of the network, the focus for Wave 3 was to test customers’ views about expanding biodiversity initiatives around substations and innovation to reduce network losses
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Prepare for net zero with actions to reduce business carbon — We have defined targets to further EP1 Link footprint reduce our BCF, factoring in the Employees and customers believe we should reduce emissions government’s net zero targets and and set clear targets to reduce our BCF. Some customers were timeline split on their willingness to pay for us to reduce our own carbon footprint
— Support for managing electrical losses in support of — We will progress with the EP2 Link decarbonisation implementation of our losses strategy, The majority of customers agreed that we should adopt an identifying opportunities for further ambitious approach to optimising losses innovation
— Work actively with your supply chain to reduce their — We will continue to work proactively EP3 Link environmental impact with our supply chain to promote Customers suggested we should work with our contractors to environmental stewardship reduce waste, lower emissions and use sustainable packaging. However, they felt it was too expensive to bring them in line with our own targets. Government stakeholders suggested closer supply chain management for environmental protection efforts
— Manage and mitigate the environmental impact of operating — We will continue to manage and EP4 Link our network mitigate the environmental impact Customers recommended that we further reduce leakage from of our operations by committing to fluid-filled cables a further reduction in oil lost from underground cables
— Support for enhancing the wider environment and biodiversity — We are committed to enhancing our EP6 Link plans region’s environment, setting ambitious Stakeholders were supportive of investment in environmental undergrounding targets and enriching protection and want us to raise awareness about our efforts. biodiversity of our sites There was support for improvements in visual amenity by undergrounding cables and to increase the scope and scale of biodiversity programmes
— Overall acceptance was high with — EAP acceptability score: 74% vulnerable customers having the - Link highest levelsNorthern of acceptability Powergrid: ourat 78% business plan for 2023-28 – 89 OUTPUTS EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Maintaining a Safe and Resilient Network – Safety
OUTPUTS – MAINTAINING A SAFE AND RESILIENT NETWORK Safety
IMAGE
SAFETY RELIABILITY & AVAILABILITY
CLIMATE ASSET RESILIENCE RESILIENCE
How much it will cost PHYSICAL & CYBER SECURITY 2023-28 expenditure £3.0m (annual) 0.5% of totex We will be energy industry leaders in safety, keeping our versus colleagues and members of the public safe so that they can 2015-23 £0.0m return home safely at the end of the day. We will be proactive in 0.0% assessing and mitigating emerging safety risks, collaborate with One of our 9 plan areas, others and explore potential innovation and technologies that taken together, delivering more for less. offer opportunities to make our network and operations safer.
The safety of our customers and halve our accident rate, which has been (ISO)-accredited safety colleagues is paramount. We have underpinned by a record run of 690 management system and investing delivered an industry-leading safety consecutive days without a recordable in training programmes to equip our performance over the current plan lost-time accident. Our benchmarking managers and first-line supervisors period, and will continue to improve positions us as an industry leader with the skills to identify and resolve during 2023-28 by focussing on the on safety performance and we have at-risk behaviours. leading causes of injuries and reducing used this position and our learnings — We will also invest in wearable exposure to high-risk activities. since 2015 as the foundations for our technology solutions for front-line business plan. colleagues to provide improved We are committed to delivering a information to reduce risk and safe network and environment for Our 2023-28 plan has been built around manage fatigue. our colleagues and for those we the following objectives: — We will continue to engage with our serve across the region. customers and communities about — We will deliver an annual safety managing risk around our network We intend to continue our improvement performance that represents equipment and infrastructure, to during the next business plan period, our best-ever performance ensure the public remains safe. so that we can further reduce our from 2015-23. Sustaining this — Our contractors’ safety performance accident rates, lessen the severity of performance throughout the five- is a major priority. We will incidents, and reduce the impact of year period will enable us to halve enhance the effectiveness of our occupational ill health on our colleagues our accident rate again by 2028. collaboration with contractors to and contractors. — Our intention is to remain as deliver a significant improvement in a leading safety performer by their safety performance. We are on track to exceed the maintaining our International commitment we made for 2015-23 to Organization for Standardization
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Maintaining a Safe and Resilient Network – Safety
Continuously improving our safety performance
We will continue to prioritise programmes, but their accident rate is Colleague Contractor the health and wellbeing of nearly three times that of ours. While safety safety our colleagues and invest in a our safety performance has improved, technology-supported approach the safety performance of our that enables us to better monitor contractors has remained relatively flat. and ensure positive impact in this area. We intend to enable our contractors to achieve this ambition and while Colleague Public To support our ambitions to further we recognise this will take time to health and safety improve our colleagues’ mental fully deliver we will set ourselves wellbeing and physical health and wellbeing on the right trajectory by aiming to we will invest in an independently halve their current accident rate by verified, ISO-accredited health and 2028. To achieve this we will enhance We will deliver an enhanced package of wellbeing programme (ISO45003). collaboration with our contractors so outputs investing £3.0m each year, or The health and wellbeing programme that we will focus on reducing exposure £15.0m over the five-year period. will take our stakeholders’ feedback to high-risk activities and learning into account – with particular focus from incidents. We will also align our Culture and accreditation will on using technology to monitor and respective safety management systems underpin our efforts. prevent health risks, and reducing the and focus on the delivery of safety impact of fatigue in our workforce. We improvement plans. A key factor in maintaining a will continue to effectively manage leading position in colleague safety working hours, limiting the maximum Ambitious safety awareness performance will be the ongoing consecutive hours worked to 16 hours, programmes for children and delivery of an improved safety culture including on-call periods. minimising inadvertent contact that focuses on the leading causes with overhead lines in at-risk of injuries, and reduces exposure to We recognise that supporting sectors will help keep the people high risk activities. We have held an colleagues’ health and wellbeing will we serve safe. externally verified accreditation for our become ever more important as the safety management system since 2004, impact of the COVID-19 pandemic Public safety is important to upgrading that accreditation to the changes working circumstances. Our stakeholders, with safety awareness ISO45001 standard during 2015-23. health and wellbeing programme will training for school-age children being We will maintain that accreditation include initiatives to further support the highlighted as one of our highest safety throughout 2023-28 ensuring that our mental health of our colleagues. priorities. Stakeholders asked that safety management system underpins we set an ambitious target to reach the improvement in performance. Our contractors’ safety more than 55,000 school-aged children performance is not at the same each year through our education Investing in the training we provide level as ours and we want to programmes, which we will aim to our colleagues will continue to be a support them to improve their achieve through a combination of priority. We will invest in safety training performance. online training packages, face-to-face programmes for our first-line managers training and collaboration with other and supervisors that will equip them Throughout the extensive engagement infrastructure providers in our region. with the necessary skills to identify and we have undertaken, stakeholders have resolve at-risk behaviours and actions. told us that when it comes to safety they We will continue to invest in driver expect our contractors to perform to training to further reduce the number of the same level as us. Our contractors preventable vehicle accidents by 2028. play a key role in delivering our work As part of this commitment we will be sponsoring 250 colleagues to undertake the IAM RoadSmart advanced driver Figure 1: our Occupational Safety and Health Act (OSHA) recordable accident accreditation. rate, rolling five-year average
Our stakeholders highlighted that they 0.50 OSHA (rate) would like to see our fleet vehicles equipped with the latest safety 0.40 technology to improve our driving ED1 actual safety performance and reduce 0.30 ED1 forecast vehicle accidents. As a result we will be equipping our fleet vehicles with collision avoidance and lane-departure 0.20 ED2 plan warning technology as standard. Also, we will invest in a new vehicle 0.10 telematics system that will enable us to benefit from significant improvements and developments in the technology 0 since 2015 when our current telematics 14-15 19-20 24-25 27-28 system was installed.
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Maintaining a Safe and Resilient Network – Safety
Rural stakeholders wanted to see navigation systems of agricultural which could be used to support our a significant investment in safety vehicles to alert drivers to the presence communities. We plan to equip some awareness for high-risk sectors such of overhead lines. We will continue to of our fleet vehicles with portable as agriculture and road haulage that engage with these groups about the defibrillators and explore how we are at risk of inadvertent contact with hazards of overhead lines and how to can link this into the community overhead lines. We are investing in an avoid inadvertent contact with them. first-responder programmes run by the innovation project that could produce local ambulance services in our region. a solution that enables the GPS location Stakeholders were also in favour of of overhead lines to be loaded in the installing defibrillators in fleet vehicles,
Output measure/1 Customer indicative input ED1 ED1 ED2 outcomes Benefits Deliverables measure to date forecast target
— Reduced number S1.1) Deliver a comprehensive safety training 2 S1 Maintain our OSHA rate 0.27 0.19 0.12 position as an of injuries to our programme for first-line managers and supervisors industry-leading workforce that will equip them with the necessary skills to RIDDOR rate2 0.07 0.03 0.01 safety performer — Reduced number identify and resolve at risk behaviours and actions of vehicle S1.2) Deliver a behavioural safety programme delivering No. colleagues with accidents and that addresses the root causes of minor accidents continued behavioural safety - - 1,800 injuries that relate to complacency, distraction and lack of improvement training by focussing on concentration leading causes S1.3) Complete an independent study into arc flash of injuries, and workwear technology developments and renew our continuing to workwear contract to ensure colleagues benefit from reduce exposure the latest technology to high-risk activities S1.4) Deploy digital solutions to transform the process of safety data acquisition, processing and analytics to better inform improvement and intervention areas, including virtual reality training
S1.5) Deliver a comprehensive driver training Health and Safety programme that meets drivers’ individual needs Executive (HSE) ✓ ✓ ✓ based on risk assessments and driving behaviours compliance S1.6) Ensure our fleet vehicles are equipped with the latest telematics technology to enable data-based No. colleague 112 120 200 interventions to support driver behaviour changes drivers trained3
— Reduced number S2.1) Implement methodology on contractor safety Expand safety Contractor OSHA S2 of injuries to our performance improvement target-setting and 0.73 0.55 0.372 management rate standards within contractors monitoring our supply S2.2) Integrate hazard and near-miss reporting chain, achieving systems through application programming interface a 50% reduction (API) solutions Date of reporting 2024 - - in contractor system go-live /25 accident rates S2.3) Update safety performance expectations for contractors with 2023-28 targets
S2.4) Deliver increased proportion of enhanced No. enhanced 1,047 1,340 1,610 audits on contractors based on risk assessments audits3 — Improved health S3.1) Implement a health and wellbeing management S3 Improve the standards and wellbeing system that is accredited and externally verified of health of staff under the ISO45003 framework and mental — Improved S3.2) Deliver a health and wellbeing programme that wellbeing attendance rate supports ongoing improvement in the physical and ISO045003 - ✓ ✓ among our mental health of colleagues accreditation workforce S3.3) Reduce the risk of fatigue in the workforce through the effective management of working hours
— Increased S4.1) Deliver awareness education programmes that S4 Deliver targeted intervention awareness utilise technology solutions to reach more school- of hazards to aged children and workers from high-risk sectors No. children and education 43,4734 43,400 55,000 programmes school-aged S4.2) Support the Ambulance Service(s) through their engaged p.a.3 in our children community first-responder programmes, equipping communities5 — Lower number fleet vehicles with a defibrillator of contacts with overhead lines — Safer agricultural working S4.3) Enable the agricultural sector to reduce practices the number of contacts with overhead lines by No. overhead line 43 41 31 developing an innovative technology solution to alert 3 — Reduction in contacts p.a. workers to the location of overhead lines repair costs from damaged lines
1. Numbers shown may be subject to rounding. See annex A1.4 Key targets and measures for profiled targets. Innovation | Data and Digitalisation | Workforce Resilience 2. Rolling five-year average; Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR); Occupational Safety and Health Administration (OSHA). 3. Rolling five-year average. 4. COVID-19 pandemic impact: As a result of social distancing, our face-to-face school engagement ceased in 2020-21 and is being restarted in stages for the remainder of the current plan period. 5. Cross-reference Physical and Cyber Resilience deliverable PC3.1 Rapid incident response. Northern Powergrid: our business plan for 2023-28 – 92 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY OUTPUTS
Maintaining a Safe and Resilient Network – Safety
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Who we Wave 3 – refinement and finalising engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 3 dedicated events Stakeholders engaged: 4,762 total – 330 unique interactions Wave 1 findings Details — Safety remains important to our customers and stakeholders. They expect us to Maintaining an excellent safety record is maintain a robust safety record that also underpins the future operations of our important to our customers network as we move to net zero. Customers identified the importance of safety education for school children and high-risk industries — Stakeholders suggested we should share good practice and learning through Collaboration, practice sharing and further collaboration with other infrastructure companies to maintain and improve continuous improvement were highlighted safety plans
Wave 2 Events: 135 total – 14 dedicated events Stakeholders engaged: 15,475 total – 4,552 unique interactions Wave 2 options A B C D E
Options were An industry leader in Proactive A champion for New technology- AI automation costed to help safety performance interventions to health and safety led safety measures and robotics takes customers further reduce with our third-party and further fatigue safety to new levels understand the safety risk in our contractors, local risk reduction benefits and operations communities and potential bill impact sector partners of the service levels proposed
Customer ambition Option C, a trade-off between being ambitious, building upon our strong current safety performance and doing and broader so in a cost-effective manner, was the strongest preferences across the various stakeholder groups with 27% of findings votes. 29% of domestic, 27% of business and 33% of rural customers voted for this, making up the majority in each segment. Elements of option D, including investment in innovative wearable technology to monitor risk, promote colleague wellbeing and an increased focus on contractor safety, emerged as additional areas of value for business, taking 23% of votes
Wave 3 Events: 91 total – 6 dedicated events Stakeholders engaged: 32,500 total – 2,473 unique interactions During Wave 3, continuous improvement in safety, continuing to educate school children and linking safety to net zero, improving the safety standards of contractors and developments in staff wellbeing strategies were discussed.
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Colleague safety is important — We will reduce the number of injuries to S1 Link There was support for additional investment in training and our workforce equipment.
— Support for our contractors to deliver same safety standards — We will collaborate with our contractors S2 Link as we do to enable them to reduce the number of injuries to their workforce
— Employee well-being is important — We will provide training and support S3 Link Stakeholders and employees want us to include health, mental to address the individual needs of our health and wellbeing programmes within our plans colleagues and improve their health and wellbeing
— Education is crucial — We will continue to support promotion S4 Link We should educate the public and children about safety and of increased awareness of hazards to deliver targeted intervention and training programmes to school-aged children and agricultural reduce contacts for at-risk sectors such as farming and haulage workers, and support community first responders — By raising awareness we will reduce the risk of inadvertent contact with our network by agricultural community and road haulage sectors
— Overall acceptance was high with SMEs — Safety acceptability score: 73% most accepting at 82% - Link
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Maintaining a Safe and Resilient Network – Reliability and Availability
Reliability and Availability
We will drive excellence in our front-line RELIABILITY & SAFETY operations and have a network that is safe, AVAILABILITY resilient and reliable but also smart and flexible. Progressive use of network technology will allow us to manage an increasingly dynamic CLIMATE RESILIENCE and complex low carbon energy landscape for our customers in real time.
PHYSICAL & ASSET CYBER RESILIENCE RESILIENCE
By the end of 2023-28 we will We have also reduced the number and available for our customers. Indeed, have improved the reliability of customers experiencing extended our stakeholders have told us that and availability of our network power cuts (i.e. those lasting longer reliability is one of their top priorities.3 with increased technology and than 12 hours) by a third. And we have efficient operational response, reduced the average length of planned Our stakeholders have told us that underpinning our customers’ power cuts by 20 per cent, to just over they want to see a stronger focus on transition to decarbonisation. three hours. reducing the length of power cuts (CML). In addition, our stakeholders Our reliability and availability These performance improvements have been very supportive of the use of performance has improved significantly have been driven by investing new technology to reduce the number over a long period of time – our supplies £35m in doubling the number of and duration of power cuts. are available 99.99 per cent of the time remote-control operation points on and the majority of you experience no our high voltage (HV) network over During the engagement, most power cuts in a given year. the period;2 continued deployment of stakeholders believed we should automated power restoration system prioritise investment in the System-wide reliability performance is (APRS) technology to automatically worst-performing parts of the network measured by the number of customer restore customers following faults and and use of new technology on our interruptions (CI), which is the number supporting our operational response HV and LV network, which will allow of power cuts in a year per 100 with smart fuse technology at low us to shorten restoration times and connected customers, and the number voltage (LV). proactively manage potential failures of customer minutes lost (CML), which where possible.4 is the average power cut duration in You’ve told us that maintaining terms of the number of minutes lost per a high level of reliability on our How much it connected customer. network is essential and will remain that way, especially as the will cost We’re proud to be on track to reliance on electricity increases. significantly outperform our reliability 2023-28 and availability commitments in the Though most customers were not expenditure £155.2m 2015-23 period. We have reduced the dissatisfied with their current level of (annual) 24.2% of totex number of power cuts (CI) by 27 per service, our stakeholder engagement cent and their length (CML) by 37 per indicates that there is support for a versus cent relative to our baseline,1 exceeding further step change in performance. 2015-23 +£14.2m our CI and CML commitments (of eight And, while the exact transition pathway +10.1% per cent and 20 per cent respectively) to net zero by 2050 remains unclear, we for the 2015-23 period. do know there is likely to be increased reliance on electricity for heating and transport. This will make it even more important that our network is reliable
1. The 2015-23 baseline was defined against network performance in 2012-13. 2. Total forecast spend for ED1 on HV automation. 3. NPG, Willingness to Pay. Customer Priorities, Quantitative Prioritisation, August 2020. 4. Emerging Thinking – Supporting Material.
NorthernNorthern Powergrid: Powergrid: our our business business plan plan for for 2023-28 2023-28 – – 94 94 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY OUTPUTS
Maintaining a Safe and Resilient Network – Reliability and Availability
Building on our strong 2015-23 We also need to make on our wider suite of LV devices, performance, we can deliver improvements on our low voltage such as our LV monitors, further a step change in service in network to realise performance enhancing support of efficient net the next regulatory period by improvements. zero investment decisions. These installing higher volumes of investments in upgraded capability remote switching and automation Improvements in our network capability account for the increase in cost on our HV networks. at HV alone will not enable the compared to 2015-23. performance improvement required to — Keeping ongoing operational costs While we have always met or exceeded meet stakeholder expectations or to flat: our business-as-usual fault our reliability targets set by Ofgem, meet our regulatory targets. We will also restoration costs are in line with we recognise there is an opportunity in need to improve fault restoration times the industry median, and we will the 2023-28 period to deliver a better on our LV network to reduce the impact improve on this. We will continue to service for our customers. On our of interruptions on customers. identify efficiencies to fund front-line network, our customers experience performance improvements, which CI performance of 49 power cuts, and Our assessment has shown that our will allow us to provide improved CML of 37 minutes on average. But LV network requires continued targeted service for our customers at no Ofgem’s current working assumptions investment and rapid deployment of additional cost. for our 2023-28 targets require a step new technology to further improve — Ensuring customers only pay change in our CI and CML performance our performance.1 This is because for the upgrades we deliver: the relative to today. our LV network has relatively high funding to deliver this programme levels of challenging legacy cable is included in our plan to be funded Our plan aims to rise to the challenge. types, which have yet to reach the through baseline allowances. To Based on our review of the options end of their useful life.2 give Ofgem and customers comfort available and our consultation with that we will only be funded for what stakeholders, we are proposing an Our programme of investment in we deliver of our HV Automation investment programme involving network upgrades is efficient. programme, we propose to include accelerated roll-out of automation this investment as a bespoke price on our HV network, which is key to We have assessed a number of options control deliverable (PCD). improving our network reliability at as well as the stakeholder feedback. Our the lowest cost. We have invested plan includes expenditure of £155.2m The remainder of this section of our efficiently in HV automation in the past, p.a. to deliver our reliability targets. This Reliability and Availability plan is which has helped us to exceed our is £14.2m p.a. (+10.1 per cent) more than structured to provide more detail reliability targets in the current period. our expenditure in the 2015-23 period, around our stakeholders’ priorities. Our plan aims to build on this position driven by our investment in network by increasing the number of remote capability upgrades. — Our plan is focussed on improving switching and network automation system-wide performance on points at the HV level. We have tested our proposals to ensure unplanned outages, in order that our proposed costs are efficient to impact the largest number Our analysis has shown that this is the while delivering customer priorities. of customers. lowest-cost way to raise performance — We also have specific proposals levels to meet our new targets, when — An optimised programme across HV to improve services for customers deployed in conjunction with effective and LV: our plan contains £64.2m who experience below-average operational response to fix faults on of investment in HV automation performance, i.e. our worst-served the network. There are alternatives to technology to double the rate of customers. automation, in the form of increased installation on our network from — Our plans to improve our planned asset replacement or increasing 2023-28. We will also invest £39.4m power cuts service. our workforce to deliver improved in a range of LV technologies — Finally, we set out how we will operational response. However, this across the network over the period, leverage data, innovate, and is less cost-efficient than automation, including smart fuses and proactive upskill our workforce to deliver our which also allows us to optimise fault management technology. Over commitments and prepare for the the use of our current workforce in half of this investment will enable future needs of customers. response to faults. further preventative fault detection
Figure 1: reliability plan costs 2023-28 2015-23 Variance 2023-28 annual annual total £m average £m average £m £m % Non-load capex – HV Automation 64.2 12.8 4.5 8.3 184.8% Non-load capex – LV Automation 22.4 4.5 2.9 1.6 54.7% Non-load capex – worst-served customers 2.5 0.5 0.0 0.5 - Non-op capex 17.0 3.4 0.0 3.4 - Network operating costs 438.0 87.6 90.2 -2.6 -2.9% Closely associated indirects 144.1 28.8 26.9 1.9 7.1% Business support costs 88.1 17.6 16.5 1.1 6.8% Total proposed cost 776.2 155.2 141.0 14.2 10.1%
1. See: EJP-10.2 LV Network Automation. 2. See: Emerging Thinking - Supporting Material.
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Maintaining a Safe and Resilient Network – Reliability and Availability
Improving system-wide reliability and availability
Our plan is set to continue our and seven per cent and 15 per cent performance. In addition, we will have strong performance trajectory reduction in CI and CML in Northeast in sought to have reduced the impact of from the current period into the 2023-24 that these targets demand. power cuts on our customers, delivering 2023-28 period, delivering a step 25 per cent shorter power cuts (CML) change improvement through the But given the scale of the challenge, relative to our current performance.1 use of technology as reliance on those improvements may not be the electricity network increases. deliverable by March 2023. However, our plan will enable us to continue on a Ofgem’s targets for 2023-28 will steeper trajectory of improvement, so require a step change in our reliability that by the end of the period we will aim performance. We will strive to achieve to have reduced the number of power the three per cent and 15 per cent cuts (CI) that our customers experience reduction in CI and CML in Yorkshire by 12 per cent relative to our current
Figure 2: Northeast – customer interruptions2 Figure: 3: Yorkshire – customer interruptions2
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2010-11 2027-28 2010-11 2027-28
DCPR5 RIIO-ED1 RIIO-ED2 DCPR5 RIIO-ED1 RIIO-ED2
Figure 4: Northeast – customer minutes lost2 Figure 5: Yorkshire – customer minutes lost2
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2010-11 2027-28 2010-11 2027-28
DCPR5 RIIO-ED1 RIIO-ED2 DCPR5 RIIO-ED1 RIIO-ED2
Actual (4-yr avg.) ED2 plan (4-yr avg.) Ofgem target Actual ED2 plan
1. Current performance is the four-year average at 2020-21. 2. Ofgem targets are indicative based on 2019-20 data and will be updated prior to final determinations.
Northern Powergrid: our business plan for 2023-28 – 96 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY OUTPUTS
Maintaining a Safe and Resilient Network – Reliability and Availability
Investing to further improve performance
This will require a programme of programme to deliver a modernised, Improving service levels for enabling investment. reliable network for our customers, customers who experience the first leg of which will be delivered Seventeen per cent of the HV switches in 2023-28. below-average network on our network are remote-controlled. performance. Automation technology enables us Only upgrading our network will to restore a proportion of customers not be sufficient, however. We impacted by HV faults in three minutes will complement our investment Our stakeholders want to see us and is already providing customers with programme with the following continue to strengthen our focus an improved level of service. Since 2015 operational improvements: on improving performance for so far, over half a million customers have customers who experience long been restored within three minutes — Enhancing the skills of our duration interruptions. by our automated power restoration operational teams: we plan to system, with further restoration within provide training to our in-house Below-average reliability can mean two 15 minutes from our control centre using response teams with the goal of things for customers: customers who remote control. deploying multiskilled response experience long-duration interruptions units who will be able to react more and customers who experience multiple In our Emerging Thinking stakeholder effectively to a larger variety of interruptions during a year. engagement consultation,1 the majority faults. In addition, by upskilling our of our stakeholders told us they would in-house team, we aim to reduce our We have made good progress in terms like to see at least a ‘major upgrade’ reliance on contractors.2 of long-duration interruptions, reducing in our network capability. So we are — Utilising network diagnostics and the number of 12-hour interruptions proposing to: industry data more effectively: by a third since 2015. However our our existing LV network technology stakeholder engagement has indicated — double the installation rate of reports extensive information that we should target a further automation devices onto our about faults. We aim to develop significant reduction in the number of network by investing £64.2m on an industry-leading protocol of 12-hour interruptions. the HV network by 2028, such that using LV diagnostic data to improve 30 per cent of our HV network our reactive and proactive response Figure 6: customers experiencing will be covered by automation to faults. 12-hour power cuts4 technology, see EJP-10.1 HV — Concentrating our efforts on Network Automation; difficult faults: we will aim to — expand the types of devices that deploy additional excavation 6,000 we can remotely control. This teams to improve our response to enables automation capability to underground faults. extend further across the overhead line network to benefit our rural Overall our plan assumes we achieve communities, who generally above industry average restoration experience more reliability and times of 45 minutes at HV and 155 3,000 availability issues; and minutes at LV (compared to 54 and 180 — invest a further £39.4m to roll out respectively today). over 8,100 automated restoration devices on our LV network and As we develop customer flexibility in enable proactive fault management the transition to the role of Distribution across 9,000 network locations, System Operation (DSO)3 it will 0 building on LV monitoring capability increasingly provide opportunities to 2023-24 2027-28 for decarbonisation. See DSO improve network reliability. We plan Strategy and EJP-10.2 LV Network to use restore and dynamic flexibility Current 2023-28
Automation. products to manage risk and help performance mitigate loss of supplies. We will Our comprehensive plan will put us also investigate how we can use on a new improvement trajectory. flexibility to improve partial restoration Therefore, we will aim to achieve a 50 However, we have not only considered at the LV level. per cent reduction in the number of the new targets, customer priorities customers experiencing 12-hour power and stakeholder willingness to pay in cuts through operational improvements, formulating our plan. We have also in particular the following initiatives: considered a long-term view of the best way to modernise our network while ensuring affordability for our customers. Our reliability investment plan is proposed as part of a 10-year
1. Emerging Thinking. 2. See Workforce resilience (People Strategy). 3. See DSO Strategy section. 4. Current performance is the four-year average at 2020-21.
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Investing to further improve performance
— Reducing the impact of Overall, we expect that this trend of Reducing multiple interruptions. interruptions via the use of mobile increasing sensitivity toward six-hour generation: power cuts is likely to continue as the Our customers’ changing use of – we will further increase pace of decarbonisation increases, and electricity came through strongly in our the deployment of mobile we recognise that improvements in this engagement. For example, in the case generation to restore supplies area will be required to meet evolving of telecommunications over broadband, following an interruption, though customer expectations. our stakeholders suggested multiple this must be balanced with the power cuts can be in some cases more environmental impact of diesel Figure 7: customers experiencing disruptive than a single longer one. generation; and 6-hour power cuts – we will increase our fleet of As such, we will aim to reduce the SilentPower electric mobile number of customers that experience generation vehicles to six 90,000 five or more power cuts annually by to provide more low carbon 15 per cent, so that 99 per cent of our restoration solutions. See customers will not experience more Vulnerability Customers plan 85,000 than five power cuts in a year. section. 80,000 In parallel, we also plan to develop — Innovating to improve reliability offerings for the partial restoration for customers on challenging of our customers, recognising from segments of our network: we 75,000 their feedback that this would benefit will continue to develop microgrid them as the pace of decarbonisation and microresilience options for increases. 70,000 customers in rural areas, where challenges to overhead line asset Our stakeholders are keen to see resilience can lead to longer 65,000 us take steps to address the level interruptions. See Whole Systems 2023-24 2027-28 of service experienced by our plan section. worst-served customers (WSC).¹ Current 2023-28
Responding to stakeholder performance Customers that experience both feedback. long-duration and multiple power cuts can be said to be WSC. We will also target reductions in the Therefore we will target a reduction number of six-hour interruptions our in the number of six-hour faults on our Our stakeholders have consistently customers experience. networks by 15 per cent, supported by told us that raising standards for the following additional measures: this group of customers is crucial. Our stakeholders have reinforced that Therefore, we plan to invest £2.5m in the 12-hour power cuts standard is a — Enhancing our despatch facilities improving services for 2,400 WSC by backstop, and that we should increas- to enable faster and more effective upgrading the assets supplying our rural ingly focus on trying to limit power cuts response to LV faults using the communities and installing automation to six hours. We have heard that this richer data that new technology will to help restore their supplies faster. is important for customers for several provide. This will significantly improve the level reasons, for example: — Reviewing our inventory of plant of service they receive by reducing the and equipment in order to ensure duration of power cuts they experience — Significant disruption can occur our staff have what they need to by 50 per cent. when a power cut extends beyond better respond to both the most six hours, because it covers two frequently occurring faults, as well In parallel, our £64.2m investment in meal times, and is long enough for as the most complex faults. HV network automation will be targeted frozen food to defrost. at the worst-performing circuits on — Six hours can also cover most of a our network, delivering significant working day, which is particularly improvements to customers that important as we expect to see more experience worse-than-average service of our customers working from on our network. home, as demonstrated during the COVID-19 pandemic. Our WSC investment is a common PCD. — A more than six-hour power cut also presents additional challenges to our customers who require electric vehicle charging. This is expected to be increasingly problematic as we transition to net zero.
1. Ofgem’s definition of worst-served customers is those that experience 12 HV interruptions over a three-year period, with a minimum of two per year.
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Maintaining a Safe and Resilient Network – Reliability and Availability
Improving services for Data and digitalisation will provide — We will release more open source planned power cuts. us with new capabilities. reliability and availability data on network performance using our Going forward we will have access to data platforms. Communication and delivering on a far greater quantity of data from — We will continue to keep our our promises remains critical to HV and LV monitoring, as well as customers informed about faults mitigating the impact of planned smart meters. This will provide us through the latest digital channels, power cuts. with valuable insights to address the e.g. using our website, social challenges of improving the reliability media, and text messages to ensure To maintain and renew assets it is and availability of our network as customers are prepared. sometimes unavoidable that we electrification gathers pace. interrupt the supply to our customers on Innovation is driving benefits in our a planned basis. — At HV, our smart grid enabling plans. investment during the current Customer satisfaction with our planned period provides us with a more Our fault prediction technology power cuts service has improved by robust and modern Internet innovation (Foresight) is a key enabler more than 5.8 percentage points since Protocal (IP) Supervisory Control for improving the reliability of our LV 2015 to over 91.6 per cent,1 ranking and Data Acquisition (SCADA) network during 2023-28. By the end of second in the industry. communications network, which is 2023-28 we will target fault predictive a foundation of our 10-year network technology covering 9,000 network Through discussion with our automation plan starting in 2023. locations – over 30 per cent of the stakeholders, we have identified a We will maximise the value of this accessible ground mounted network. number of measures that will continue investment by increasing automation This, combined with our LV monitoring to minimise the disruption that and investing in upgrading our programme, will help us proactively customers experience. We will aim to: control systems to help restore intervene and prevent faults from power more quickly. occurring on our network. — increase the amount of live line — On the LV network, our proposed working and deployment of mobile LV technology investment will Critically, we will target the deployment generation to allow us to maintain allow us to increase the amount of of this technology on the worst- our assets without power cuts; operational information we collect performing parts of the network to — extend our seasonal planned power about our network. This provides us ensure improvements are targeted cut policy to ensure that in winter with the opportunity to develop best towards our WSC. outages are only taken during practices regarding the use of LV- daylight hours, and will be monitoring data to enhance reactive Enabled by improvements in cancelled if temperatures drop and proactive fault response. We will technology, customer flexibility will below freezing; and combine the roll-out of monitoring provide further reliability and availability — give customers 10 days advance with information from smart meters opportunities. We will also explore notification of all planned power and pre-fault technology to drive a how we can use flexibility at LV as well cuts to allow sufficient time to make more proactive approach to network as using suitcase generation to affect alternative arrangements. management. To maximise the partial restoration. value of these new initiatives and allow rapid decision making, we will We will need to upskill our teams modernise our operational hub to to deliver enhanced reliability on allow more efficient allocation of an increasingly smarter powergrid. We plan to further improve resources to faults. reliability by using technology Innovations such as Foresight allow us to on our networks, facilitating We will also look to invest in additional move beyond the traditional paradigm shortened restoration times data analytics to allow us to make of ‘fix on fail’. To maximise the benefits, and proactively managing better short-term decisions about our we will need to broaden the skills of operational response, and to support our people, while developing greater potential failures ahead better long-term decisions about technical specialist skills in certain areas. of time. optimising investments. Our plans to support the necessary skill development in our workforce are set Finally, to support our overarching out in annex 5.2 Workforce resilience objective to provide our customers with strategy. Paul Black access to a modernised network, we System will continue to enhance our provision engineering of information on the reliability and manager availability of our network.
1. 2020-21 regulatory year.
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Maintaining a Safe and Resilient Network – Reliability and Availability
Output measure/1 Customer indicative ED1 ED1 ED2 outcomes Benefits Deliverables input measure to date forecast target
RA1 Deliver a ≥12% System average improvements RA.1) Deploy 8,600 HV remote reduction in the switches (Bespoke PCD) number of power — A more reliable network Customer cuts2 for our customers RA.2) Deploy 8,100 LV fault- interruptions 48.6 47.4 42.0 — Additional automation management devices (unplanned) will continue to drive reliability and availability improvements for the RA.3) Establish LV network RA2 Deliver a ≥25% duration of the assets’ management capability to allow the reduction in the functionality increased data from Foresight, LV monitoring and smart meters to be duration of power Creation of a smarter — used to improve services cuts2 and more flexible network facilitating decarbonisation — Increased network Customer monitoring and minutes lost 37.2 34.0 28.3 automation allows RA.4) Innovate in flexibility to (unplanned) more efficient targeting support unplanned interruptions and of future expenditure the use of microgrids/microresilience through a greater for worst-served customers (HV and understanding of our LV) network
RA3 Reduce by Reduction in long-duration 50% the annual power cuts number of Power cuts customers that — Reduced disruption to >12hrs (pre- 3,943 3,600 2,700 experience a 12- customers now and in RA.5) Enhance our first response clock stop) 2 hour power cut future periods as they through improving our ability to become more reliant on track and deploy staff to faults more electricity supplies swiftly, by skillset and by location RA4 Reduce by (24/7/365) 15% the annual Power cuts number of >6hrs (pre-clock 87,001 82,500 74,000 customers that stop)4 experience a 6-hour power cut2 RA.6) Target significant improvements in network operability through use of technology to manage RA5 Ensure 99% of Improvements for worst-served customers planned outage risk and proactively our customers do identify and deliver solutions to not experience Customers who — Improved services emerging ‘problem networks’ experience >5 more than 5 30,174 26,000 23,000 for customers who interruptions interruptions in a experience a worse than 4 5 annually year average level of service — Long-term investment will allow us to move Deliver £2.5m RA6 customers out of this RA.7) Roll out HV Foresight using of targeted category benefiting them primary disturbance recorders investment to in the long-term improve network Worst-served customers performance in 0 0 2,400 rural areas for addressed3 2,400 worst- (Common PCD) served customers predominantly in rural areas RA.8) Deliver investment to enable the isolation of substations without RA7 Provide Better services for planned incurring network outages customers with outages 10 days’ notice of planned interruptions, — Improved planned outage % of time customer satisfaction customers operate only 63.5% 70% 80% in daylight RA.9) Expand SilentPower mobile provided with 10 hours during battery fleet to support during days’ notice winter months planned and unplanned interruptions and cancel if temperatures are <0°C
Innovation | Data and Digitalisation | Workforce Resilience
1. Numbers shown may be subject to rounding. See annex 1.4 Key targets and measures for profiled targets. 2. Relative to a four-year average baseline. 3. In line with Ofgem’s definition. 4. Four-year average figures. 5. Cross-reference Enabling Whole System Solutions deliverable WS3. Roll-out of microgrid technology.
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Maintaining a Safe and Resilient Network – Reliability and Availability
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Who we Wave 3 – refinement and finalising engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 4 dedicated events Stakeholders engaged: 4,762 total – 491 unique interactions Wave 1 findings Details — Reliability of the network was viewed as a key responsibility and an important priority Future reliability of the network was key for for investment. Stakeholders felt we should prioritise maintaining substations and customers power lines to ensure the future reliability of the network We should seek to minimise the frequency — Investment should be targeted at reducing longer restoration times ahead of reducing and duration of power cuts the frequency of shorter interruptions — Stakeholders want us to provide clear information on the size of any investment It is important for us to demonstrate needed with comparisons and to balance investment in reliability against other balanced reliability investment decisions priorities Wave 2 Events: 135 total – 21 dedicated events Stakeholders engaged: 15,475 total – 15,189 unique interactions Wave 2 options A B C D E
Options were Maintain a highly Reduction in Further significant Improvements Reliability costed to help reliable service – number and length system-wide in areas where performance customers network available of power cuts improvements in our reliability across our network understand the 99.98% of the time while delivering reliability levels performance varies driven by the roll- benefits and improvements the most through out of innovative potential bill impact for worst-served deployment technology of the service levels and vulnerable of innovative proposed customers technology
Customer ambition 25% of stakeholders support setting ambition at option E ‘driven by the roll-out of innovative technology’. Across and broader the Emerging Thinking voting (rural panel, political engagements, the microsite, and the domestic and business findings surveys) 86% voted for option B or above, 65% voted for option C or above, and 43% voted for option D or above
Wave 3 Events: 91 total – 10 dedicated events Stakeholders engaged: 32,500 total – 3,031 unique interactions During Wave 3, future reliability of the network and the level of support for technological advancements to support customer locations that are experiencing more power cuts than average were discussed with customers
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Prioritise targeted reliability investment — We will increase our network monitoring, RA1 Link Experience of reliability is good, but targeted and improving long-term asset planning and helping us RA2 efficient investment should be part of our 2023-28 make efficient investment decisions, focussing on plan targeted investment in worst-performing areas
— Invest in a network for the future, focus on — We will restore customers power more quickly RA2 Link shortening power cuts by increasing the scale of high voltage remote RA3 Creating a more capable, future focused network switching through our automated power RA4 with increased automation and reducing faults that restoration system. Investing in innovative last 1.5-3 hours to 3 minutes or less is a priority and technology will restore customers quicker while valued by our customers monitoring the network in real time to identify issues earlier, preventing future power cuts
— Improve services for worst-served customers — We will target further improvements in our RA3 Link Customers wanted to see improvements in service operational response, resolving longer and more RA4 for those who experience significantly worse than complex power cuts more quickly. Increased use of RA5 average restoration performance. Twelve hours is too mobile generation and green SilentPower vehicles RA6 long to be off supply, 5-6 hours is the point where a will help to restore customers quicker power cut becomes a significant inconvenience for our customers
— Improve the performance of the network in rural — We will invest in areas that experience below RA5 Link areas average levels of service that may have received RA6 Customers support increased investment in network less infrastructure investment. Our network improvement in areas that have traditionally received automation programme roll-out will focus on worst- less investment (and would not necessarily meet the performing areas, further improving reliability economic efficiency test for investment) such as rural Northumberland
— Keep customers up to date so that they can prepare — We will give customers advanced notice of RA7 Link for longer power cuts planned power cuts, with the timing of planned Customers told us that they can be flexible and work works at times of day and year where the least around longer power cuts, provided we keep in close inconvenience will be felt by customers contact with them and update regularly on progress
— Overall acceptance was high with 79%. SME and — Reliability and Availability acceptance score: 77% rural customers were most accepting of the plan - Link
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Maintaining a Safe and Resilient Network – Our Approach to Resilience
Our business-wide approach to resilience
Collaboration is at the heart We have built a portfolio of more The threat landscape will continue of our approach. than 30 operational response plans to evolve. that we periodically review, drill, test We work with central government, or exercise to ensure we remain The external threat landscape is the Department for Business, Energy prepared and ready. Our operational constantly evolving, whether that & Industrial Strategy (BEIS), and the response plans contain triggers that be changing weather patterns or the seven local resilience forums (LRFs) in drive the extent of incident response ever-present risk of malicious physical our region, on a multi-agency basis to required. We proactively move or cyber-attacks. We undertake ensure we have a firm grip on threats, through controlled escalation stages regular threat assessments, analysis risks and issues. This structured and of awareness, preparation, readiness and modelling to assess risks and we enduring stakeholder engagement and mobilisation as each trigger point carry out proactive asset hardening allows us to plan effectively for the is met. In this way, we have become to resist and absorb any impacts. long term and execute coordinated accustomed to switching between Long-term resilience is embedded in responses to emergency events that business-as-usual operations and our investment plans to ensure the bring about or involve disruption to emergency response modes. For certain assets we install today are fit for the power supplies. Through this types of disruptive events, it is also environment in which they will be industry-wide collaboration we learn necessary to have a specific recovery operating in the future. Our approach to about situational exposure to risk, phase to allow a smooth transition back resilience in our plan is set out below: insecurities or vulnerabilities that need to normal routines. mitigation, and build actions into our business planning.
Customer Workforce Operations Environment Regulatory Financial
Company-level resilience
Operational and network resilience Government Financing* — Emergency planning and compliance — Service provider/supply chain risk
Service Workforce Asset Climate Managing resilience Resilience* Resilience* Resilience* Uncertainty and Risk*
— Network — Severe weather Asset Risk — Flooding — Vegetation Physical management and Cyber Resilience* Key
Plan sections — Electricity system resilience — Telecommunications
The next three sections of our plan cover three key areas of our approach in line with Ofgem’s resilience framework – Asset Resilience, Climate Resilience, and Physical and Cyber Resilience. Our Workforce Resilience plans can be found here – Workforce Resilience plans. We set out more detail in annex 4.9 Our approach to resilience.
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Maintaining a Safe and Resilient Network – Asset Resilience
Asset Resilience
SAFETY RELIABILITY & AVAILABILITY Our network will fit the evolving needs of our region. The long-term condition and performance of our asset base will be efficiently managed so it is safe, reliable, environmentally friendly and ASSET resilient, maintaining a long-term view on capacity needs RESILIENCE for decarbonisation pathways.
PHYSICAL & CYBER SECURITY
CLIMATE RESILIENCE
Our approach to asset resilience future capacity for decarbonisation and will not only maintain the health of realises other synergistic benefits. This our network but also support the way we can minimise long-term costs transition to net zero. for our customers.
Maintaining and renewing our asset To do this we plan to spend £214.9m p.a. base is our single largest expense and in the 2023-28 period which is five per the decisions we take to invest (or cent (£10.9m) more than we’ve spent not) can have a material impact on the each year in 2015-23. This increase How much it service we provide to both our current in investment includes £16.9m of will cost and future customers. expenditure p.a. (£84.3m over the five- year period) that delivers two-for-one The average age of our assets is outcomes related to decarbonisation 2023-28 increasing and sustained investment – adding capacity for future pathways expenditure £214.9m is required to maintain the long-term as part of our core asset renewal (annual) 33.5% of totex health of the network. In deciding programmes that generates an which investments to make, we estimated net saving of £471m in future versus optimise between refurbishment and avoided costs between 2028 and 2050. 2015-23 +£10.9m replacement, targeting those assets +5.3% that are high risk or in poor condition. It is also particularly important that we adopt an approach that manages the condition and performance of the asset base in a way that maximises
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Maintaining a Safe and Resilient Network – Asset Resilience
A resilient asset base is our foundation
The resilience of our network is investment and with our proposed 2023- Age related deterioration important for stakeholders and will 28 investment plans – and assessed that represents a major challenge in the become even more so, especially against our view of network risk. management of long-term risk. given the increased reliance on electricity as we decarbonise. We do not mechanistically use asset Many of our assets were installed health, criticality and risk indices to between 1950 and 1970. This age profile Our stakeholders have indicated that drive our investment plans. Instead we of historical investment represents a they want us to: use these indices as one of a number major challenge in the management of inputs into an asset management of long-term risk. A high proportion — maintain network health, continuing approach that combines analytical and of those assets are now moving into with programmes to replace and operational experience to produce an the mid- to highest-risk bands, which refurbish assets that drive greater investment plan that delivers efficient is driving an overall expected increase reliability; and effective levels of service. in asset risk between 2023 and 2028. — optimise asset lives through the use A key example of this is our overhead of condition monitoring; We are ahead of our plan for wood pole lines. — deploy innovative technologies reducing the levels of network risk. to monitor assets and understand This increase in the average age of our where investments should be made; Our total network risk is ahead of assets across most asset categories — recognise the need for a balanced our straight-line profile for the has resulted in approximately 20 per approach to managing risk over the eight-year period 2015-23, at 69.3 per cent of the network exceeding what longer term while supporting wider cent (compared to a 62.5 per cent has traditionally been accepted as their plan objectives; and target),1 and so are well positioned to normal expected life (see figure 1). — maximise synergies with other deliver our targets. elements of our plan, such The process of managing these as ensuring that we adopt a In the Northeast, we have so far installation peaks began in earlier net zero ready approach to delivered 87.6 per cent of our risk- periods, prioritising replacement of asset refurbishment and asset reduction target. We expect to achieve critical assets at 132kV and extra high replacement. our overall agreed risk-reduction targets voltage (EHV). In our 2015-23 plan we by 2023, with total levels of network recognised that the management of this We assess our asset health through the risk currently 11 per cent lower than they profile would be a key ongoing issue for use of industry standard methodologies. were in 2015. 2023-28 period and beyond.
— A health index framework for In Yorkshire we have delivered 57.5 Our current approach supports this collecting information relating to per cent of our risk-reduction to date. efficient transition, targeting life asset condition and probability of However, our plan is phased to deliver extension through refurbishment failure. Health is assessed utilising a more outputs in the latter years of the wherever practicable, with a variety of condition monitoring and 2015-23 period. We expect to achieve programme of enhanced asset inspection data to measure asset our target by 2023. Our forecast monitoring to offset projected risk condition and performance (which includes significant lengths of 132kV increases and to maintain our low and tends to deteriorate as assets age). fluid-filled cable replacement works stable fault rates over the long term. We — A criticality index to collect that are in progress. These schemes will continue this approach. information relating to the are several years into multi-year consequences of failure of an programmes and have not yet delivered asset (which tends to remain static outputs. Total levels of network risk are through its life). currently 5 per cent lower than they were in 2015. We ascribe a monetary value to the consequence of failure for each asset to represent the impact of failure Figure 1: example Health Index profile for low voltage (LV) and high voltage (HV) (criticality). This is then combined with a wood poles value for the asset’s probability of failure Number (health) to allow risk for an individual of assets asset to be calculated as monetised risk 20,000 100,000 (in £s). This can be brought together poles will be within and across asset categories to 16,000 60+ years calculate total network risk (monetised) old by 2023, at a given point in time. 12,000 increasing by 4,000 poles
Risk can be reduced through 8,000 each year replacement and refurbishment
activities, which can improve both 4,000 asset health and criticality. Using this
approach, we have made an assessment 0 of the changes in health and criticality that will occur – both without any 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 HI1 HI2 HI3 HI4 HI5
1. 2019-20 regulatory year.
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Maintaining a Safe and Resilient Network – Asset Resilience
Maintaining the long-term health of the network
Our investment strategy will — is a natural part of the ageing of a enable us to better understand, multi-generational asset; and maintain and manage the condition — can be managed by asset of our network in a safe and management by targeted control A resilient asset base is the cost-effective manner. measures in the period. foundation of our plan; we will maintain the underlying Our network investment strategy is set condition of our equipment out at annex 6.1 Network investment We have modelled our investment efficiently and maximise strategy. strategy over the long term to wider future benefits. understand how risk will change. Our plan for each asset class has been Due to our asset age profile we will developed holistically to deliver the be on an increasing risk trajectory following key strategic objectives: throughout 2023-28, which will peak in the early 2030s (see figure 3), before Peter Collinson — maintain legal and regulatory reducing again. These projections give Investment compliance; us confidence that we are properly planning and — deliver long-term stable network balancing the timing of investment in delivery manager asset risk; our long-lived assets to keep downward — deliver value for money, minimising pressure on costs and maintaining whole life cycle costs via the the health of the network, thereby optimisation of synergies; sustainably managing the peaks in — manage uncertainty around historical investment. decarbonisation; — recognise the likelihood that reliance Figure 2: asset resilience investment – whole life risk on electricity will increase through the period and beyond, particularly Whole life risk (as % of 2023) 2030 to 2050; and — deploy proven innovative technology Northern and continue to explore new Northeast Yorkshire Powergrid solutions to: – enhance the maturity of our 2023 100.0 100.0 100.0 asset management process; – enhance inspection and 2028 with no intervention 129.9 132.6 131.2 maintenance techniques; Impact of interventions -23.4 -24.6 -24.0 – extend asset life through targeted refurbishment; 2028 with proposed intervention 106.5 108.0 107.2 – improve intervention targeting; and – improve efficiency. Modelled benefit from -2.1 -3.0 -2.5 decarbonisation investment We will target a 24 per cent 2028 with modelled benefits from risk benefit from our asset 104.4 105.0 104.7 interventions. decarbonisation investment
Figure 3 shows the forecasted change in monetised risk due to asset Figure 3: future projected risk profile of the asset base degradation over the five years from 2023 to 2028 and how our interventions will mitigate that. 115% Whole life risk (as % of 2023) The specific asset resilience investments set out in our plan reduce whole life risk by 24.0 per cent (relative to there 110% having been no intervention). The result is a modest and manageable overall increase in risk of 7.2 per cent on average across Northeast and Yorkshire 105% over the 2023-28 period. This is reduced further by 2.5 per cent when we consider the benefit from investment for 100% decarbonisation. This modest increase in risk is acceptable as it:
— is part of a strategy to mitigate peaks 95% in investment while maintaining the underlying health of the network 2023 2026 2029 2032 2035 2038 over the long term;
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Maintaining a Safe and Resilient Network – Asset Resilience
Deploying innovative techniques to manage risk.
Our plan targets priority areas by within our proposals by: of more costly asset replacement deploying condition-monitoring until more certainty over future solutions alongside moderate — prioritising investment in our highest- loading and utilisation is achieved; programmes of asset replacement risk assets, for example low voltage and and refurbishment to target worst- (LV) poles in residential areas, or — establishing other enhanced control performing assets and manage fluid-filled cables near water courses measures such as including more predicted fault rates, see annex 5.3 and manually operated plant; frequent or comprehensive asset Digitalisation Strategy and Action Plan. — prioritising investment in our worst- inspections, additional monitoring Where power cuts do arise as a result of condition assets by targeting assets and innovation to improve inspection asset failure our investments in specific with the highest probability of failure data quality and intervention reliability initiatives are designed to as a consequence of observed targeting. Overall, we estimate minimise the impact for our customers or measured condition data, or savings of £177m in the 2023-28 (see Reliability and Availability section). performance data; period from our use of these — targeting asset refurbishment to innovative techniques. For further We are able to manage moderate ensure we can address a wider detail see Explaining Our Costs. increases in our overall risk profiles range of assets allowing the deferral
Decarbonisation investment will provide additional asset health benefits.
In addition to the risk reduction derived estimate that this will reduce network additional health benefit will vary and from our asset resilience investments, risk by a further 2.5 per cent to leave may deliver more or less benefit than the replacement of assets as part of total whole life risk at 4.7 per cent higher estimated here. However, it is clear that our decarbonisation investment (see than at the start of next price control a manageable 7.2 per cent increase in scenarios and investment section) will period. Due to the uncertainties inherent risk represents the worst case scenario. deliver asset health benefits. Based on within our forecast for decarbonisation our ‘best view’ planning scenario, we investment the exact value of this
Our asset health and criticality priorities for 2023-28 target investment in our highest-risk and worst-performing assets.
The change in whole life risk is not uniform across our asset categories. Our investment plan targets investment toward the areas where risk is forecast to increase the most.
Figure 4: asset category movements in whole life risk Figure 5: asset category movements in expenditure from 2015-23 to 2023-28 from 2015-23 to 2023-28
£2225.0 £m p.a. 107.0% whole life risk (%of ED1) 3.9% 0.0% 107.2% £2.0m £4.7m £220.0 £14.2m 0.4% -£0.1m £214.9m 103.0% 1.6% -£2.5m -£7.3m £210.0 1.0% 0.3% 100.0% 204.0m 99.0% £200.0
95.0% £190.0 ED1 1. 2. 3. 4. 5 6 ED2 ED1 1. 2. 3. 4. 5 6 ED2 Wood Tower Cables Distribution Major Non Wood Tower Cables Distribution Major Non poles lines substation substation NARM poles lines substation substation NARM plant plant categories plant plant categories and and indirects indirects
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An overview of our approach
Engineering Approach Justification Papers
Our plan contains a significant uplift in investment to address the large number of poles installed during the peak investment period of the 1950s-1970s, which — EJP-4.1a LV Overhead 1 are expected to degrade to the point that intervention is required. We have Lines Wood identified opportunities to optimise our replacement intervals through the — EJP-4.1b HV Overhead poles use of innovative enhanced monitoring techniques (such as the use of Thor Lines hammers) in order to extend asset lives where safe to do so. We will seek to — EJP-4.2 EHV and 132kV align our interventions with changes required to the network to support future Wood Pole and Mast decarbonisation demand, such as where a requirement is triggered to replace Overhead Lines overhead line conductors as part of full line rebuilds, particularly at LV.
We anticipate a moderate increase in risk, which will be managed, by — EJP-4.3 EHV and 132kV exception, through tower refurbishment and conductor replacement. 2 Tower Lines Tower lines
We forecast a small increase in risk as a result of a large reduction in investment in the replacement of fluid-filled cable. Our plan significantly increases our use — Environmental Action Plan 3 of tracer perfluorocarbon (PFT) tagging to better manage oil and fluid loss (and — EJP-1.3a EHV & 132kV Extra high reduce leak rate by 15 per cent) allowing an overall cost reduction in this area. Cables (oil) voltage — EJP-1.3b EHV & 132kV (EHV) and Cables (gas) 132kV cables — EJP-1.3c EHV & 132kV Cables (solid)
A high proportion of our distribution substation plant asset base will degrade into the highest risk bands (see figure 6). While the increase in asset risk could — EJP-2.1 Distribution 4 be managed to existing levels by targeting individual assets for replacement, Substations – Plant the projected uptake in the connection of low carbon technologies (LCTs) Distribution will also require increased network capacity. To achieve asset health and substation capacity synergies we will increase full substation replacements where plant network utilisation is forecast to be the greatest, while accepting a moderate increase in risk.
We will see a small increase in risk in this area as we deploy targeted — EJP-3.1a Major midlife refurbishment to manage an increase in the population of assets Substations – Plant 5 that exceed their normal asset lives. We will prioritise investment in assets (Transformers) Major where the utilisation on the network is highest and the need for reinforcement — EJP-3.1b Major substation more certain. Substations – Plant plant (Switchgear)
Our non-NARM investments include increased costs to address — For more detail on these 6 overhead line clearances (£1.2m p.a.) and costs for additional inspection, cost movements see maintenance and repairs activities in line with our strategy to manage the explaining our costs Non- ageing asset base (£4.2m p.a.). These costs are offset by the completion network of a number of programmes in the current price control period (such as asset risk Black Start resilience). metric (NARM) categories and indirect costs
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Figure 6 shows the forecast proportion plan on replacing in the period. we are able to prioritise the of assets in each health index category — Tower lines: we will continue to replacement of substations that An overview of our approach in 2023, the proportion of assets in each manage our tower population also require additional network health index category by 2028 without through mid-life refurbishments capacity where there are also strong intervention (due to asset degradation) to ensure that these assets do condition drivers and where there and the proportion of assets in each not degrade beyond the point are synergies with other business health index category by 2028 after the that refurbishments become objectives such as improved safety effects of degradation and our planned uneconomic. Half of the tower line and reliability. investments.1 conductor population will move — Major substation plant: We will beyond the normal expected asset see a small increase in risk in this — Wood poles: the number of high- life for the asset base as shown by area as the population of HI4 risk poles (HI4 and HI5) increases the movement into the HI3-HI5 assets increases from one per substantially during the next price health index bands. cent to nine per cent from 2023- control period from 24 per cent to — EHV and 132kV cables: we project 28 as many of our oldest assets 40 per cent of the population. We a modest increase in assets in the (currently HI3) degrade beyond are able to manage this increase highest risk bands (HI4 and HI5) their normal expected asset down to about 30 per cent of the as older cable assets degrade. We lives. Investment will continue population by the end of the period will manage a potential increase to be targeted at the highest risk by targeting the replacement of in associated fluid loss incidents (HI5) assets supplemented by an our highest-risk poles, particularly by increasing our use of PFT extensive programme of mid-life those with the highest criticality technology. refurbishments of our HI3-HI4 (e.g. LV poles in residential areas) — Distribution substation plant: assets where economic to do so. as well as increasing our inspection we will accept a moderate risk frequencies for those that we do not increase in this area to ensure
Figure 6: movement in Health Index bands from 2023-28
Health Index band Asset Total group assets HI1 HI2 HI3 HI4 HI5 2023 38% 18% 20% 11% 13% 393,720 Wood poles 2028 without ED2 intervention 32% 17% 10% 17% 23% poles 2028 with ED2 intervention 44% 17% 10% 14% 15% 2023 27% 40% 33% 0% 0% 4,601 2028 without ED2 intervention 19% 30% 51% 0% 0% towers 2028 with ED2 intervention 19% 48% 33% 0% 0% Tower lines 2023 20% 57% 8% 13% 1% 2,167km 2028 without ED2 intervention 15% 12% 52% 9% 13% 2028 with ED2 intervention 20% 12% 52% 8% 8% Extra high 127,745 2023 68% 21% 9% 2% 1% voltage/132kV items of 2028 without ED2 intervention 65% 21% 3% 5% 6% cable plant 2028 with ED2 intervention 68% 20% 3% 4% 3% Distribution 10,842 2023 41% 26% 16% 9% 9% substation items of 2028 without ED2 intervention 37% 21% 8% 11% 23% plant plant 2028 with ED2 intervention 41% 22% 8% 9% 20% Major 2023 77% 9% 10% 1% 3% substation 3,179km 2028 without ED2 intervention 72% 14% 1% 9% 4% plant 2028 with ED2 intervention 74% 14% 1% 9% 2%
We will maximise the substantial Specifically, we will: there is less certainty over future value for customers that can be network capacity requirements, and delivered by driving synergies — Use the latest data from network where we judge we can accept and between decarbonisation and monitoring and analytics to ensure manage the risk of ageing assets asset renewal investment. effective identification of priorities, through enhanced inspections or whichever pathway to net zero is monitoring combined with asset life We have developed an optimised followed, and deploy capacity- extension techniques. asset renewal plan, which will create increasing solutions such as full — Continue to proactively increase significant additional capacity in the substation replacements, overhead the capacity within our network areas that most need it and limit the line rebuilds and circuit overlays, through incremental investment, increase in total cost by minimising where the network constraints are where efficient, as part of routine asset renewal expenditure on those the most onerous and occur soonest asset replacement works through areas where the future requirements under any credible pathways. design and specification choices or for additional capacity are less certain. — Defer asset replacement where our policies.
1. Excluding modelled health benefits from decarbonisation investment.
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Significant benefits
Our investment proposals are Open Networks common evaluation underpinned by robust cost benefit methodology. analysis (CBA). For further information on our proposed additional We have undertaken extensive analysis investments, justifications and links to £471m capacity of the least total cost options for our our engineering justification papers estimated significant plan, considering the total suite of plan (EJPs) and CBAs see annex 6.2 Our savings between additional objectives and drivers for investment. Costs In Detail. 2023 and 2050 capacity to enable accelerated We have used the following CBA pathways to tools within our optioneering where net zero appropriate: Ofgem CBA template; NARM long-term risk; and the Energy Networks Association’s (ENAs)
Output measure/1 Customer indicative ED1 ED1 ED2 outcomes Benefits Deliverables input measure to date forecast target
Enable an — £471m of AR1 synergy savings efficient long- AR1.1) Prioritise replacement towards assets that also between 2028 Annual reporting term transition deliver capacity increases required by our net zero and 2050 on decarbonisation to net zero pathways and upsize our assets where required to - ✓ synergy benefits - through — Increased deliver long-term synergy savings, annually reporting created maximisation capacity for on benefits created of synergies accelerated between load- pathways related and — Reduced asset renewal disruption for 2 expenditure customers AR1.2) Enhance our business processes and analysis — Increased tools to better enable the identification of load efficiency growth and asset condition synergies
— Maintain long- High risk Deliver our AR2.1) Replacement of ‘high risk’ outdoor substations AR2 term asset risk substations 168 190 100 investment with indoor substations 3 plan to and reliability replaced improve — Reduced cost AR2.2) Utilise our new innovative Thor hammer network — Improved assessment device, alongside foot patrols, to better Impact of health through delivery target the ageing wood poles in worst condition interventions on - - 24% efficient efficiency through our inspection and replacement programmes whole life risk (%) decision- — Improved data making, AR2.3) Implement online dissolved gas analysis quality Delivery of deploying (DGA) technology on power transformers to identify 79.0% 100% 100% NARMS target3 innovation and — Long-term current and future issue optimisation of strategic interventions investment AR2.4) Carry out ‘fingerprint’ analysis on switchgear to identify current and future issues — Maintain safety, legal AR2.5) Undertake partial discharge mapping for HV and Electricity and EHV circuits on underground cables to identify Safety, Quality current and future issues and Continuity AR2.6) Utilise smart meter data to identify customers Regulations with high load and therefore, increased risk of (ESQCR) overloaded cut-outs regulatory compliance2 AR2.7) Utilise drone technology to capture imagery for routine asset condition inspections, as opposed to — Reduced helicopters likelihood of unnecessary AR2.8) Investigate using AI and machine learning to investments and/ automatically triage captured drone imagery (ref. or premature AR2.7) and highlight where works are required replacement of AR2.9) Undertake a market assessment to investigate equipment in the alternative technology and/or materials for substation journey to net building and civils to ensure we are aligned to modern zero by 2050 best practice for non-electrical assets AR2.10) Report on the condition and health of our Annual reporting on ✓ ✓ ✓ asset base annually health of asset base
Innovation | Data and Digitalisation | Workforce Resilience
1. Numbers shown may be subject to rounding. See annex A1.4 Key targets and measures for profiled targets. 2. Electricity Safety, Quality and Continuity Regulations 2002 (ESQCR). 3. Network Asset Risk Measures target (NOMs in RIIO-ED1). 4. Cross-reference DSO1.3) Installation of LV load monitoring; cross-reference Network for Net Zero SI1) Ensure network capacity is available.
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Significant benefits
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Who we Wave 3 – refinement and finalising
engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 2 dedicated events Stakeholders engaged: 4,762 total – 64 unique interactions Wave 1 findings Details Balance investment with a fair cost to the — Customers agreed they have a duty to pay for long-term improvements to the network customer but disagreed on how costs should be fairly recovered — Long-term planning is required with a 10+ year outlook to support, as much as Long-term planning must enable net zero possible, the transition to a low carbon future Asset and refurbishment priorities should — Maintaining long-term condition was thought to be working well overall but that be future-focussed expectations of reliability and resilience are likely to increase
Wave 2 Events: 135 total – 5 dedicated events Stakeholders engaged: 15,475 total – 234 unique interactions Wave 2 options A B C D E
Options were Broadly similar Slight improvement Higher levels of Long-term Significant, costed to help levels of reliability in risk of asset investment to reduction in targeted investment customers performance but failures producing deliver long-term fault rates while to deliver larger understand the with a risk of more increased certainty reduction in fault delivering a net zero reduction in faults benefits and faults on some parts in maintaining rates ready network and lower future potential bill impact of the network reliability levels costs in 2028-33 of the service levels and beyond proposed
Customer ambition Option C was the most popular choice among customers, where 27% thought that a significant short-term and broader investment would yield major improvements and reduce costs in the long term. Business customers were evenly findings spread across options B to E, while the majority of future energy customers, 35%, voted for option D. Those who selected less ambitious options (A to C) also recognised the importance of investment in the long-term condition of the network but were concerned about the potential higher costs and what this might mean for customer bills
Wave 3 Events: 91 total – 6 dedicated events Stakeholders engaged: 32,500 total – 2,402 unique interactions During Wave 3, ambition levels D and E were retested to confirm customers’ preferred level of investment for network resilience improvements while preparing for net zero
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Support for long-term investment and preparations for net — We will actively enable the transition AR1 Link zero, balanced with efficiency and affordability to net zero through a programme of Customers recognised a balance must be struck between the additional, efficient investments within need to invest in long-term improvements, while managing costs our asset replacement programmes in the near-term. that delivers extra capacity needed for Customers and colleagues recommended a proactive renewal net zero strategy, upsizing equipment that would deliver net zero capacity benefits where possible, enabling decarbonisation, cost savings, and reliability improvements
— Introduce innovations alongside replacement and — We will invest in advanced inspection AR2 Link refurbishment programmes to improve reliability and lower and analysis techniques to help make future costs better decisions about how, where Rural and domestic customers support investment in systems and when to invest in the network to to monitor asset health, recommending ambitious investment in support greater resilience and net zero tools that enable pre-emptive maintenance to reduce both long- readiness term costs and faults
— Acceptance was high for all customers — Asset Resilience acceptability score: 75% with SMEs being the highest at 76% - Link
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Maintaining a Safe and Resilient Network – Climate Resilience
Climate Resilience
We will adapt our network and operations to build resilience against the effects of climate change, including working collaboratively and using innovation to develop new solutions to address the range of climate change pathways and consider wider system interdependencies.
SAFETY RELIABILITY & AVAILABILITY
ASSET CLIMATE RESILIENCE RESILIENCE
PHYSICAL & CYBER SECURITY
Climate change represents a to deliver 211 flood defence upgrades by significant ongoing risk to our 2023, allowing us to reduce our costs in network and our customers. the 2023-28 period.
We have heard the following key Our plan, set out in detail in our Climate messages from our stakeholders: Resilience Strategy contains investment of £16.0m p.a. throughout the 2023- How much it — Plan for the worst – consider 28 period on climate resilience, an will cost a 4°C global temperature rise as a overall reduction of £6.5m (29 per cent) worst-case scenario. p.a. compared to 2015-23. The major 2023-28 — Collaborate with other infrastructure elements of this work are: expenditure £16.0m and regional organisations to share (annual) 2.5% of totex knowledge and data. — flood mitigation where our plan — Address interdependencies with contains annual expenditure of versus other infrastructure providers. £1.2m, a reduction of £4.6m or 2015-23 -£6.5m 79.1 per cent. -28.9% We have built strong foundations in — vegetation management where the current period. We accelerated our our plan contains expenditure of One of our 9 plan areas, programme of flood mitigation works to £10.9m p.a., an increase of £1.3m or taken together, delivering ensure that our major sites are compliant 14.1 per cent. more for less. with national standards. We are on track
NorthernNorthern Powergrid: Powergrid: our our business business plan plan for for 2023-28 2023-28 – – 111 111 OUTPUTS EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Maintaining a Safe and Resilient Network – Climate Resilience
Analysing the potential impacts
We have risk-assessed the impact The main signals for the UK are warmer, A full risk assessment has been carried of climate change and severe wetter winters; hotter, drier summers; out across three timescales (current, weather on our network to inform and an increased risk of extremes. 2050s and 2080s) for both RCP2.6 and our plans. We have also considered regional RCP8.5 to inform our plan. The analysis variations and are working with other shows that no significant divergences Using the Met Office’s UK Climate organisations to consider how their are seen until beyond 2050 (see figure 1). Projections 2018 (UKCP18), we have adaptations will affect our network. considered a range of scenarios (or climate change pathways) predicting In addition, we have carried out the effect of climate change on our local benchmarking comparisons against weather to the end of the century. We best practice alongside consideration Our long-term success depends have focused on two representative of emerging national guidance from on how well we prepare for the 1 concentration pathway (RCP) scenarios: organisations such as the Climate challenges of the future by Change Committee, the Department accounting for and adapting to — RCP2.6 (close alignment with the for Environment, Food & Rural Affairs the effects of climate change on 2°C global warming considered in (Defra) and the National Infrastructure our network. the Paris Agreement); and Commission. This shows that we are in — RCP8.5 (a worst-case scenario of a strong position as a result of our work Clare Thomas 4°C global warming). to date. Asset management engineer
Figure 1: UKCP18 climate change profiles
If the global average temperature is kept within 2°C, the Should the global average temperate rise reach 4°C the Met Office predicts that, by the end of the current century, uncertainty in the modelling creates a much wider range of maximum summer temperature for our region will fall within possible outcomes. the range of 30.5°C and 39.5°C.
47.5 Max temp (ºC) 47.5 Max temp (ºC) 95th 90th 42.5 Summer maximum temperature (ºC) 42.5 Summer maximum temperature (ºC) RCP2.6 showing percentiles RCP8.5 showing percentiles 95th 75th 37.5 90th 37.5 50th 75th 50th 25th 32.5 25th 32.5 10th 10th 5th 5th
27.5 27.5 2061 1995 2029 2063 2097 2061 1995 2029 2063 2097
Rainfall predictions are equally as uncertain as temperature However, should global temperature rise reach 4°C projections out to the end of the century. Should global there is much greater risk that winter rainfall significantly temperature stay within 2°C winter rainfall is likely to remain increases for our region. This increases the risk of flooding relatively stable. and possible loss of supplies.
160 5-day rainfall (mm) 160 5-day rainfall (mm)
95th Winter 5-day rainfall (mm) Winter 5-day rainfall (mm) RCP2.6 showing percentiles RCP8.5 showing percentiles 90th 95th 90th 75th 100 100 75th 50th 50th 25th 25th 10th 10th 5th 5th
40 40 2061 1995 2029 2063 2097 2061 1995 2029 2063 2097
1. Our plan approach aligns with the supplementary Green Book Guidance on ‘Accounting for the Effects of Climate Change’, published by Defra in November 2020. This document sets out specific guidance for projects, policies and programmes that have a lifespan beyond 2035. The guidance states for these projects we should follow a climate resilient approach using at least two climate scenarios to: – consider options that include all adaptation measures that would mitigate the known impacts of the 2°C scenario; and – make decisions based on our own risk appetite about whether we also want to consider adaptation measures aligned with 4°C.
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Developing our response
Flooding (fluvial — We will continue to maintain compliance with industry requirements for flood and pluvial) mitigation. long periods of above — Our plan has £1.2m of flood defence investment (79.1 per cent less than 2015-23) to: average precipitation – carry out minor upgrade works at 13 major substations to ensure continued or intense rainfall compliance with Engineering Technical Report (ETR) 138 standards; and events resulting in – carry out flood mitigation works at 35 high-criticality distribution substations flooding and erosion. in the period to continue to enhance our resilience, for example sites that feed other infrastructure providers. — We considered options for enhancements to existing flood defences to raise our level of resilience above that considered to be industry best practice, for example by increasing defences at all at-risk major substations up to a 1:1,000 year level.1 While this carried some support from some stakeholders it did not represent value for money.
Gradual increase — Our established programme of works for vegetation management will continue in in temperature and the 2023-28 period to ensure clearances to overhead lines. We will target 24,100 rainfall spans of the network p.a. warmer and wetter — Overall vegetation management costs in our plan are £10.9m p.a., an increase conditions extending of £1.3m (14.1 per cent). This is driven by the emerging risk of ash tree dieback vegetation growing (forecast to affect 290 spans of overhead line p.a.), clearances to tower bases seasons. and substations. The introduction of two light detection and ranging (LiDAR) surveys in the period will better enable us to drive efficiencies through targeting our programmes.
Extreme heat — We will work to embed climate resilience into all our specifications and standards high temperatures to deliver synergistic resilience through our core asset replacement programmes. reducing the performance and efficiency of assets.
Storms — We will enhance our storm resilience through strengthening of our overhead storm conditions line networks through our core asset replacement programmes. leading to operational failure of above ground assets, increased faults and loss of supply to customers.
In parallel, we will enhance our ability — the national Energy Networks Our plan sets out metrics to track to recover from major events through Association (ENA) climate resilience our progress in enhancing the learning lessons from major events to working group, consisting of UK resilience of our network to inform improvements in our processes electricity and gas distribution and climate change. and practices, allowing us to promptly transmission operators; calibrate our operational response — other local infrastructure We are working with other network plans, trigger criteria and controlled organisations, such as Northern Gas companies as part of the ENA climate escalation stages, see annex 4.9 Our Networks and Yorkshire Water, to resilience working group to develop a approach to resilience. enhance regional climate change comprehensive set of industry-wide, strategies; common resilience metrics. We will Our stakeholders have — other regional bodies on catchment- report on our progress annually. reinforced the need to manage based flood mitigation projects – interdependencies to ensure whole £2m is included in our plan to fund We will also continue to submit progress system resilience. these works; and reports to Defra and the National — local resilience forums, BEIS, and Adaptation Plan in line with the five- We will continue to work with other infrastructure providers on yearly reporting cycle laid out under the other infrastructure sectors and joint scenario planning and testing of Adaptation Reporting Powers. regional organisations to identify recovery processes. interdependencies and enhance resilience. This includes collaborations with:
1. ‘1:1,000 year’ means that, statistically, a flood of that magnitude (or greater) has a 1 in 1,000 chance of occurring in any given year. In terms of probability, the 1,000-year flood has a 0.1 per cent chance of happening in any given year.
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Output measure/1 Customer indicative ED1 ED1 ED2 outcomes Benefits Deliverables input measure to date forecast target
CR1 — Improved long- CR1.1) Improve and maintain flood resilience High-risk sites 2 100% Maintain flood protected to ETR138 93% 99% defence resilience term resilience of through targeted adaptations in civil at all major the network defences and installing additional substation Total sites resilient to defences across the region 3 255 271 48 substations — Increased flooding protection against CR1.2) Improve flood resilience at flooding events distribution substations, either by moving Major substation flood defences 73 84 132 them out of the line of flooding risk or by 3 implementing mitigation measures installed
Share data with infrastructure High criticality CR1.3) distribution providers on local-level resilience and - - 35 identify local dependencies substations with increased resilience3 CR2 — Maintain CR2.1) Undertake enhanced resilience cuts Reduce the impact in line with ENA’s Engineering Technical High voltage (HV) of storms on our resilience of the network Report 132 (ETR132) on our overhead network resilient to 42% 60% 75% network through network to comply with enhanced resilience high winds (ETR132) a comprehensive — Improved requirements programme efficiency and, therefore, lower ETR132 network of vegetation clearance (km) 889 1,295 844 management cost due to the use of technology CR2.2) Establish and maintain clearance Vegetation corridors management 24,800 25,700 24,100 clearance spans p.a. (ENATS 43-8)4
CR2.3) Assess and tackle the issues anticipated from ash tree dieback
CR2.4) Undertake a vegetation clearance programme for substations and tower bases
CR2.5) Utilise LiDAR technology to ensure efficient targeting of our vegetation No. LiDAR network 0 1 2 management surveys in period in period
CR3 Improve — Improved CR3.1) Collaborate with other regional resilience through resilience of infrastructure operators to identify and collaborative the network, mitigate interdependencies our region, and work on beyond interdependencies to reduce the risk — Increased CR3.2) Collaborate with the Environment efficiency of Agency and local authorities on the of cascade failures delivery across systems implementation of their regional flood risk — Increased management plans and establish support collaboration where appropriate
Improved CR4 Maintain — CR4.1) Utilise drones for storm damage operational resilience assessments resilience and efficiency through long-term embed long- adaptation CR4.2) Undertake collaborative exercises term resilience to test our operational response. These across our asset — Improved operational simulations test our response to the loss of programmes, response to post- critical national infrastructure and are often working with storm restoration carried out in collaboration with government others to better or in coordination with National Grid or — Increased understand future our parent company, Berkshire Hathaway embedded Energy risks resilience across all our asset CR4.3) Embed resilience across our asset programmes programme designs and specifications to deliver long-term synergistic resilience, — Improved for example moving substations out of resilience at lower the line of fire when replacing them for cost condition drivers and ensuring we have the appropriate ambient future temperature included when we design and establish the rating for overhead lines
CR4.4) Trial the installation of current flow monitors in areas at risk of wildfire
CC4.5) Undertake collaborative research projects to develop predictive analytics for the effects of weather on our underground networks
Innovation | Data and Digitalisation | Workforce Resilience
1. Numbers shown may be subject to rounding. See annex A1.4 Key targets and measures for profiled targets. 2. One major scheme and two shared National Grid sites to be completed in 2023-28. 3. Cumulative in period. 4. Annual average in period.
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How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Who we Wave 3 – refinement and finalising engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 5 dedicated events Stakeholders engaged: 4,762 total – 150 unique interactions Wave 1 findings Details The impact of climate change on — Climate change adaptation and compound events were tangible concerns for communities remains a concern customers, especially for those in vulnerable locations or areas prone to flooding Collaboration is key to building resilient — Stakeholders viewed collaboration as necessary to develop resilient infrastructure as infrastructure there are key interdependencies across different sectors and the supply chain Consider changes in land use in climate — We should consider land use change as part of climate risk assessments and collaborate planning to understand how adaptation technologies may add more stress to the grid
Wave 2 Events: 135 total – 11 dedicated events Stakeholders engaged: 15,475 total – 5,008 unique interactions Wave 2 options A B C D E
Options were Maintaining current Enhanced cross- Expanded asset Mitigation of Comprehensive costed to help strong levels of sector collaboration relocation and evolving risks such investment and customers network resilience and investment to replacement as wildfires and cross-sector understand the build resilience to programmes interconnection approach benefits and floods and high to build further of major sites to addressing future potential bill impact winds resilience to floods defend against climate change of the service levels and high winds high-impact, low- proposed probability events
Customer ambition 34% of stakeholders supported us taking ambitious action option E (‘Addressing future challenges’) to increase and broader resilience in the face of increasing severity and frequency of natural hazards – flood and storm events – findings exacerbated by a changing climate. Among domestic customers, 23% voted for option B, which was behind option E (34%)
Wave 3 Events: 91 total – 7 dedicated events Stakeholders engaged: 32,500 total – 2,318 unique interactions Option C was further explored with stakeholders and customers to refine commitments for flood mitigation and extending collaborations with regional infrastructure partners to plan for, and manage together, the consequences of climate change
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Take steps to mitigate the impact of climate change on the — We will continue to manage the risks CC1 Link network presented by climate change through Support existed for ambitious efforts to reduce the network’s our ongoing programme to mitigate risk to natural hazards such as flood and severe wind. Most flood risk across the network customers recommended that we focus preparedness and mitigation spending in high-risk areas
— Manage the impact of storms through ongoing network — We will continue to monitor the impact CC2 Link maintenance of climate change on the environment Stakeholders recognised the increasing risk presented by flood and on the network and manage the and storm events and supported a range of actions including impact of weather events such as relocation of critical assets from tidal or fluvial floodplains and storms by putting in place operational proactive removal of vegetation mitigation measures
— Work together with other infrastructure partners to manage — We will further our collaborations CC3 Link climate impact with infrastructure partners, working Stakeholders urged us to collaborate with other companies and together to identify shared priorities, public agencies to develop innovative, efficient, and effective innovations and practices to reduce risk cross-sector approaches to climate adaptation and impact
— Collaborate, sharing information and plans to manage future — We will identify opportunities to CC4 Link challenges manage and mitigate network resilience There was support for sharing and co-funding equipment, operationally through collaborations and sharing information with institutions, especially on future and identifying mutually beneficial innovation partnership working
— Overall acceptance was highest with rural customers (85%). For customers — Climate Resilience acceptability score: 69% with lower levels of acceptance, - Link more information on deliverability is important to them
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Maintaining a Safe and Resilient Network – Physical and Cyber Resilience
Physical and Cyber Resilience
We will build on the extensive investments we have SAFETY RELIABILITY & AVAILABILITY already made to protect your information and electricity supply, and to continually reduce the risks of existing and evolving threats. PHYSICAL & ASSET CYBER RESILIENCE RESILIENCE
We understand changing customer We will start in 2023 from a needs and net zero ambitions mean a position of strength. move to an increasingly decarbonised, decentralised and digitalised energy As a business, we already take the CLIMATE system is required. At the same time, threat to your services and information RESILIENCE we are seeing increasing IT/OT network very seriously and our activities since risk – particularly in the field of cyber 2015 have gone above those identified security. However, we are set to start in our 2015-23 business plan. This the five-year period from 2023 in a is particularly the case in cyber strong position because of the £47m security, where the need arose to investment we have made in physical invest more than £16m in meeting and cyber resilience in the period the emerging threat. 2015-23, meaning that we can continue to secure your existing and future services while reducing costs. How much it We know that security of your electricity will cost supply and information is important to you. We plan to invest £49m on driving 2023-28 down risk that will, in turn, create a expenditure £14.1m stronger network that is resilient to (annual) 2.2% of totex cyber and physical attacks, and a further £7m on ensuring we have resilient versus communications systems that will 2015-23 -£1.6m ensure our engineers can safely control -10.2% and maintain your electricity supply. One of our 9 plan areas, taken together, delivering more for less.
In the 2015-23 period we have invested to:
Establish a Certify our systems Implement Meet the Establish processes dedicated cyber and processes to the the Center for requirements set and deploy a security team and a international standard Internet Security’s out under the EU wide range of 24x7x365 security for management of (CIS) Controls Security of Networks cyber detective operations centre. information security, across our & Information Systems and defensive ISO27001. systems. (NIS) Directive. technologies.
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Maintaining a Safe and Resilient Network – Physical and Cyber Resilience
We also invested significantly in Recent high-profile examples illustrate Under the EU Security of Networks & improving the physical security systems this growing threat: Information Systems (NIS) Directive, we at our substations, including establishing are duty-bound to take appropriate and a dedicated, round-the-clock, — May 2021: Colonial Pipeline, proportionate measures in securing the alarm-receiving centre to monitor the which carries just over 50 per cent network and information systems on security systems at our substations and of the fuel supplies across the which the essential service we deliver critical sites. east coast of the US, was forced to you relies. Equally, under the General to cease operation following a Data Protection Regulation (GDPR), we The investments made since 2015 ransomware attack. are required to protect our customers’ mean that our focus from 2023 is on — February 2021: Oldsmar, Florida, personal information. maintaining the systems and processes where a hacker took control we have established coupled with of chemical dosing of a water Your feedback continues to echo that targeted incremental improvements treatment works in an attempt to it is our responsibility as a network to further reduce risk. Our business poison 15,000 residents. operator and guardian of that plan will deliver enhanced outputs — December 2015 and 2017: nation- information to ensure it is safe, and that without increasing the level of spending state attack on the Ukraine power we use it appropriately. compared to 2015-23. system that resulted in disruption to power supplies across the country You asked us to engage with specialists You have supported our on two separate occasions. in this area to ensure we can work to proposal to invest to reduce available best practices. Our approach risk and improve the resilience Our customer outcomes focus on focusses on the continual reduction of of our systems. reducing the risk of a successful risk and does so against the backdrop physical or cyber-attack and maintaining of an ever-changing cyber-threat Coupling investment in new technology, resilient communications across our landscape. This means we need skilled such as artificial intelligence (AI), network. Based on our essential service, cyber professionals and training with investment in our people, is the and feedback on what is important to programmes that will see these skills cornerstone of our business plan. you, our approach is to deliver on two evolve to match the maturity of cyber clear responsibilities: protecting your criminals over time; additionally, we — We recognise that, in the cyber information and protecting your have partnered with a National Cyber security arena, the increasing level power supply. Security Centre (NCSC)-approved of threat means that even just to supplier to ensure we have specialist stand still requires investment. This We take these responsibilities input in assessing and selecting is driven by the ever-growing level seriously. As such they shape our improvements to help us work toward of sophistication and determination approach to cyber security. meeting the NCSC Cyber Assurance of adversaries, be that criminal Framework. organisations seeking profit, nation As responsible network operators, states gaining access to critical we are obligated to ensure our From 2023, we plan to increase our infrastructure to cause disruption, systems are resilient to attack. Your team by 20 per cent by recruiting more or groups looking to cause social feedback reinforced that stance. You cyber specialists, then investing in their harm through attacks. These can told us you are concerned about the training and ongoing development. be directly targeted at specific potential impact from the increasing More broadly we will invest in our organisations, or distributed attacks frequency of cyber-attacks and you workforce to provide the skills needed that look for any opportunity supported the need for an action plan to help them do their job in a cyber to exploit weaknesses in an for communicating any cyber-security secure way, building on our solid organisation’s IT systems. risks and mitigations associated with approach that has already provided digitalisation including security of our people with the cyber essentials transferring smart meter data. to perform their work in a safe and
Protecting One of the first lines of defence against cyber threats is our people. Therefore we are investing in training, development and security tools your to help us identify weaknesses, as well as detecting and responding to information cyber-attacks on our systems to protect your information and any other information we own or process.
Protecting In addition to making sure that our systems are secure to protect your data, we must also make sure that our systems and network are cyber your power secure to protect your electricity supplies. Disruption to our network supply remains the most significant way that we impact the lives of our customers. We have seen this come through strongly in your feedback to us, which encourages continued investment in the security and resilience initiatives required to ensure that we minimise that disruption.
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Maintaining a Safe and Resilient Network – Physical and Cyber Resilience
We plan continued investment in our cyber and property defences to meet the growing threats to our network, customers and systems.
Phil Green IS security and compliance manager
secure way. For example, instances of We plan to establish secure party Such improvements include enhanced colleagues clicking on test phishing connectivity models and expand our fencing, including electric fencing, emails has reduced, from 33 per cent cloud security prevention, detection additional closed-circuit television at the start of 2016 to just under 0.5 per and response capabilities by ensuring (CCTV) and perimeter detection and cent at the end of 2020. that cloud security tools are installed physical security patrols. as a standard part of our system build. We will invest in security tools This continued expansion of our We plan to target investments at our to protect our networks from cyber-security capabilities includes highest-risk sites. We will enhance unauthorised access or attack. mitigating the risks presented by open the physical security at 25 per cent of data and the increased digitalisation of our highest risk substations including Part of this will include extending our operations. all our sites designated as CNI. These our operational technology network enhancements include using new surveillance capability to detect Any new or changing systems and technology that can for example unauthorised or abnormal activity. As processes will be incorporated into our automatically distinguish between part of this, we will enhance our systems ISO27001-certified information security human intruders and wildlife. This will to detect network-based attacks to all management system, which is in place be fitted in addition to the security our major substations. to ensure they remain under continuous systems already installed, enabling risk review and improvements. more value to be extracted from We will invest in tools that employ AI to our previous investment and help us help us quickly detect and respond to Our approach to physical identify real intrusions and reduce cyber-attacks on our control systems security will continue to underpin response to false alarms through the utilising machine-first decision making, protecting power supplies. deployment of improved CCTV and ultimately verified by a human. Our perimeter detection. approach, however, is not solely The new threats of cyber security do reactive: we will improve the systems not overshadow the well-established Underpinning our network that we use to hunt for active threats physical security threats the network resilience is a reliable and weaknesses in our IT and power faces. communications network that network control systems by investing allows us to safely coordinate our in security tools that can continuously The significant work we have done since workforce as well as remotely inspect our systems, and alert us to 2015, including meeting the standards control the electricity network. weaknesses as they are found, as set for sites designated as Critical well as investing in risk-management National Infrastructure (CNI), means During the period it is vital that we invest applications that will help us manage that we are able to reduce our costs to mitigate the impact of the retiring and improve our cyber risk management while incrementally maintaining, and of the power resilient public telecom and governance processes. These improving, our levels of resilience. network technologies that we use initiatives are all aimed at improving our today for communication with our capability to detect cyber-attacks by From 2023 we will continue to focus field engineers. monitoring more of our data at more on security incident ‘hot spot’ areas points on our systems. This will help responding with improved physical The Emergency Services Network our security operations centre see and security measures based on best (Airwave) will be closing down and BT correlate more events that may be an practice that are designed to protect systems (PSTN) that deliver telephone indicator of a threat or compromise. our network from theft and vandalism lines to our substations are changing activity that not only increases costs but to a more advanced but less power also puts your electricity supply at risk. resilient model. These are the power
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Maintaining a Safe and Resilient Network – Physical and Cyber Resilience
resilient systems that our engineers This investment is essential in order Cyber security is important to us all, but currently use to communicate when to ensure we are able to meet our one of the strongest forms of defence mobile telephones cannot be relied on. obligation to provide 72 hours of power is obfuscation so we cannot share all With our own fixed telecommunications resilience to the systems that we use to we will do. An overview of our plans network providing a high degree of remotely control the electricity network for investment is shown in this section resilience, we will invest in mobile and that will be needed to restore of our plan but our detailed Cyber communication to ensure our field power in the event of a major national Resilience plans have been securely engineers have continued access to failure. We plan to maintain the current provided to Ofgem’s Cyber Security power resilient mobile communication power resilience for our substation team to scrutinise. that will ensure that they can safely work communications in line with the current to restore power in extreme events. national resilience guidance.
Output measure/1 Customer indicative input ED1 ED1 ED2 outcomes Benefits Deliverables measure to date forecast target
PC1 Protect our — Customers’ PC1.1) Invest in technology, such as cloud customers’ information will be access security broker (CASB) and AI information kept safe analytics, that helps to identify weaknesses in our IT systems and quickly detect attacks
Develop and implement a cyber- PC1.2) Loss of information specialist training programme for our (material cyber workforce 0 0 0 breach) PC1.3) Invest in automated event response technology to help us quickly respond to cyber-attacks
PC1.4) Achieve recertification for ISO27001 and ISO27019
PC2 Protect our — Customers’ power PC2.1) Design and implement core OT customers’ power supplies will not system and major substations network supply from cyber be impacted by sensors cyber-attacks attacks Loss of supply PC2.2) Develop and implement an OT (material cyber 0 0 0 cyber-specialist training programme breach)
PC2.3) Implement EDR on our core systems
PC3 Protect our — Customers’ power PC3.1) Deploy a rapid incident response Loss of supply customers’ power supplies will not security solution to quickly protect network (material physical 0 0 0 supply from be impacted by substations breach) physical attacks physical attacks at our major PC3.2) Deploy intelligent perimeter security Intelligent perimeter substations - - 155 upgrades security upgrades
PC4 Ensure our — Restoration PC4.1) Deploy a resilient mobile Date of system communications of customers’ communication system for our critical field - - 2025/26 upgrade systems are power power supplies colleagues resilient to help our will not be engineers safely impacted by major and quickly restore communications power failures PC4.2) Establish vehicle deployable No. mobile resilience emergency communication hubs - - 4 — Power supply will vehicles remain resilient (deployable resilience)
Innovation | Data and Digitalisation | Workforce Resilience
1. Numbers shown may be subject to rounding. See annex A1.4 Key targets and measures for profiled targets.
Northern Powergrid: our business plan for 2023-28 – 119 OUTPUTS EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Maintaining a Safe and Resilient Network – Physical and Cyber Resilience
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Who we Wave 3 – refinement and finalising
engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 5 dedicated events Stakeholders engaged: 4,762 total – 227 unique interactions Wave 1 findings Details — Stakeholders were concerned about the potential impact from increasing frequency of Stakeholders prioritised actions to mitigate cyber-attacks. They wanted an action plan for communicating any cyber security risks and minimise cyber risks as open data- and mitigations associated with digitalisation including security of transferring smart sharing increases meter data Regular engagement with cyber experts is — Stakeholders want us to engage with specialists in this area welcomed A priority for customers is targeted — Customers wanted us to focus on sites with a history of theft and vandalism, especially investments for high-risk network sites those where there is potential for wider corruption across the network
Wave 2 Events: 135 total – 6 dedicated events Stakeholders engaged: 15,475 total – 4,940 unique interactions Wave 2 options A B C D E
Options were Strong controls Advanced Wider roll-out Roll-out of state- Near full coverage costed to help against the risk protection at our of advanced of-the-art controls of our business customers of physical and highest risk sites protection to our and next generation with state-of-the- understand the cyber-attacks, reducing the risk of high-risk sites, technology art detection and benefits and protecting customer cyber compromise further reducing the allowing for controls, including potential bill impact information and the on the network risk of compromise enhanced detection facilities and of the service levels energy network on our network and response to systems to support proposed threats decarbonisation
Customer ambition Stakeholders’ views were polarised with the favoured options by stakeholders being option E (34%) or option B and broader (25%) levels of ambition in this area. Feedback was divided between those favouring a high level of investment findings due to perceived significance of physical and cyber hazards, and those favouring low levels of investment due to perceived good performance already in this area. Among domestic customers, there was a clear majority for option E (35%), while among SMEs there was an even split between options B and E (30% for each)
Wave 3 Events: 91 total – 3 dedicated events Stakeholders engaged: 32,500 total – 2,277 unique interactions Following diverse views about levels of ambition in Wave 2, Wave 3 explored the level of importance placed on robust cyber security plans, investment in the physical security of our sites from theft and the impact on customer resilience from power cuts with customers
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Safeguarding customer information is important — We will continue to safeguard our customers’ PC1 Link Stakeholders emphasised the need for privacy information with future-proofed practices and safeguards as a prerequisite for the introduction of protocols in place digital technology and smart meters
— Effective cyber security plans are increasing in — We take cyber security very seriously and PC1 Link importance recognise this is an evolving challenge with plans in PC2 Stakeholders were concerned about the increasing place to ensure we mitigate these threats frequency of cyber-attacks and the security of our network. Stakeholders urged increased investment in security of IT platforms and to facilitate the automatic detection of, and response to, cyber threats
— Security of equipment and substations is valued — We will continue to employ practices and PC3 Link Customers support improvements to sites with a technological solutions to protect our network and history of theft and vandalism. Support also existed substations from physical attacks for the increased use of motion sensors as well as other automated technologies
— Support for future-proofing network — We will maintain and upgrade our communications PC4 Link communications systems, which enable power restoration across Customers supported plans to enhance technology our network and communications systems that support power restoration
— Physical and Cyber Resilience acceptability — Overall acceptance was high with customers; and Link score: 73% trust was important to them at 73% -
Northern Powergrid: our business plan for 2023-28 – 120 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY OUTPUTS
Meeting the Needs of Consumers and Network Users – Customer Service
OUTPUTS – MEETING THE NEEDS OF CONSUMERS AND NETWORK USERS Customer Service
CUSTOMER VULNERABLE SERVICESERVICE CUSTOMERS
OPENNESS & CONNECTIONS TRANSPARENCY
OUR COMMUNITIES
Our customers will experience a personalised, proactive service that provides choice in how and when they do business with us. Backed by the latest customer-facing systems and use of data, we will use our interactions with customers to support their journey to decarbonisation.
Customer service is an ever-growing How much it and vital part of our business. As your will cost needs and expectations evolve, so does our commitment to offer a proactive, ED2 personalised, reliable and flexible expenditure £4.2m service to every customer we serve. (annual) 0.7% of totex
Our commitment to providing an Vs ED1 ever-improving service to you on 2015-23 +£0.2m priority topics, such as reliability and 5.0% connections, will be supplemented as we move into new territory with One of our 9 plan areas, changes brought about by the energy taken together, delivering transition, providing you with support more for less. on the journey to decarbonisation.
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Meeting the Needs of Consumers and Network Users – Customer Service
Striving to be the best
Our performance demonstrates Figure 1: overall customer satisfaction our ongoing commitment to customer service. 94.0% Customer satisfaction score
In the current period we committed that customer service would become faster, 90.0% more reliable and better communicated. Our overall performance has continued to improve with customer satisfaction 86.0% scores increasing by 8.2 percentage points to 90.5 per cent since the start of Industry range the current period. 82.0% Northern Powergrid performance In parallel, our complaints have fallen by 43.7 percentage points since the beginning of the current period and we 78.0% have increased the proportion resolved in one day or less by 29.5 percentage 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 points to 83.3 per cent.
You have told us you value self-service platform, we will aim communication to you on planned us continually improving to further integrate our systems power cuts and identify where customer service. with our customer relationship you may benefit from additional management (CRM) platform on-site support. We have engaged with more than to provide a streamlined, easily 14,000 customers who have been accessible service if you choose to Proactively responding to clear that we should continue to invest engage with us digitally. dissatisfaction: you have told us that in delivering high levels of customer — We will introduce at least three new when something does not go to plan service. Therefore, our aim in 2023-28 channels to support communication, you want to see us managing your is to build upon our progress made which have been determined by expectations, keeping you informed to date. We will capitalise on new customer feedback – reply text and being proactive in our approach to technologies, further personalising our messaging, direct messaging resolve your dissatisfaction quickly and service, being proactive in our response (e.g. WhatsApp) and video chat, effectively. and giving you a choice in how and supported by what3words. when you do business with us. — We will enable ease of navigation — We will be proactive in our between channels, while retaining approach, embedding ownership This will be complemented by our traditional contact channels so and devolving complaint resolution supporting you on the journey to you have the choice to speak to a to our upskilled regional teams net zero and continuing to embed person, if you wish. where it is better for you and more a customer-first culture across our — We will provide greater flexibility effective to do so, whilst offering whole business. by enhancing our appointment on-site customer service support to offerings, extending our service to engage in person to quickly respond To deliver our enhanced commitments provide appointments up to 8pm to your concerns. we will spend £4.2m each year – a five and over weekends for planned per cent increase – to provide you with services. Additionally, we will offer Customer care: you have told us that greater flexibility, choice and support to same-day/next-day appointments delivering personalised and dedicated achieve net zero. with a cost-reflective charge paid by customer care to vulnerable customers customers using this service. is important, in particular supporting a We have listened to your feedback — Proactive communications with fair transition to net zero through our and our customer service you before, during and following a services. commitments break down power cut remain critical and you into the four key themes that have fed back to say that you want — We recognise the importance of matter most to you. greater levels of support once a providing greater support to our power cut exceeds six hours, that most vulnerable customers and Proactive and flexible service: you support for vulnerable customers you have said you want us to be have told us that immediate, proactive is a priority, and that you would ambitious in our commitments, to and personalised communications are benefit from practical advice, which we have listened and acted a priority, combined with flexibility in support and information within your upon – see our Vulnerable when you do business with us. We will local communities. Customers section. utilise the latest technology to engage — Where you experience a long- with you on new platforms and expand running power cut, we will aim to Supporting decarbonisation: you our service offering. provide proactive, practical, on-site have told us to evolve our customer support through deployment of service offerings to provide more — Building on the £4m invested in our customer service vehicles and support on your journey to net zero. digital customer service during customer service professionals. We will use our expertise in this area 2015-23 and the introduction of our — We will deliver enhanced proactive to provide information, support and
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Meeting the Needs of Consumers and Network Users – Customer Service
advice as you transition to using low service teams will work in hand in advice and support to communities, carbon technologies (LCTs) and provide hand with our experts to provide you partners and local authorities. additional help and guidance. with tailored support on flexibility Through our regional CEAs, we products and services. will support local authorities in line — We will be proactive in our — We will make the best use of our with decarbonisation targets. We approach, providing information CRM system to identify your will collaborate across our teams to on energy efficiency and requirements, answer any frequently ensure that you receive consistent decarbonisation, supporting you asked questions on matters such as guidance and continuously learn via our range of communication electric vehicle charging or adopting from our communities to enhance channels. new forms of high-efficiency our customer guidance in this area. — Our intergenerational research and electrical heating, and signpost you Our CEAs will work seamlessly with engagement with early adopters to externally accredited service our regional and customer service of LCTs shows that customer providers. Where you need extra teams to further enhance and tailor service to support net zero needs support our team will be on hand the service we provide to you. to focus on education and must be to provide a personalised service generationally targeted with a range through further understanding your Above all we want to ensure we of platforms for different needs. We requirements. offer you best-in-class customer will use our range of channels to — Using insight and information service. target and support understanding available to us across our region, we of net zero and decarbonisation, to will develop and deliver targeted Our service will be underpinned by bring to life what it means for our outreach campaigns to further further investment in our people customers. inform you on decarbonisation and and contractors through an annual — Our research shows that the how you can support the journey to programme of customer service task of decarbonisation can be net zero. training, which will evolve as we mature overwhelming for many customers, — Backed up by our suite of analytical our customer service offering, aligned with clear guidance, support and tools, we will support you by with high standards of quality. education considered essential for providing access to system data, real change to occur. We recognise along with simple intuitive guidance. We will seek independent assurance of the complexity of this topic and This will support you in making our approach via external accreditation want to use our expertise to help informed decisions when you wish of our customer service standards inform you during your interactions to connect to our network. to provide a roadmap of continuous with us. — As part of our commitment to improvement with you, our customers, — As our services expand for our large the communities we serve, we at the heart of our delivery. customers, electricity suppliers and will recruit a team of community Independent Distribution Network energy advisors (CEAs) across our Operators (IDNOs), our customer regions. They will deliver direct
Our satisfaction scores average >90%; we want to improve further, offering the best possible service. We engaged over 14,000 customers and leading organisations about customers’ needs to develop our plans.
Louise Lowes Head of customer and shared services
Northern Powergrid: our business plan for 2023-28 – 123 OUTPUTS EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Meeting the Needs of Consumers and Network Users – Customer Service
Output Customer measure/1 ED1 ED1 ED2 outcomes Benefits Deliverables indicative input me to date forecast target
CS1 Improve customer — Improved customer CS1.1) Give customers more choice in how Broad measure of satisfaction by satisfaction to contact us through the introduction of customer service 90.5% 92.0% 93.5% introducing new — Choice and flexibility three new communication channels, while score (ODI-F) contact channels, – enhanced digital ensuring full access to traditional contact greater on-site channels No. digital contact offering, including 5 5 8 support and self-service, channels choice in booking supporting our slots for planned customers and CS1.2) Offer greater convenience to services, providing future customers customers by extending appointment increased choice where this is booking slots for planned services into and flexibility in important, but evening/weekend and same day/next day how and when offering choice customers do of human contact business with us2 where required CS1.3) Provide proactive communications — Enhanced to customers for both planned and convenience of unplanned power cuts, where available, 5 7 7 when and how our using smart meter data Convenience (working days am/ days next customers can do (days of week/ days), pm/ day/same business with us time slots) business weekend day including on-site CS1.4) Provide on-site support where hours support where customers experience long-running power required cuts
CS1.5) Provide an enhanced digital self- service offering, preserving the option of 100% human contact where preferred
CS2 Improve the speed — Faster turnaround CS2.1) Resolve complaints through our of complaint for complaints regional teams where it is quicker and Complaints resolution, resolution more effective to do so resolved within 83.3% 88.0% ≥90% resolving 90% of day+1 complaints within one day CS2.2) Use data analytics to aid quicker Complaints analysis of common themes and group resolved within 96.4% 98.0% ≥98.5% complaints by type to support quicker day+31 resolution and root cause analysis Complaints 2.8 1.8 1.4 metric (ODI-F)
CS3 Expand our — Customers more CS3.1) Expand our services for our customer service active, informed large customers, electricity suppliers offering to provide and engaged on the and Independent Distribution Network support for decarbonisation Operators, working collaboratively with flexibility providers transition our customer account management team and data users — Customers able to to provide tailored support on flexibility maximise use of data products and services, making best use Introduction and services offered of our customer relationship management of customer system to identify requirements, answer satisfaction - - 2023-24 FAQs and signpost to approved service survey for providers data services customers
CS3.2) Provide simple, intuitive guidance for data to our customers making it easier to access, find and use
Innovation | Data and Digitalisation | Workforce Resilience
1. Numbers shown may be subject to rounding. See A1.4 Key measures in our plan for profiled targets. 2. Cross-reference to Our Communities deliverable CO3.1) Providing information through communications around the path to decarbonisation.
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Meeting the Needs of Consumers and Network Users – Customer Service
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we engaged ... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 13 dedicated events Stakeholders engaged: 4,762 total – 1,176 unique interactions Wave 1 findings Details — Customers support the use of data to improve our service. Our customers want A personalised flexible service is welcomed personalised service offering options when they contact us, but also at their by customers convenience via a wider offering of appointment times for services — Customers wanted flexible options on ways and channels to interact with us, including A range of options and channels to social media, website, direct messaging and the opportunity to speak to a colleague communicate with customers is important when needed Self-service options and digital tools — Customers see digital technology as valuable e.g. appointment booking, engineer are seen as valuable for a wide range of tracking, planned power cut notifications, and restoration time changes customer types
Wave 2 Events: 135 total – 16 dedicated events Stakeholders engaged: 15,475 total – 14,544 unique interactions Wave 2 options A B C D E
Options were Delivering a great More choice for Enhancing our Tailored, Personal, fast, costed to help service every day a great customer range of digital personalised flexible and customers experience and and personalised services, utilising value for money understand the enhanced support services data analytics customer service, benefits and services to provide a combining data and potential bill impact proactive customer digital technology of the service levels experience across to deliver best-in- proposed multiple channels class service
Customer ambition The highest number of votes (30%) went to the highest level of ambition option E, while options C and D both and broader shared 20% of the votes. Of this 30% for option E, 83% came from domestic customers, followed by 11% from findings SMEs. Although most customers were happy with current customer service levels, there was support for improvements such as new digital channels, extended appointment times, enhanced telephony support and personalised person-to-person support via a human where required
Wave 3 Events: 91 total – 11 dedicated events Stakeholders engaged: 32,500 total – 3,411 unique interactions The importance and scale of a personalised service was explored with customers during Wave 3, along with engagement to consider the shape of future service offerings to support flexibility and customers’ readiness for net zero
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Choice of contact channels and flexible services are — We will develop more personalised, flexible CS1 Link important support services for our customers that Customers felt that more digital contact channels would be take into account their changing needs, beneficial, alongside additional telephone (and SMS) support. working patterns and need to access our Customers saw personalised advice as a benefit, where services through a wider, more dynamic this was a customer’s preference or support was required range of digital channels we will ensure — o following self-service, especially during power cuts. There that customers who require or speaking to was support for extended appointment times someone are able to do so
— Clear, responsive communications and swift resolution of — We will continue to develop our customer CS1 Link issues support processes and colleague CS2 Stakeholders recommended that digital tools are easy-to-use development programme to ensure we and enable rapid, direct communications. Customers wanted meet and exceed customers’ expectations, us to be proactive, informing them in advance of activity or communicating progress regularly and planned power cuts, communicating in a transparent manner resolving issues swiftly and quickly resolving complaints and outstanding issues
— Services to support decarbonisation are growing in — We will work in partnership with our CS3 Link importance customers and stakeholders to develop a We should do more to build awareness of the services that range of support services that helps them we offer, especially for vulnerable customers. Customers prepare for net zero support additional engagement on how to navigate the energy transition, with advice on options for domestic, business and vulnerable customers
— Customer service scored the highest — The acceptability score for customer service: 77% for ease of understanding and clear plan - Link delivery out of all business plan areas
Northern Powergrid: our business plan for 2023-28 – 125 OUTPUTS EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Meeting the Needs of Consumers and Network Users – Vulnerable Customers
Vulnerable Customers
Vulnerable customers will be at the CUSTOMER VULNERABLE SERVICE CUSTOMERS centre of our thinking. We will use data and strong partnerships to provide tailored services to vulnerable customers. OPENNESS & CONNECTIONS We will support customers in fuel TRANSPARENCY poverty and support a socially inclusive transition to net zero by minimising barriers to enter the energy market so OUR COMMUNITIES that no one is left behind. IMAGE
We will provide enhanced services we addressed relevant wider social to vulnerable customers. issues with an increased emphasis on fuel poverty and affordability We recognise that all customers can services. The development of our social be at an increased level of vulnerability programme and consumer vulnerability — o when experiencing a power cut, and matrix has widened the range of tailored that our role in providing additional support services we are able to provide. support for vulnerable customers who Investment in data gathering and social require it is an essential service. indicator mapping has (in conjunction with partners) enabled us to target and How much it We have a high prevalence of recruit in excess of 900,000 customers will cost vulnerability in our region, with to our Priority Services Membership approximately 4.5m of our customers (PSM)2 throughout the period. We 2023-28 (56 per cent) meeting Ofgem’s definition have established a robust partnership expenditure £3.9m of vulnerability.1 network that improves access to (annual) 0.6% of totex hard-to-reach customers, expanding our We conducted extensive engagement understanding of vulnerability and the Vs ED1 and research to significantly increase issues and challenges that customers 2015-23 +£3.1m our knowledge and understanding are faced with in our region. Finally, we +387.5% of vulnerable customers and their have developed affordability outreach requirements, with the aim of programmes, supporting 5,000 One of our 9 plan areas, developing tailored services to meet customers a year to alleviate the impact taken together, delivering their needs. Where we had a mandate, of fuel poverty in our region. more for less.
1. Ofgem’s definition of vulnerability: “We define vulnerability as when a consumer’s personal circumstances and characteristics combine with aspects of the market to create situations where he or she is: significantly less able than a typical domestic consumer to protect or represent his or her interests; and/or significantly more likely than a typical domestic consumer to suffer detriment or that detriment is likely to be more substantial.” 2. In light of stakeholder feedback, we are referring to the Priority Services Register as the Priority Services Membership.
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Meeting the Needs of Consumers and Network Users – Vulnerable Customers
Supporting vulnerable customers is a priority for us
Building on these foundations, our plan We will deliver more targeted ensure we are continuing to meet the will formalise and enhance the services recruitment of vulnerable web content accessibility guidelines we provide to customers in vulnerable customers to our PSM to (WCAG) Level AA standard, and a situations. Support will include: proactively communicate with and wider assessment to check we are using manage the needs of vulnerable the best techniques and approaches — more targeted recruitment to the customers on an ongoing basis. suitable for vulnerable customers. PSM; — a new accessible communication In order to most effectively help As part of our plan, we will also develop channel; customers in the most vulnerable a new ‘all in one’ application solution — enhanced support for vulnerable situations, it is vital to be able to identify for vulnerable customers; an approach customers; and recruit them to our PSM. Ofgem supported by our stakeholders that also — smarter use of data; expects us to undertake proactive and goes beyond Ofgem’s requirements to — ambitious plans to scale up our fuel targeted advertising of the PSM and the deliver for those across our region. See poverty programmes; and services offered to vulnerable customer Customer Value Propositions section — the development of new groups, and our stakeholder research for more details. The application will be programmes to ensure no one is left supports this. Feedback suggests that developed with stakeholders and will behind in the low-carbon energy an ‘all in one solution’ application would be robust and responsive to changing transition. be valuable; to enable customers with needs in the coming years, and aims to: different communication needs to Above all, we will ensure that customer easily engage with priority services and — improve our accessibility for vulnerability is central to our activities affordability programmes. those customers with special throughout our work, an approach that communication needs; our stakeholders widely favour. There are in the region of 900,000 — enable us to respond to their households on our PSM. We will build requirements through the new Support for vulnerable customers during on our existing progress and hold digital platform; power cuts was one of our stakeholders’ ourselves accountable with stretching — provide an alternative and less top priorities. Customers want to see targets. We have set a target of resource-intensive method of increased outreach and communication recruiting 70 per cent of our eligible communication, which means a campaigns – targeted at the vulnerable high-risk customers to the PSM before decrease in customer time spent – to enhance awareness of the PSM the end of the price control period.1 To contacting us through traditional and the support available during power do this, we will use data and partners methods; cuts. The support needs to be proactive to develop a regional approach to our — release resource to assist those and accessible, with human contact recruitment to reflect local differences customers who do not utilise digital preferred where possible. Stakeholders (including rural and urban differences). channels; also approve of increased collaboration Campaigns will be delivered — offer wider benefits, such as energy with partners (both those in other through external PR agencies, media efficiency advice and affordability sectors and experts in their fields) communication and media outlets. programmes; in order to provide the best service To complement this, customer-facing — provide us with a two-way possible. As part of the wider strategy, staff will have access to an application communication tool, increasing we will do more to address fuel poverty, that enables them to submit real-time information on customers’ needs and address the barriers to vulnerable amendments to the PSM and complete and helping overall customer customers, including promoting energy new registrations. relationship management; and efficiency in their homes. — improve awareness of low voltage Sophisticated digital techniques will power outages. This a stretching plan that commits be employed to recruit, track, maintain to a level of ambition over and above and share information on vulnerable The majority of the cost increases Ofgem’s minimum requirements in customers. We are actively working with relating to PSM recruitment are from several key areas. These significant other utilities and regulators to develop the application development and improvements will cost around £3.9m a shared essential services PSM, and we roll-out. There will be an upfront in total p.a. between 2023 and 2028, will continue to use wider data sources development cost of £1.0m, with which represents an increase of £3.1m and social indicator mapping and ongoing maintenance costs of around p.a. compared to our current spend. But partners to help identify hard-to-reach £0.2m p.a., however the benefits are this step up in activity and investment customers and sign them up to the PSM. likely to be significant. will bring forward significant benefits for our most vulnerable customers and Our communication aims to be Customers can make savings as a result is offset by efficiencies in other areas of proactive, accessible and human- of access to valuable information. On our plan. centred, an approach supported by average, the savings from switching our stakeholders. This is why we will energy suppliers is around £350 p.a. per continue to communicate in a variety switch, while the savings from energy of spoken languages (as a minimum, efficiency advice is around £102 per the top 10 languages in our region), plus household. The application is likely non-spoken languages such as British to increase the instances of all these Sign Language, and produce accessible scenarios, and combined they could 1. High-risk customers are defined as those who are web pages using services such as Recite have a total value in the region of £4.4m. medically dependent on electricity, have a severe physical disability, chronic serious illness or have mental Me. We will also undertake a review to health needs.
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Meeting the Needs of Consumers and Network Users – Vulnerable Customers
Taking our support to the next level
Customers’ “2-3 hours you can cope “After 6 hours that would “Anything over 8 hours “12 hours, that would be needs evolve over with that – it doesn't become a struggle for me. would be frustrating” devastating. We would the life-cycle of affect your freezer” I can't afford to get any leave and I’d think about cold on my chest” the financial loss as well” a power cut Medically dependent Poor mobility Serious/chronic illness Temporary vulnerability
Manageable Problematic Struggle Less than 3 hours 3-6 hours 6-8 hours 8-12 hours 12 hours
Critical need Is the safety of the customer affected by the power cut?
Emotional need How emotionally distressing is the power cut for the customer?
Comfort need How has the power cut affected the physical comfort of the customer?
Contact centre colleagues assess the needs of each customer – this A call from the British is an example of Proactive contact and The option of a torch or Red Cross, a visit from an tailored support ongoing updates from our glow sticks and a hot meal engineer and a generator if The option of alternative Powergrid Care team provided needed accommodation if required
Operations Proactive contact and Consider mobilising the On-site support team provides enhanced welfare support colleagues assess ongoing updates from our on-site support team if including customer support vehicles, generator provision the needs of the Priority Service Team power cut is expected to and face-to-face updates if required customers and exceed 6 hours additional support as part of their restoration strategy Proactive communication with PSM customers throughout the power cut
As a vital part of our support during We will endeavour to proactively that impact more than one household power cuts we are committing contact 100 per cent of high-risk and exceed six hours. to faster and more personalised PSM customers within the first proactive communication and hour of a power cut and 95 per Similarly, we plan to work with providing enhanced care for our cent of remaining PSM customers businesses that support people in PSM customers. within three hours of a power cut. vulnerable situations, such as care homes, to develop resilience strategies. When talking to vulnerable customers To meet this new target, we will increase about power cuts (as part of our ‘How the size of our PSM communication As part of our enhanced welfare offering to drive behaviour changes in PSM’ team. This additional capacity will help we are also aiming to reduce the impact research), we learned that proactive increase the speed of response, and of long-duration power cuts for those communication is important, as is the the ability to respond across channels customers who are most at risk by availability of human contact to discuss according to the needs of customers. increasing our capacity to install remote the needs of that customer. Relevant For planned power cuts we will generation. This remote generation will information channels are, therefore, endeavour to speak to all impacted PSM include adding the capability to install required to be accessible for a diverse customers. We will also aim to provide up to 25 ‘suitcase’ generators per week. range of vulnerable customers, and these customers with a proactive our stakeholders have told us that contact at least three days ahead of There will be additional costs associated tailored support should be offered a planned power cut. with this increased level of service, during power cuts. particularly around proactive customer Building on the welfare support offered communication and the enhanced level We have devised initiatives across to vulnerable customers during the of support offered on site. In the two broad areas where we can offer current price control period, where we 2023-28 period, there will be an enhanced support for vulnerable developed our vulnerability matrix to increase in spending of around £1.5m customers. These areas cover proactive tailor services to the customer’s needs, per year. Almost all of this will fund communication before and during a we are planning to establish a new proactive onsite support for customers. power cut, and enhanced onsite welfare dedicated support team that will provide support during a power cut that exceeds enhanced, personalised onsite welfare six hours. These initiatives have been support in the event that a power cut is developed in line with the principles set expected to last longer than six hours, out by Ofgem, particularly principle one, when more than one household is which requires vulnerable customers impacted. Our target for 2023-28 is to to be effectively supported and provide onsite support during the day communicated with throughout. for 75 per cent of unplanned power cuts
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Delivery partners – delivering success
— Set clear — Select projects based expectations for on our objectives the interventions, — Identify lead partners including income with expertise and maximisation, proven delivery energy efficiency, ability (e.g. Citizens health and wellbeing Set Deliver Advice) improvements objectives schemes — Develop and deliver — Set clear KPIs with partners programmes tailored to local conditions
— Evaluate against three — Survey a sample Gain common metrics of customers to Measure agreed across the gain feedback for customer and sector improvements benefits stakeholder — Evaluate against our feedback own Northern Powergrid-specific KPIs — Quantify benefits through DNO-agreed SROI model and proxy bank1
Making better and smarter We will continue to work across these (including those for fuel poverty, use of data will improve social themes by enhancing our access social impact and education) to better indicator mapping, help us better to hard-to-reach customers and understand social issues. This will access hard-to-reach customers collaborating with partnership agencies enable identification of emerging issues, and deliver targeted support to working across our regions. and target our support in response vulnerable customers across our to the changing needs of customers. region. Our approach to vulnerability These initiatives have been developed will recognise the changing in line with the principles set out by We need to keep building partnerships needs of vulnerable customers, Ofgem, particularly principle two, which with other organisations, and make and, through the use of data and describes how the smarter use of data smart use of data. This aligns with our working with expert panels and can help inform service development stakeholders’ wishes for us to improve partnerships, we will deliver and have a greater understanding of access to hard-to-reach customers in targeted support to those social issues. disadvantaged areas and communities. customers across our region. However, meeting the minimum In the current price control period, we We will select partners (including those expectations is not enough. We will have used data to access hard-to-reach beyond the energy sector) based on identify additional data sources and and seldom-heard customers. Using the impact that we can have working complete more frequent data refreshes social-indicator mapping aligned to together in our region. The partners to track new and emerging issues. We Ofgem’s vulnerability needs codes, we will use localised information and will increase our work with partners acquired additional data that provides knowledge to enable intervention. We to ensure representation and support an accurate view of fuel poverty and will continue to deliver programmes across our region and enhance our low energy homes, and also established through a mix of in-house teams and access to hard-to-reach customers. a Future Fairness consumer panel. partners, working proactively on issues This is alongside an annual review We have been committed to ongoing such as affordability, and reactively to of data, partnerships and policy, in data improvements, refreshing power cuts. conjunction with an annual action our social-indicator mapping and plan and ongoing monitoring of our acquiring new data that will help us In practice, we will use data from programmes that will be assured by our ensure that nobody is left behind during Experian, our partners, our community social issues expert group. the energy transition. fund, and our other programmes
1 SROI: social return on investment.
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Meeting the Needs of Consumers and Network Users – Vulnerable Customers
Focussing on affordability and a just transition
When we established our low- carbon strategy we considered the impact of this strategy on vulnerable customers. We developed a research and engagement programme to understand the challenges and barriers for vulnerable customers faced with the transition, and participated in workshops with the Centre for Sustainable Energy. This work introduced the idea of a vulnerability lens, which we used to prioritise our actions, and informed the development of our ‘nobody left behind’ framework, which sets out our approach for a socially just and inclusive transition. This approach is supported by our stakeholders, who have highlighted that awareness, affordability and accessibility must be central to the energy transition.
The nobody left behind framework will provide the foundations on which we We will offer affordability services The affordability measures include can tailor our engagement approach that will help customers access working with partner organisations to to ensure inclusivity and accessibility debt and financial advice, solutions improve the effectiveness and delivery across the next price control period. In to reduce energy bills, and critical of our affordability service. This means doing so, we will deliver against Ofgem's financial support. increasing support from two to six principle three which aims to remove of our operating regions so that all blockers to participating in a smart, We have made significant progress in customers can benefit from these flexible energy system. We will play addressing fuel poverty issues in by services regardless of where they are our part in ensuring future policies and completing in-depth research to inform located. The actual support offered will services are fair and reduce barriers to our approach, establishing fuel poverty include debt advice, advice on income participation by aiming to: support programmes, mapping areas maximisation and advice on eligibility of fuel poverty to assess the extent of for grants (such as the Warm Homes — work with partners to put initiatives the issue in our region and developing Discount). We will also offer referrals to in place that will directly support a fuel poverty strategy (which will be ‘Green Doctor’, a charity-run initiative 5,000 vulnerable customers through refreshed annually). Most importantly, that delivers in-home efficiency and the transition; we have developed successful advice visits and offer critical financial — actively monitor the impact of the programmes in partnership with support through a hardship fund for journey to net zero on vulnerable Citizens Advice. those facing acute fuel poverty or customers; crisis. As noted by our stakeholders, — collaborate with partners to develop Affordability is a theme that our we are seen as being impartial and actions aimed at overcoming stakeholders have strongly reinforced are therefore well served to offer barriers that emerge during the for a long time, and our work to date has independent energy efficiency advice. transition; and allowed customers to access solutions — trial new approaches using Ofgem’s to reduce energy bills and benefit from Enhancing affordability services will network innovation allowance (NIA). bespoke income maximisation advice increase costs by £0.6m per year, as well as in-house visits from energy which is primarily direct customer Ensuring no one is left behind will cost efficiency advisors. We also deliver interventions and supporting products £0.6m per year more than we currently targeted communications campaigns and services for vulnerable customers. spend. We are developing new areas run annually to improve reach. But we estimate the value of this service of activity and the costs will cover to customers could be as much as research, engagement, programme Our focus in in the 2023-28 period £40m over the course of the price development and partnership working. will be to address the differing levels control period. Our programmes will be delivered by of support within our region, and we independent and impartial partners plan to build on the success of these As part of the energy transition, and our newly formed team of programmes by scaling them up across we must ensure that none of community energy advisors (see the Our our region. This will allow us to directly our customers are left behind Communities section for more details). support around 100,000 customers, on the decarbonisation journey, The net present value of this service, representing 25 per cent of our and that the shift to net zero is using a social return on investment customers experiencing extreme made with awareness, affordability model, is over £2m between 2023-28. fuel poverty. and accessibility.
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Meeting the Needs of Consumers and Network Users – Vulnerable Customers
Embedding our approach
We want to embed a culture of vulnerability training we offer and give considering the priority of network protecting vulnerable customers more explicit prioritisation to vulnerable resilience investments, once our in our operation, and be able to customers in our investment decisions. standard criteria have been met, maximise opportunities to provide we will then use vulnerability support for these customers. Where vulnerability training is criteria to prioritise resilience works concerned, we are planning to increase where they can deliver benefits for Supporting vulnerable customers is our in-house capabilities to train staff vulnerable customers. the responsibility of everyone at on vulnerability issues. We will increase Northern Powergrid. A key part of our the frequency of customer vulnerability vision is putting customer vulnerability training for all colleagues to every two issues at the centre of our thinking, years, improving on our current aim to especially when it comes to our people do so every three years. Colleagues and our culture. who have face-to-face interactions with vulnerable customers will also Delivering enhanced support, We have made good progress and we benefit from additional enhanced tackling fuel poverty and must keep up the momentum. In line training that examines regional specific ensuring no one is left behind with principle four of Ofgem’s baseline challenges, and we will coordinate in a greener energy future is at expectations, we will continue to work with our wider customer-first training the heart of our plans and with our expert groups (such as those on to ensure that vulnerability issues are reflects our stakeholders’ social issues, and social responsibility covered (see Customer Service section feedback. management), who provide essential for more details). guidance and support for our teams. We will also continue to deliver vulnerability Similarly, we will enhance the roles training to all staff which has helped of our vulnerability champions to us identify ‘vulnerability champions’ empower decision-making, raising the Catherine Harris and created ownership of vulnerable profile of these issues throughout the Consumer customer issues in the business and business. Vulnerability issues will also vulnerability across our region. We plan to go further feed into our practical decision making manager by expanding and enhancing the on a routine basis. For example, when
Our approach to vulnerability
Our principal aim is to provide the best possible support and assistance to our vulnerable customers informed by a detailed Aim understanding of their needs
To expand our understanding of vulnerability
To improve our services
Objectives To increase access to the ‘hard to reach’ To ensure a socially inclusive, fair and equitable transition to Distribution System Operation (DSO)
To alleviate the impact of fuel poverty
Enablers Engagement, data Developing Developing our and research our people partnerships
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Output measure/1 Customer indicative ED1 ED1 ED2 outcomes Benefits Deliverables input measure to date forecast target
VN1 Undertake targeted — Greater reach % of eligible high- recruitment of to support risk customers vulnerable recruited to PSM 48% 54% 70% vulnerable customers customers VN1.1) Provide customer-facing and front-line (ODI-F) to our PSM, — Greater staff with access to our PSM so they can contacting all PSM flexibility for submit real-time amendments and complete Proactive customers every two how vulnerable new registrations contact for data years to refresh our customers cleanse every 24 100% 100% 100% records (LO) access our months for PSM information and customers (ODI-F) communicate with us VN1.2) Using data and collaboration with our partners, develop our recruitment campaigns to reflect regional differences, including urban and rural customers
VN1.3) Give our vulnerable customers more choice in how they engage with us by creating Broad measure of customer service a fully digitised ‘one-stop-solution’ by 2 2 2024-25 to enable a more accessible, faster score: overall – N/A N/A 93.5% and convenient route to contact us and access PSM customers our services. This will also free up capacity for (ODI-F) a more responsive telephone-based service for those who prefer it (CVP) PSM sign ups from colleague referrals 8% 13% 25%
VN2 Provide enhanced — Tailored VN2.1) Provide enhanced customer support Broad measure support to vulnerable support during vehicles during planned and unplanned power of customer a power cut cuts. These will include innovative upgrades, satisfaction customers during for example, suitcase generators and pandemic (power cuts – 91.4% 91.8% 93.1% supply interruptions — Personalised and proactive safety measures PSM customers) including temporary support (ODI-F) restoration and proactive — Proactive and VN2.2) Deliver proactive communication Proactive contact communications (LO) more frequent during supply interruptions utilising digital of high-risk (P1) communication channels customers within - - 100% utilising a one hour (ODI-F) wider range of channels VN2.3) Roll out regional use of net zero-ready Proactive SilentPower mobile battery vehicles to support contact of all temporary restoration during planned and PSM customers - - 95% unplanned outages within three hours (ODI-F)
VN2.4) Establish a new support team to Customers provide additional on-site support in the event offered enhanced that power cuts last longer than six hours, support on site for 7% 14% 75% providing personalised, proactive support for >6hr power cuts vulnerable customers (ODI-F)
VN3 Use data and — Targeted VN3.1) Share and make priority services, partnerships to support enhanced service information and support — Greater tools available among trusted partners, enhance our support allowing collaboration for targeted support for for vulnerable understanding of our customer hard-to-reach and seldom-heard customers customers, sharing base information with VN3.2) Identify additional data sources and trusted partners to partnerships to allow us to track new and access hard-to-reach emerging issues and to support customers and, customers in doing so, improve our understanding of our customer base
VN4 Support customers — Up to £40m of VN4.1) Extend our partnership reach to deliver benefits a regionally tailored multifaceted affordability in fuel poverty with service for 100,000 customers in extreme affordability services, — Different forms Average no. of vulnerability fuel poverty (c. 25% of those in our region) targeting 100,000 unlocking £40m of benefits fuel poverty 4,356 6,320 20,000 customers to unlock addressed interventions p.a. (ODI-F) up to £40m of VN4.2) Work with partners to educate benefits customers on energy efficiency and available grants
VN5 Work with partners to — Vulnerable customers put in place initiatives supported to Average no. that overcome allow them VN5.1) Work with partners to offer customers of customers barriers to the smart to benefit tailored support on how to benefit from engaged energy transition and from the low the transition to net zero and ensure that through the no - - 5,000 support a socially carbon energy vulnerable customers are not left behind one left behind inclusive transition transition programmes p.a. to net zero, targeting (ODI-F) 25,000 interventions4
VN6 Embed vulnerability — Enhanced VN6.1) Deliver enhanced, regionally focused support for training to colleagues every 24 months across our business vulnerable operations customers VN6.2) Apply vulnerability criteria (once Front-line staff across the standard criteria has been met) as part of trained in rolling range of our prioritising network investment works 24-month N/A3 N/A3 100% services programme VN6.3) Publish an annual vulnerability report (ODI-F) for our stakeholders covering the delivery of our 2023-28 vulnerability commitments and metrics
1. Numbers shown may be subject to rounding. See A1.4 Key measures in our plan for profiled targets. Innovation | Data and Digitalisation | Workforce Resilience 2. Only the power cuts element of BMCS is measured in 2015-23. 3. 2015-23 performance is not comparable as this is currently on a three-year cycle – we currently train 100 per cent of colleagues on this basis. 4. See Our Communities CO3.2) Community energy advisors
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How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 10 dedicated events Stakeholders engaged: 4,762 total – 331 unique interactions Wave 1 findings Details Further analysis and understanding of — We should improve targeting of PSM recruitment to improve awareness of the vulnerable customers’ needs will support enhanced service provision and develop a system to prioritise needs PSM recruitment — Stakeholders wanted us to ensure that those who are most in need are reached. They Efforts to identify and support those most believed that those in vulnerable situations often did not know what help was available in need is important or how to access assistance — Stakeholders expected us to protect vulnerable, fuel poor and rural customers during Barriers that vulnerable customers are the transition to DSO. Affordability and accessibility were viewed as barriers that likely to experience during the transition to vulnerable customers are likely to experience. They felt there was a need to clearly a low carbon future should be addressed communicate about decarbonisation Wave 2 Events: 135 total – 10 dedicated events Stakeholders engaged: 15,475 total – 996 unique interactions
Options with levels of ambition Support for vulnerable customers during power cuts was viewed as important across most groups were explored to help customers of stakeholders. Customers and colleagues believed that we should prioritise affordability, fairness understand the benefits of the and inclusivity, even over investments that enable decarbonisation, and work to embed vulnerability service levels proposed services into business as usual (BAU) activities
Wave 3 Events: 91 total – 7 dedicated events Stakeholders engaged: 32,500 total – 628 unique interactions Wave 3 explored the nature and importance of additional support for vulnerable customers. The importance of partnerships working to extend fuel poverty provision was discussed alongside a consideration of awareness our role for customers who need additional support Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Promote and manage the PSM to ensure it reflects the — We will continue to grow our understanding VN1 Link make-up of our region’s vulnerable communities of the levels of vulnerability across our There was support for us to work with other groups region to make sure we are able to target our and utilities to collaborate to create a unified PSM for a recruitment and support for our customers comprehensive view of vulnerable populations most in need effectively
— During power cuts, vulnerable customers should be — We will work with our customers and VN2 Link prioritised for additional support partners to develop and prioritise a range Stakeholders recommended that we should prioritise of enhanced support for our vulnerable support for vulnerable customers during power cuts customers during a power cut. This will and provide more accessible communications to raise include enhanced on-site welfare support awareness of support services and rapid communications for customers impacted by a power cut during power cuts that exceeds six hours and the development of a priority service app
— Increase partnership working, innovation and data sharing — We will build on our work with partners and VN3 Link to support those most vulnerable use data smartly to enhance both current VN4 Stakeholders highlighted the importance of a socially support for our customers and communities VN5 inclusive energy transition and that we should consider and the reach of future services innovative solutions to support vulnerable customers, including increased data sharing with partners
— Increased support for the fuel poor is important — We will expand the depth, reach and VN4 Link Customers felt we had an increasing responsibility to targeting of our fuel poverty support support customers in fuel poverty and vulnerable positions. programmes; measuring their impact and This included us actively supporting education and advice benefits to further scale up programmes on topics for improving home energy efficiency for with the greatest impact vulnerable customers and communities
— The energy transition must consider the impact on — We will work with local partners and VN5 Link vulnerable communities experts to develop new programmes to Customers considered that we should take a leading role identify and overcome potential barriers to in ensuring a just and fair transition for customers and decarbonisation to enable our customers communities and communities to benefit from the energy transition
— Support for vulnerable customers should be embedded — We will continue to work across our VN6 Link within all services business to build ownership, capability and Stakeholders wanted us to enhance support for vulnerable understanding of the changing needs of our customers across reliability, decarbonisation and cost vulnerable customers management. Stakeholders also felt more should be done to raise awareness and accessibility. Stakeholders wanted to see emphasis on embedding vulnerability services into BAU
— Customers who gave a lower acceptance score want more information about the new — Vulnerable Customers acceptability score: 67% - Link service offer for vulnerable customers. This will be explored further in in Wave 4 Northern Powergrid: our business plan for 2023-28 – 133 OUTPUTS EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Meeting the Needs of Consumers and Network Users – Our Communities
Our Communities
CUSTOMER VULNERABLE We will be a force for good in our communities, leveraging SERVICE CUSTOMERS our position in our region to make a positive contribution to the communities we serve. OPENNESS & CONNECTIONS TRANSPARENCY
OUR COMMUNITIES
We see our role as being a force will integrate our approach further Our approach to supporting our for good, which goes beyond by developing social programmes communities breaks down across running our network. This includes that simultaneously improve both the three clear themes. Firstly, we must everything from making a positive network and our communities. embed social initiatives in a way that contribution to the communities delivers the most impact based on local we work and live in, to creating a Communities across our region are area needs. Secondly, we should be cleaner, greener energy system focussed on the after-effects of the supporting the most disadvantaged that everyone can benefit from. COVID-19 pandemic. This, coupled schools and encouraging pupils from a Our performance shows that we with the shift towards a decarbonised broad and diverse range of backgrounds benefit most when we engage society, is creating a changing to engage with STEM subjects, as with trusted partners to deliver landscape that, in our role as an well as to consider careers in energy programmes that meet our social anchor organisation, we must help specifically. Finally, it’s imperative that objectives, and this will continue communities to navigate. we help communities to understand, beyond 2023. We serve not just participate in and benefit from the our customers and region, but the Understanding how these changes transition to net zero, while overcoming communities we live and work in. impact households, communities and any associated barriers. local authorities has driven our approach Support for our communities is a and grounded our plans in customer-led principle that we apply to our thinking evidence. Our social impact initiatives across all areas of our business plan. in the current price control period We have measured the Social We work closely with communities demonstrated that our communities Return on Investment (SROI) to develop and establish strong want us to interact more with them that we expect our customer programmes and initiatives to improve and to strive to meet their social outcomes to deliver during the lives of the more than eight million needs alongside their energy and 2023-28 for our communities. customers who we serve. In the next business ones. That is £9.09 for every £1 spent price control period (2023-28) we through delivery of:
— social impact schemes; — skills-based volunteering; and — supporting communities on the path to decarbonisation.
How much it will cost
ED2 expenditure £1.6m (annual) 0.2% of totex
Vs ED1 2015-23 +£1.0m +166.7%
One of our 9 plan areas, taken together, delivering more for less.
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Meeting the Needs of Consumers and Network Users – Our Communities
A force for good in our region
Partnerships will be key to The tool provides a socioeconomic along with our wider workforce delivering our communities profile of an area and helps us resilience propositions, is designed strategy. We will continue to use accurately assess which initiatives will to help us progressively diversify our our existing strong partnership have the greatest social impacts for workforce. It will help us to build a model to further enhance our local communities, and deliver them. pipeline of talent entering our business relationships and collaboration, As part of our digitalisation strategy, and the wider energy industry that and to deliver our customer we plan to integrate this tool within reflects the diverse make-up of our outcomes. the asset management team and our communities. operating systems to deliver a modern, Our engagement has taught us that intuitive and effective service. We recognise the important our customers value the work we do position that we hold as an anchor in their communities, and that we Our education programme is organisation and that we have a should maximise the promotion of this, a key pillar in our communities key role in supporting a sustainable thereby increasing the opportunities engagement strategy and we will low carbon future for our region. for people to participate in, and benefit increase its reach in the 2023-28 from, the schemes that we support. period. We hold a privileged position - our We will, therefore, also focus on raising activities have a direct impact on the the profile of our community support The aim of the programme is to communities we serve. schemes to enhance awareness and improve social mobility in our region, participation. particularly for those who live in more Supporting our more disadvantaged disadvantaged areas. communities to save energy and reduce The cost of our communities their energy bills has long been a focus propositions will be £1.6m per annum, a In the current price control period, we of our community initiatives, but the £1.0m increase on what we are spending have maintained a strong focus within transition to net zero means that our in the current price control period. secondary education on developing approach needs to evolve and include all However, this additional investment is employability skills. We will use this as customers to help them decarbonise. funded through efficiencies elsewhere a foundation to increase that support in our business plan. Therefore we in the next price control period and We plan to recruit six community will be able to improve our service our education programme will be energy advisors (CEAs) who will in communities without passing this grounded in engaging pupils in STEM cover our region to deliver advice and increased cost onto customers. and increasing their awareness and support to communities, partners understanding of decarbonisation and local organisations. The CEAs Our focus when working with and the path the net zero. We will also will have a number of responsibilities, our communities is to build on ensure that this programme delivers including delivering decarbonisation the strong baseline we have the appropriate safety messages advice and support to households, established in the current price to complement our wider safety community groups, local organisations control period to enhance our programme. and businesses, as well as signposting social programmes over the period to external partners offering energy to 2028. With a specific focus on schools in more efficiency advice and support. They disadvantaged areas, our team will be will also have the technical expertise to We have worked hard to align our empowered to inspire growth in future support groups looking to develop and social programmes with our network skills and to showcase energy and low deliver community energy schemes. investment programmes and, over the carbon career pathways, in tandem They will be able to refer vulnerable next planning period, we will aim to roll with our apprenticeship and graduate households to external partners for out social initiatives to support 50 per recruitment propositions outlined in our support as part of our vulnerability cent of the schemes in our investment Workforce Resilience plan. strategy to ensure that everyone portfolio, a significant increase from the benefits from the transition to a zero two per cent of investment schemes Our workforce is an integral part of our carbon society. that we are currently complementing local communities, one that underpins with social programmes. the regional economy and its growth. There will be a strong link to the energy We live and work in the communities we efficiency advice being given as part of Key to achieving this is the support serve, and our education programme, our customer service offering to ensure of our network of partners across the that we meet the goals set out in our ‘no region, who will deliver grassroots one left’ behind proposals. We have a initiatives such as energy efficiency and role to play in supporting communities decarbonisation advice and support, and individuals affected by the transition Being a force for good has always STEM engagement in local schools, tree been important to us and we’ve to low carbon technologies, which is planting and woodland creation and heard from stakeholders that they why our communities approach extends assisting community energy groups to too value this support for local to ensuring a just transition and the meet community needs as well as our communities. wider social mobility agenda. The CEAs social objectives. will be working to deliver these wider Michelle social impact initiatives and closely Areas of need will be identified through Cummings collaborating with the schools team and our social mapping tool, which we will Social responsibility external partners to ensure that there is continue to use to plot the vulnerability manager a clear map to explain potential career characteristics across our region. pathways into low carbon industries
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Meeting the Needs of Consumers and Network Users – Our Communities
The role of — Supporting the region to community Community Energy Green job decarbonise energy efficiency awareness advisors — Helping the most vulnerable to benefit from net zero plans — Connecting the dots with — Community groups — Advise local area energy plans — Charities 2023: Community — Support — Helping to bring forward — Households 2 advisors energy advisors — Signpost more community energy — Businesses schemes 2028: — Offer — Local organisations technical 6 advisors expertise
Net zero Upskilling and ambitions education
– whether this is from education, or energy sector. The team will use around decarbonisation and exploring transferring of skills from traditionally network knowledge, load projections, opportunities for secondments into carbon-intensive industries. customer activity and the wider Northern Powergrid will help deliver environment to provide feedback, and this programme and, more widely, Our CEAs will also complement our also feed insights into our own plans. expand the knowledge of local groups team assisting in the development on decarbonisation and the move to net of local area energy plans (LAEPs) to Investment in upskilling external zero. Long-term we will be exploring support the decarbonisation agenda partners will be key. Collaborating with external contracted partnerships to with local authorities and the wider community groups to deliver messaging expand the scheme.
Output measure/1 Customer indicative input ED1 ED1 ED2 outcomes Benefits Deliverables measure to date forecast target
CO1 Deliver tailored — Supporting CO1.1) Minimum of 50% of major project % of major schemes social impact bespoke investment schemes to have a social impact with social impact 15% 17% 50% programmes community scheme attached scheme attached for 50% of our needs major investment CO1.2) Review potential social schemes £m investment in schemes using our social mapping tool social programmes in £0.3m £0.4m £1.4m period2
CO2 — Increased social CO2.1) Develop relationships with Support our STEM pupils mobility educational establishments across our communities to supported in 2452 450 800 region with a particular focus on deprived promote STEM — Increased deprived areas p.a. subjects and longer-term areas careers workforce resilience CO2.2) Support colleagues who want to take part in skills-based volunteering, to Hours volunteered provide education on energy careers as well 616 770 1,130 p.a. as opportunities within Northern Powergrid
CO2.3) Become active in regional recruitment fairs and school, college and university career events
CO3 Offer community — Communities energy advice educated on to support our energy saving as CO3.1) Educate our communities through communities part of the route to communications, awareness activities on the path to decarbonisation and partnerships around the path to decarbonisation decarbonisation — Enabling efficient decarbonisation — Cheaper route to decarbonisation CO3.2) Establish community energy No. schemes Social return on advisors in each of our regions to deliver supported through - - 45 investment of direct advice and support to groups and community energy £9.50 per £1 spent local authorities advisors3 for CO1, 2 and 3
1. Numbers shown may be subject to rounding. See A1.4 Key measures in our plan for profiled targets. Innovation | Data and Digitalisation | Workforce Resilience 2. Cumulative, in price control.
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Meeting the Needs of Consumers and Network Users – Our Communities
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 6 dedicated events Stakeholders engaged: 4,762 total – 149 unique interactions Wave 1 findings Details To create greater social impact, further — Stakeholders want further collaboration with local charities, community groups and collaboration with local community SMEs to deliver tailored social impact programmes in the area partners and SMEs is needed Work comprehensively with schools to — Stakeholders wabt us to be ambitious when supporting education schemes (e.g. support net zero and develop future energy launch a dedicated skills programme in schools to engage with children and build skills STEM and future energy skills) — Stakeholders want us to clearly communicate the decarbonisation process, Educate customers and communities on particularly for vulnerable customers and the general public, so they understand what decarbonisation pathways their options are Wave 2 Events: 135 total – 16 dedicated events Stakeholders engaged: 15,475 total – 5,367 unique interactions Wave 2 options A B C D E
Options were Targeted support, in Increased reach Comprehensive ‘Social impact’ Regional leader costed to help collaboration with of our social coverage of our model that informs driving sustainable customers our partners, for programme social programmes asset, social and development understand the communities and and support for across the region, environmental benefits and customers most community energy supporting those investments; potential bill impact in need. Skilled most in need leverage benefits of the service levels jobs created in our of decarbonisation proposed regions and take a leading role in community energy
Customer ambition For Northern Powergrid to become a regional leader, option E received the highest number of votes with 29%. and broader Option D, ‘Breaking new ground’, received significantly fewer votes than the other four options, with just 11%. SME findings and domestic customers were very evenly spread across both options C and E.
Wave 3 Events: 91 total – 7 dedicated events Stakeholders engaged: 32,500 total – 2,551 unique interactions During Wave 3, customers’ support and associated ambition were retested. We explored the mixed feedback on our role and refined commitments to provide a clear case for practical support to help communities decarbonise
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Deliver social value schemes for communities and — We will continue to work with local partners to CO1 Link raise awareness of the associated programmes develop targeted programmes to support and build There was clear desire for more visibility and capacity within our local communities alongside awareness of social impact programmes delivered in planned network investment programmes, which communities and schools. Customers recommended will be increased in scale and ambition that we tailor support and work with local partners to reflect the differing needs of the diverse communities across our region
— Raising aspiration and developing the new skills — We will expand our work with schools, local CO2 Link ready for the energy transition is important colleges and within our communities to raise Customers support volunteering in local awareness of future green and smart energy career communities, with widespread support for our opportunities school outreach and aspiration raising programmes. Investing in educating young people to encourage uptake of STEM subjects and awareness of net zero was important for the region
— Customers and communities need support to — We will build on our community energy efforts to CO3 Link navigate the energy transition develop a supportive advisory approach to enable There was support for dedicated advisors to support customers and communities to take confident the energy transition and doing more to educate steps to decarbonise the public on the decarbonisation changes such as low carbon heat pumps, energy efficiency and decarbonisation of transport and heat
— Customers trust that we will deliver the — Our Communities acceptance score: 70% communities plan with a joint score of 71% for - Link acceptance and trust
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Meeting the Needs of Consumers and Network Users – Connections
Connections
We will deliver a cost-effective, efficient and CUSTOMER VULNERABLE SERVICE CUSTOMERS personalised service for all our connections customers, with smarter, more flexible solutions that support the connection of low carbon OPENNESS & CONNECTIONS technologies onto our network in support of the TRANSPARENCY transition to net zero.
OUR COMMUNITIES
The energy landscape is evolving, with net zero targets driving a significant increase in new connections for low-carbon technologies (LCTs), storage and generation. We are an enabler of this transition – connecting people to the electricity network is one of the most important jobs we do.
Every new connection we deliver contributes to the economic growth of our region by enabling new homes to be built, new businesses to start trading and new sources of renewable generation to come online and start supporting the energy system.
During 2023-28 we will deliver an efficient and cost-effective connections service. We will offer smarter, more flexible solutions that support our region’s net zero ambitions. We will give our customers more choice and How much it deliver a range of additional services and will cost benefits, while aiming to keep the price of a connection flat. ED2 The connection costs that are socialised expenditure £13.5m across all our customers – where the (annual) 2.1% of totex investment we make has a wider benefit to our network – will increase by £3.5m Vs ED1 p.a. during 2023-38. This increase is 2015-23 +£3.5m entirely driven by the need to ensure +35.0% our network can support our region’s transition to net zero. One of our 9 plan areas, Ofgem is currently consulting on how taken together, delivering our charges should be structured and more for less. who should pay the costs of connecting to our network. We have developed this plan based on the current charging Connections prices framework. We will keep our plan Smaller connections: flat under review, as the decision Major connections: flat Ofgem makes may mean that our plan needs to change.
NorthernNorthern Powergrid: Powergrid: our our business business plan plan for for 2023-28 2023-28 – – 138 138 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY OUTPUTS
Meeting the Needs of Consumers and Network Users – Connections
Quicker, easier and more efficient connections
Our plan is shaped by customer Connections are an important part In the 2023-28 period we feedback. of our plan for net zero. will be increasing connections and keeping costs low with We engaged with a broad and inclusive In order to ensure that we open new services. range of connections stakeholders and up all the credible pathways to customers to inform our plan, using decarbonisation in our region, we will The next five-year business plan period their feedback to develop and refine our help more customers to get connected will see us introduce more services customer outcomes. to constrained areas of our network with and new automated processes that increased levels of network flexibility, will allow us to deliver a range of All our customers agreed that network smarter solutions and reinforcement additional services and benefits for investment, flexibility services and the where required. our customers, while keeping the availability of network data would be cost of connections low. key to facilitating the significant number For customers seeking flexible of new and modified connections that connections, we will facilitate better, We will help all our customers, including will be required to achieve net zero. more frequent discussions at all voltage those who are vulnerable, to get levels and help them to understand connected with a range of tailored Our customers encouraged us to when this type of offer could result in a support and services to guide them be ambitious in terms of our data quicker and cheaper connection. through the connections process and provision and digitalisation plans. improve their overall experience. We They also stressed the importance of Our major works connections are targeting delivering connections a personalised service and so we will customers can expect to benefit from up to 20 per cent more quickly for our be developing our online platforms for the deployment of active network small works customers, while delivering customers who want to self-serve and management (ANM) schemes with the highest levels of customer service, complement this with enhanced upfront associated flexibility contracts that including the ability to choose the date support and technical advice for those will enable them to get connected and time of a new connection. who prefer to talk to us before making quicker and without the need for an application. significant reinforcement. Those To further support our customers same customers will also get access throughout the connections process, Our small works customers prioritised to an Enterprise ANM system that we will provide a free advice and quicker, cheaper connections and we will allow them to access network application checking service for small have responded with a target to reduce information and curtailment operations works customers who are seeking lead times. We will offer more services for the parts of the network to which new connections or making changes aimed at improving their customer they are connected, and help them to existing ones. This will include journey and deliver more for the same to understand factors affecting the customers who are seeking connections cost for these customers. performance of their connection. We for EV charge points, solar photovoltaic have already deployed ANM across four (PV) and heat pumps. Major works customers – consultants locations, further supporting customers and developers in particular – prioritised who may want to connect. The Recognising the importance our major availability of network data to allow decarbonisation section provides more works customers place on upfront them to perform their own upfront detail on our plans in this area including support, we will facilitate better assessments and access to our experts. the flexibility services our customers will and more frequent pre-application Local authorities said they need more be able to access. discussions with our engineers. We will support to deliver their decarbonisation also offer an expanded ‘ask the expert’ targets and confidence in our network’s The decarbonisation of heat and service, providing technical advice on ability to support their long-term, transport are two of the most important topics including which EV charging strategic plans. drivers for reaching net zero. We will solution to select or typical loadings and develop new automated processes connections arrangements for small These insights have shaped our plan. to streamline the notification and and medium-sized enterprises (SMEs). application process for electric vehicle Our Major Connections Strategy (annex (EV) charge points and heat pumps, 4.12) sets out our vision and connections making it quicker, easier and lower cost service outcomes in this area. to connect these LCTs. We will focus on providing an efficient and cost-effective connections service with smarter, more flexible solutions that support our region’s low carbon ambitions.
Andy MacLennan Commercial director
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Meeting the Needs of Consumers and Network Users – Connections
A growing number of our customers Through the provision of network data Our award-winning AutoDesign tool will appreciate self-service opportunities. that is easy to access and understand, be evolved so it can be used for new In response, we are developing our we will empower our customers to make generation connections and to retrofit digital platforms to enable customers to more informed decisions about how LCTs to existing properties – this is self-serve and create a more seamless and where to connect. Publishing more something we were told was a priority online experience. However, for those comprehensive network planning and by our stakeholders. Users will be able customers that would still prefer to capacity data in open and accessible to identify the most viable options to talk to us we will complement this formats will be key to this. connect to our LV network and get a with enhanced upfront support before real-time cost for the work. making an application. By making enhancements to our extra high voltage (EHV) and high voltage We will also look to develop an To unlock further benefits for those (HV) network availability heat maps, we industry-first LV heat map that utilises customers who prefer to self-serve, will make them more dynamic and user- LV monitoring and smart meter data. It we will build enhanced functionality friendly, including a combined long-term will give users unprecedented visibility on top of our open data platform, development statement (LTDS) that of our LV network’s capacity and help including free analytical tools to help will give customers full visibility of our them make more informed decisions with the processing of data, capabilities network, from low voltage (LV) to EHV about how and where to connect and at to enable self-service connection and support investment decisions by the right time. quotations, retrofitting of existing offering transparency at substation and connections and more dynamic heat feeder level. maps and tools to understand power flows on our network.
We are improving the customer journey so we We will give our can offer high-quality customers more choice connections services. and deliver a range of additional services and benefits, while aiming to To do this we will: keep the cost of a connection flat. — ensure customers have a clear choice between self-service or our expert team-led service with the ability to switch seamlessly between the two; Derek Fairbairn — support self-service customers System design with a new web chat tool; manager
— make the same tools that our own teams use available for our customers;
— maximise the number of small and major works customers self-serving by making more services available online;
— provide more data to customers about our network together with locational signals for capacity availability and forecast load growth to assist deployment strategies; and
— be as efficient as possible with available resources i.e. people, process and IT to make it quicker and easier when planning and delivering work for our customers.
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Meeting the Needs of Consumers and Network Users – Connections
In creating our business plan, Figure 1: increase in connections to facilitate the EV charging infrastructure we have carefully considered based on our planning scenario that the decisions we make now will affect our region’s ability to meet net zero. 8000 Connections volumes (p.a.) We have a network investment plan that enables us to cater for all credible decarbonisation scenarios. Our Planning Scenario assumes that 6000 we will see around 1.84m EVs on our region’s roads by 2030, requiring 32,000 new connections for EV 4000 charging infrastructure alone. We will Major works (EV) be ready to support this and ensure our efficient and cost-effective connections service meets the future needs of our 2000 customers. Small works (EV)
The increased demand has the 0 potential to increase workload and we have carefully considered this and 2020-21 2022-23 2024-25 2026-27 2028-29 2030-31 plan to resource our team and deliver capabilities accordingly, balancing need, flexibility and cost.
We will promote fair and open Our Major Works Connections — better and more frequent upfront competition. Strategy sets out the discussions with our engineers; commitments we are making — a new open data platform We will continue to promote fair and for our diverse range of major that will provide access to open competition in connections so works connections customers free analytical tools and that our customers have more choice in and stakeholders. comprehensive network data for who delivers their connection. We will those who prefer to self-serve; continue to be open and transparent During 2023-28, we will focus on — increased levels of ANM to get by publishing guide prices and providing a cost-effective and them connected more quickly, performance metrics, so that customers efficient connections service and on without the need for significant can compare our prices and service supporting customers throughout reinforcement, and access to a levels with other independent providers the end-to-end connections process. new Enterprise ANM system that and decide who is best for them. provides detailed network and We will empower customers to make curtailment data; and Through our development work on the more informed decisions about how — new automated processes to open data platform, we plan to provide and where to connect, through the streamline the notification of Independent Connection Providers provision of network data that is and application for EV charge (ICPs) and Independent Distribution easy to access and understand. We points and heat pumps, making Network Operators (IDNOs) with access will complement this with upfront it quicker, cheaper and easier to to the same planning tools as our own support and advice and more connect LCTs. design engineers and technicians. options for customers who prefer to self-serve. We are aiming to deliver these additional services and benefits Our Major Connections Strategy while keeping the cost of sets out our commitments for the connections flat for our major works To develop our future connections service, we engaged 2023-28 period. Customers can customers. with a broad and inclusive range expect to benefit from: of stakeholders and used their feedback to refine and develop a plan which is truly customer focused and designed to address their future priorities and needs.
Emma Wilson ICE and connections stakeholder advisor
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Meeting the Needs of Consumers and Network Users – Connections
Output measure/1 Customer indicative input ED1 ED1 ED2 outcomes Benefits Deliverables measure to date forecast target
CN1 Help our small — Customers have CN1.1) Develop our digital platforms for BMCS connections – more choice in how customers who want to self-serve and small works (ODI-F) 88.9% 91.2% 92.5% works customers they engage and provide enhanced upfront support for those to get connected interact with us who prefer to talk to us before making an quickly by Average connections — Better support application lead time – small 71.2 36.2 29.0 providing more through the works self-service connections Time to quote options, greater process support and more LVSSA – small works 6.7 3.4 2.7 — Customers able CN1.2) Provide a free advice and (ODI-F) flexibility over to understand application checking service for small delivery likely costs works customers and community energy Time to quote LVSSB 14.2 5.5 4.4 and timescales groups, including for LCTs and generation – small works (ODI-F) before making an Time to deliver application LVSSA – small works 48.7 28.3 22.7 — Independent (ODI-F) technical advice Time to deliver — Quicker, CN1.3) Give small works customers the option to pick the date and time of their LVSSB – small works 78.5 36.5 29.2 more efficient (ODI-F) connections connection Connections GS (LO) % compliance – 98.9%3 99.0% 99.5% small works2 CN2 — Customers able CN2.1) Develop AutoDesign functionality Facilitate the to identify the to enable customers to self-serve and mass uptake of most viable and generate quotations for LV demand LCTs, flexible cost-effective connections, load increases for existing LV Major connections 84.3% 85.0% 90.0% connections and connections and connections and budget estimates for new satisfaction (overall) network flexibility get a cost for the LV generation connections. Go-live planned to support the work in real-time for 2025-26 drive to net zero — New automated Major connections ✓ processes to satisfaction – streamline the CN2.2) Utilise AutoDesign technology to - - 90.0% develop an LV network availability heat map pre-application connection process services (ODI-F) for LCTs that utilises LV monitoring and smart meter — Quicker data to enable real-time system planning. Major connections connections Go-live planned for 2024-25 satisfaction – - - 90.0% — Cheaper quotations (ODI-F) connections CN2.3) Introduce new automated systems to streamline the notification/application Major connections process for LCTs and facilitate mass uptake. satisfaction – - - 90.0% Go-live planned for 2023-24 delivery (ODI-F) CN3 — Increased Empower our information about customers to where to connect make more CN3.1) Make improvements to our HV and informed — Easily accessible and understandable EHV network capacity heat maps to include decisions about network the provision of an integrated LTDS and how and where information information that can forecast changes in to connect by capacity availability.4 Go-live planned for — Ability to 2024-25 expanding the undertake upfront scope of network assessments information ✓
CN4 — Increased choice CN4.1) Work with ICPs and IDNOs to Continue to of connection further minimise input services and extend facilitate fair and provider the scope of contestable works open competition so that our — Quicker CN4.2) ) Publish guide prices and monthly customers have connections performance metrics as well as providing a choice in who — Cheaper clear cost breakdowns in connections delivers their connections quotations connection ✓ — ICPs/IDNOs will CN4.3) Develop a bespoke AutoDesign have access to platform for ICPs and IDNOs with increased levels of non-contestable costs. Go-live planned for network data 2024-25
CN5 — Increased Connections Deliver an connections in CN5.1) Provide an enhanced ‘ask the expert’ guaranteed efficient areas of constraint technical advice service. Go-live planned standards % 99.8%3 99.8% 99.9% connections — Quicker for 2023-24 compliance – major service for all works our customers, connections providing more — Cheaper CN5.2) Upskill our LV/HV design engineers connections to facilitate better and more frequent Time to connect – 13.2 13.2 technical advice discussions with customers on flexible unmetered days3 days <13 days to customers on connections at EHV, HV and LV smarter and more flexible solutions CN5.3) For EHV connections, where a ✓ flexible solution could avoid the need for additional network reinforcement, we will % of major have a detailed discussion within 14 days 3 of receipt of a compliant application and connections 99.3% 99.5% 99.7% provide the customer with the information appointments met they need to make an informed choice on the options available
1. Numbers shown may be subject to rounding. See annex 1.4 Key measures in our plan for profiled targets. 2. Guaranteed standards including distribution generation standards. Data and Digitalisation | Workforce Resilience 3. 2015-23 period to date annual average. 4. See Whole Systems WS2.2) Energy matchmaking scheme Innovation | ✓ included in Major Connections Strategy
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Meeting the Needs of Consumers and Network Users – Connections
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we engaged ... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 15 dedicated events Stakeholders engaged: 4,762 total – 1,497 unique interactions Wave 1 findings Details Self-service and tailored guidance enable — Many customers would prefer to apply for a connection via online self-service rather an efficient and effective connections than a phone call but want the option to speak to someone if necessary service The cost of connections remains an — Small works customers prioritised quicker, cheaper connections while major works important consideration for customers customers prioritised value for money, upfront support and greater efficiency The availability of both digital and in- — While there was general support for greater self-service and digital channels, person channels remains important for customers also stressed the importance of in-person support and guidance. customers Customers wanted to understand the additional support available.
Wave 2 Events: 135 total – 16 dedicated events Stakeholders engaged: 15,475 total – 5,196 unique interactions Wave 2 options A B C D E
Options were Providing you with Enhancing the Delivering smarter, New measures to High levels of costed to help personal and online personal service quicker, and flexible facilitate mass LCT network flexibility customers supported service we provide and connections and uptake, flexible and connectivity understand the offerings providing more supporting LCT connections, and to drive, enable, benefits and online self-service uptake variable network support, and potential bill impact tools access accelerate the low of the service levels carbon transition proposed
Customer ambition The highest level of support was option E, with 33% of the vote; particularly for domestic customers, with 75% and broader of them voting for the highest level of ambition to invest in network flexibility in line with a low carbon future findings and to increase the speed at which new connections could be established. The majority of SMEs (41%) and rural customers (39%) also supported option E, whereas option A received the fewest votes in all categories. Stakeholders commented on the importance of considering the impact on costs of this option
Wave 3 Events: 91 total – 12 dedicated events Stakeholders engaged: 32,500 total – 2,261 unique interactions The role of connections to enable increased uptake of LCTs in support of decarbonisation was explored, alongside the importance of data sharing with stakeholders and the characteristics of the connections process and support models
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Greater support to enable small works customers to — We will continue to develop our systems and CN1 Link get connected efficiently and effectively processes to support our customers, identifying Clear support to connect small works more efficiently opportunities to speed up the connections process, at a competitive cost and for delivering value for providing flexible options and tailored support money to customers services where needed
— Prepare to enable an increase in LCT connections in — We will introduce new processes and automation CN2 Link support of net zero to streamline the connections process for LCTs and There was clear support for high levels of ambition for we will facilitate better, more frequent discussions proactive investments to create a smart network that with customers on flexible solutions enables flexible connections to facilitate the uptake of a range of LCTs
— Up to date, accessible network information — We will publish more comprehensive data on CN3 Link underpins the energy transition for our customers network capacity and performance and make it Stakeholders and customers supported regional easy to access and understand collaborations
— Support for data and information sharing to deliver — We will continue to support and enable a CN4 Link all effective connections processes across all competitive environment where customers have a parties fair and open choice
— Customers want a choice in how they engage and — We will develop our digital platforms for customers CN5 Link interact with us who prefer to self-serve and complement this There is support for increased self-service with enhanced advice and support services for connections processes while maintaining in-person those who prefer to talk to us before making an support. application
— Plan acceptability was high and trust at 75% was — Connections acceptability score: 72% - Link also important for customers
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Meeting the Needs of Consumers and Network Users – Openness and Transparency
Openness and Transparency
We will remain open and transparent in how we operate, earning the trust of our stakeholders through Distribution System Operation (DSO) in our region. We will report on the delivery of our commitments, open ourselves up to scrutiny and support new and existing markets by providing open data, taking a flexibility-first approach to network investment.
CUSTOMER VULNERABLE SERVICE CUSTOMERS
OPENNESS & CONNECTIONS TRANSPARENCY
OUR COMMUNITIES
We will evolve our open and honest to interact with us more quickly, outcome, irrespective of whether culture by building trust and being cost-effectively and easily. Our Data it is asset or non-asset based. This even more collaborative, ensuring and Digitalisation section sets out the ensures that, when investment decisions that together we can achieve our full details of our open data offering, are made, they are fair and maximise shared goals. including our plans to publish more customer benefits. Nonetheless, network data such as combined we recognise and want to address As a business we understand that long-term development statements, that for some, a perceived conflict of being open and transparent is how interactive heat maps, and more interest exists. we establish effective relationships, information on capacity and network collaborate with our partners and performance. We will also explore encourage others to compete with how we can use smart meter data us. We have a strong foundation and to provide personalised, proactive actively publish reports, share network energy efficiency information and How much it data, facilitate fair procurement support. And importantly, we will will cost processes, encourage independent create tools to improve the accessibility scrutiny and enable healthy competition. of our data to help and encourage ED2 However, despite the mechanisms you to maximise its use. expenditure £0.7m already in place, we recognise that we (annual) 0.1% of totex need to be progressive and continue More information is positive, but to act reliably and with integrity as the we must also demonstrate our truly Vs ED1 demands on our business increase. transparent system of operation. 2015-23 +£0.2m +40.1% We need to continue to build trust Our regulatory framework incentivises and reinforce our open culture. us to optimise efficiencies and minimise One of our 9 plan areas, costs to achieve long-term, sustainable taken together, delivering Like you, we believe that by making our network performance and deliver value more for less. data open, we can facilitate the move to for money. As a result, when we make a more flexible net zero energy system, decisions about our network, we always stimulate competition, and enable you select the solution to achieve the best
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Meeting the Needs of Consumers and Network Users – Openness and Transparency
Earning the trust of our stakeholders
We have already taken steps to reaffirm a robust and transparent investment organisations, we will provide support that our approach to making investment appraisal process. And finally, where and guidance using our six new decisions is transparent and equitable. projects meet the relevant criteria, we community energy advisors (see Our We have published our investment will adopt Ofgem’s early and late models Communities section). We will also appraisal processes and supporting of competition. Our plans for late upskill external partners and community metrics and have also appointed competition will comprise a milestone groups to promote decarbonisation, and an independent body to review the approach that minimises customer support groups involved in the transition application of our procedures and detriment. Eligible early competition to future energy systems. report its findings to us. In addition, we projects will be evaluated in terms of have identified areas where potential viability and customers' interests. Supplementing this will be the actions conflicts could materialise and made we take to deliver DSO and facilitate our clear distinctions around roles and Collaboration is essential to help region’s decarbonisation. We will use responsibilities to ensure that decisions us successfully deliver DSO roles knowledge of our network, customers are discrete and independent. and achieve our environmental and the wider environment to provide commitments. feedback to local authorities on their Irrespective of this, we plan to go future energy plans and seek input further, and will use our transition We already utilise robust and on ours. In addition, we will invest in to DSO to evolve our internal transparent procurement processes enhanced cross-sector and cross- arrangements by further separating our to achieve high standards of service vector collaboration to improve system systems and ensuring our appraisal and that are delivered safely and efficiently. planning, and will undertake annual decision-making processes are even However, we know that by working workshops to ensure comprehensive more robust, independent and even more closely with our suppliers input. It is our intention that our well-defined. This will include even we can collectively adopt best distribution future energy scenarios greater transparency by providing practice and accomplish our net zero (DFES) will become the focal point for opportunities for you to give feedback targets. You have confirmed that you regional energy scenarios. As a result, on our major investment decisions, support our approach and believe we plan to create six regional system- both in terms of traditional it is important for our suppliers to planning engineering roles to enable reinforcement and flexibility services. demonstrate strict ethical, social and our local area energy planning and environmental standards. community energy schemes. To encourage more flexibility in the regulated energy sector, there has We are taking steps to implement your To ensure we are fulfilling our to be more competition. feedback. Our Environmental Action promises, we will appraise our Plan (EAP) includes a commitment performance with enhanced rigour We believe in healthy competition and aligning our procurement processes and scrutiny. we actively encourage Independent with the international standards set Connection Providers (ICPs) and out in ISO20400. We will adopt a We start from a strong position. Our Independent Distribution Network responsible procurement policy and governance is robust and demonstrates Operators (IDNOs) to carry out an accompanying charter. The charter we understand and care about our contestable services. By ensuring our is being developed with the Energy responsibilities. Our sufficiently procurement processes are fair and Networks Association (ENA) and will independent non-executive directors transparent we also attract suppliers clarify our environmental, health and hold the executive directors and to compete for our business. But we safety, operational and compliance senior leadership team to account. We know that encouraging competition requirements. This will include that a routinely report to our shareholder, is important to you, and so we want minimum of 98 per cent of suppliers the regulator and you, while several to do more. working on our network will be expert groups independently audit ISO14001 accredited. We have set a our activities. But even with these In Connections, we plan to enhance our target of 90 per cent compliance with arrangements, we have found that the bespoke AutoDesign platform, enabling our charter and will report on this to oversight provided by the Customer ICPs and IDNOs to access a range of you and Ofgem. During the 2023-28 Engagement Group (CEG) during the self-service tools to identify optimum period, we will engage an independent development of this business plan has points of connection and obtain instant third party to review our procurement helped us to challenge our ambition, quotations. This will save time and, processes, allowing us to check clarify benefits and evaluate if our for major works connections where progress and adapt accordingly. planned expenditure is aligned with your AutoDesign is used, it will eliminate priorities and willingness to pay. charges for connection offer expenses. You have told us that, to be We will also continue to extend the successful, we need to take you Accordingly, we plan to retain the scope of contestable services that ICPs with us on our journey to net zero. CEG at a cost of £0.7m during 2023 to are able to undertake. 2028, not only to critique and report We know that only together can we on our future business plans and the Our enhanced open data will provide achieve a sustainable decarbonised achievement of our commitments, but real-time network information, tools and whole energy system, foster regional also to oversee our ongoing stakeholder analytics to help identify opportunities economic development, promote engagement programme. As the value such as where network reinforcement is flexible energy solutions and become provided by the CEG is contingent on its needed. In performing the role of DSO more efficient. These are big challenges, independence, the chair and members we will continue to foster the utilisation and we have an important role to play. will be regularly refreshed. of flexibility-first solutions by running In conjunction with regional energy
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Meeting the Needs of Consumers and Network Users – Openness and Transparency
We will share timely and As a result, we plan to publish the We know we need our workforce clear information about our reports produced by the CEG and behind us to realise our goals and performance, plans and an annual report on our DSO plans. commitments. achievements. To drive efficiencies, we will better utilise our existing material by making We are proud of the relationships we This is particularly important for our it easier to find on our website and have built with our trade unions and, rapidly evolving priorities such as our more understandable by using less while our safety and people services transition to DSO and the facilitation of technical jargon. In support of our teams have regular dialogue with our our region’s decarbonisation. But, when open and honest values, we will also trade unions, our directors would we asked you about our reporting, you limit the information we redact for welcome even greater exposure to told us that you wanted clearer visibility commercial reasons. the views of our employees. We, of our activity and associated costs, but therefore, plan to invite our trade union you did not want us to invest in this area. representatives to attend one board meeting per year and let them choose how best to utilise the time.
Output measure/1 Customer indicative input ED1 ED1 ED2 outcomes Benefits Deliverables measure to date forecast target
OT1 Develop our — Increased commercial transparency function to — Flexibility market development stimulate OT1.1) Publish and report on our internal flexibility processes for investment appraisal markets, procure of flexibility solutions and network flexibility reinforcement in such a way that and govern demonstrates our flexibility-first approach and ensures the best outcome for the our internal long-term planning of the network investment appraisal processes, openly publishing and reporting on outcomes
OT2 Enhance our — Increased OT2.1) Establish our CEG as a standing corporate transparency body to scrutinise our stakeholder governance and — Increased engagement activities and delivery of our sustainability independent business plan outcomes frameworks, scrutiny making them — Increased access to OT2.2) Extend our reporting framework even more our performance, to include annual reports on DSO, Major key performance Connections, our Environmental Action transparent indicators and Plan, Vulnerable Customers, including decision making upgrading accessibility to material via our website, further utilising plain English, and limiting our use of content redaction
OT2.3) Establish regular trade union meetings with our board
OT2.4) Develop a responsible procurement charter and supporting responsible procurement charter (including Suppliers compliant underlying metrics) to drive initiatives with responsible - - ≥90% such as sustainability and decarbonisation procurement charter throughout our supply chain
OT2.5) Develop and implement a sustainable procurement policy and align it Network suppliers 97% 97% ≥98% to the guidance set out in ISO20400 ISO14001 accredited
OT3 Enable fair — Increased OT3.1) Continue to proactively engage with competition ICPs and IDNOs to further minimise the and open input services they require and to extend competition2 — Greater choice for customers the scope of contestable works and the services they can offer their customers (LO) — Reduction in cost
OT3.2) Adopt Ofgem's early and late competition models for applicable projects
Innovation | Data and Digitalisation | Workforce Resilience
1. Numbers shown may be subject to rounding. See A1.4 Key measures in our plan for profiled targets. 2. Cross-reference Connections CN4.3) Bespoke AutoDesign platform for ICPs and IDNOs; cross-reference Connections CN2) Data and heat maps.
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Meeting the Needs of Consumers and Network Users – Openness and Transparency
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 5 dedicated events Stakeholders engaged: 4,762 total – 60 unique interactions Wave 1 findings Details
Open, innovative and meaningful — Stakeholders wanted engagement from us to be topical and innovative and to be engagement is important to stakeholders informed about how their feedback has been used or adopted
Regular performance reporting and — Stakeholders recommended we increase the use of our data, provide regular reporting simplification of communication is on spending and investment, and reduce technical jargon in communications important to customers Open data sharing is welcomed by — Support existed for more information and open-sourced data sharing with customers stakeholders and stakeholders
Wave 2 Events: 135 total – 5 dedicated events Stakeholders engaged: 15,475 total – 4,948 unique interactions Wave 2 options A B C D E
Options were Leaders in regulatory A modest Actively A regional leader Sustainable costed to help integrity – always acceleration facilitating regional on the path to development is at customers doing the right thing of DSO and decarbonisation in decarbonisation, the heart of our understand the digitalisation plans performing the role collaboratively organisation and its benefits and and increasing of DSO and through working with local decision making potential bill impact access to network our supply chain authorities and of the service levels open data other stakeholders proposed
Customer ambition 45% of domestic and 47% of business and vulnerable customers recommended we establish a high level of and broader ambition by supporting option E, placing openness and transparency at the heart of the organisation and our findings decision making. Rural customers supported the most ambitious options in equal measure, with options D and E getting 33% of the votes each. Stakeholders were interested in how we work with our supply chain and wanted to see clearer reporting on topics like cost and collaboration with regional organisations. Stakeholders also would like to see further investment in technology that can improve our network operations and increase our ability to be driven by high-quality open data
Wave 3 Events: 91 total – 5 dedicated events Stakeholders engaged: 32,500 total – 2,785 unique interactions During Wave 3, the approach for future energy services was discussed with stakeholders along with the need to report performance to customers on a regular basis, in a coherent and easy to navigate manner. The ongoing role for accountability and reporting to groups such as the CEG and challenge panels was also debated
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Stakeholder support for preparations for growing — We will continue to support a flexibility-first OT1 Link flexibility markets approach, developing our services, commercial Generators prioritised investment in the network and support functions and reporting practices as this proactive communication on flexibility opportunities. continues to gather momentum through the energy transition
— Environmental reporting and governance is — We will actively hold ourselves to account, OT2 Link important reporting on our performance transparently by our Customers and stakeholders viewed “ensuring more stakeholders and customers than 95% of suppliers meet strict environmental management standards” as crucial
— Collaboration and a continued role for the CEG is — We will continue to support and promote OT2 Link supported collaboration, diligent governance and a fair, open OT3 Stakeholders and customers supported substantial and competitive regulatory environment. We will regional collaboration and retaining the CEG retain the CEG as a standing body
— Openness and Transparency acceptability score: — Acceptance scored highly with trust at 71% being - Link 74% equally important to our customers
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Our Consumer Value Propositions
Going the extra mile
We have built an ambitious plan for 2023-28 and in certain areas we have identified opportunities to deliver additional value to unlock significant and meaningful benefits for our customers and communities.
We are proposing four consumer Our CVPs form part of our overall Our Customer Engagement Group value propositions (CVPs) where we plan to ensure we lead the drive to (CEG) has reviewed our CVPs and we have identified robust benefits for our decarbonisation in our regions while have considered their feedback as part customers. Our CVPs cover four of making the transition as efficient and of the development. the five categories allowed by Ofgem. affordable as possible. These propositions go beyond the The full details of our CVP proposals are minimum requirements and functions The benefits of our CVPs have been set out in annex 1.5 Detail on our CVPs. typically undertaken by an energy independently modelled to estimate the network company as ‘business as usual’. consumer value in each case. We have used the industry-wide social return on investment (SROI) tool to do this.
CVP proposals
One-stop app Self-service Dynamic voltage Phase one solution for analytics toolkit optimisation for roll-out of vulnerable domestic energy next-generation customers efficiency energy system
CVP1 CVP2 CVP3 CVP4
Give our customers Build enhanced Dynamically manage Undertake first stage more choice in how functionality on top voltage on our system to deployment of a they engage with us of our open data achieve behind the meter blueprint for the next by creating a fully platform to unlock benefits at 27% of domestic generation energy digitised ‘one-stop additional customer properties in the 2023-28 system, rolling out 30 solution’ to enable a benefits. This will period, increasing to 80% innovative microgrid more accessible, faster include a set of free over the projected lifetime. solutions in some and convenient route to analytical tools to Our solution (currently in of the most remote contact us and access help with processing late stages of innovation parts of the network our services. This will data and enhanced trials) will improve energy to enhance system also free up capacity self-service. efficiency delivering an resilience. for a more responsive annual average reduction telephone-based of up to £20 in customer service for those that energy bills and 27kg of prefer it. carbon emissions per household each year.
Plan area Vulnerable DSO and Major Enabling Whole Enabling Whole Customers Connections System Solutions System Solutions
Costs £1.8m £6.0m £8.1m £6.4m
Consumer £4.4m £7.6m £31.6m £7.6m 1 value
1. The net present value (NPV) of the project is shown over a 10-year period as the CVP relates to the first-stage deployment of a future energy system and so the benefits are reflected over a longer time period.
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Our Consumer Value Propositions
Our Consumer Value Propositions
information, consolidated in one place. option to seamlessly self-serve their By extending our digital channels data and information requirements. we will make digital services more accessible for those with complex and Our app will cost £1.8m during the diverse vulnerabilities. The pandemic 2023-28 period and will deliver a has accelerated an uptake of digital net present value of £4.4m based CVP1: app to support technologies; however, we recognise on an SROI of £2.85 for every £1 that some vulnerable communities have spent over 2023-28. vulnerable customers greater instances of digital exclusion. An additional benefit of introducing our app The value assumes uptake of 300,000 We will develop a one-stop app is that, as we open up a new channel for customers from our 900,000-strong solution to support vulnerable people who prefer engaging through Priority Services Membership (PSM) customers to provide a more that medium, we free up more capacity households, delivering benefits accessible, faster and convenient in our contact centre to support the including reducing stress caused during route to contact us and access digitally excluded and those customers a power outage, customers feeling more our services. who prefer to engage in person. in control and savings realised as a result of information provided to support Through our engagement, our Customers will benefit from a switching energy suppliers and energy stakeholders – including our social personalised experience with access efficiency advice. issues expert group – have placed to live information on the network, emphasis on support for vulnerable proactive communications, be able to We propose that 30 per cent of any customers during power cuts. Digital manage their own customer records CVP reward would be contingent on solutions and increased contact and access information to support them delivery of the app, with the remaining channels were identified as important to save money and benefit from the 70 per cent contingent on uptake opportunities to enhance our services. transition to decarbonisation. (number of vulnerable customer users) proportionate to the forecast used In response to this and as part of our Our proposition goes beyond the to derive the projected benefits. Vulnerability strategy (annex 4.11), we Ofgem minimum standards for Non-delivery of the app would result in will develop an app solution that will vulnerable customers as it will offer full clawback of any reward. give customers greater flexibility and consumers even greater choice in how convenience with access to real-time to interact with us and provide the
The decarbonisation transition will This will cost around £6.0m in the impact a wide range of stakeholders, 2023-28 period, delivering a net all of whom will have different present value of £7.6m based on a requirements to serve a variety of SROI of £1.47 for every £1 spent. outcomes. To give functionality to our CVP2: self-service open data we will provide an analytics The benefits we have modelled include analytics toolkit toolkit that will allow more self-service the savings from designers’ time as and value to be extracted from our customers self-serve their connection We will build enhanced data, supporting uptake of low carbon requirements and the savings achieved functionality on top of our open technologies (LCTs) and planning from connection offer expenses. data platform to unlock additional for decarbonisation. customer benefits including We have however been unable to a set of free analytical tools to Our analytics toolkit will include reliably determine the benefits from the help process data and enhance capabilities to enable self-service open data portal as we cannot quantify self-service. connection quotations, budget who will use the data, what it will be estimates, the connection of used for and the downstream benefits LCTs, dynamic heat maps, and this will bring. Our approach reflects Our stakeholders have told us that tools to understand power flows a very prudent view as we anticipate they not only want to access but also on our network. benefits delivered from the open data to better understand and be able to portal will be significant. interact with our network data. We Our plans go beyond Ofgem’s minimum have received very strong support data provision requirements, adding for our self-service offerings such as analytics tools and self-service offerings, AutoDesign. In response to demand for brought together into one place for ease this type of provision we will develop a of access. This will allow customers to comprehensive open data platform that extract maximum value from our data. we can build on to establish a variety of It will also provide a scalable solution as self-service channels across a range more LCTs connect to our network. of existing and future service lines.
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Our Consumer Value Propositions
We propose that any CVP reward is contingent on delivery of each Our self-serve analytics toolkit functional work package that goes CVP will deliver a range of benefits above Ofgem’s baseline requirements package. We propose a 20 per cent across our customer base: clawback of the reward for any of the packages that are not delivered. — Domestic (including vulnerable) — Local authorities will be able The functional work packages are: customers will be able to assess to use network data to plan for connection quotations, connection the viability and costs associated decarbonisation and identify budget estimates, small LCT retrofitting with adoption of LCTs such the most cost-effective routes of connections, dynamic heat maps as electric vehicles and heat to deliver their plans, which and the analytical tools. pumps, simply by inputting may include assessment of their addresses. development opportunities, green belt and brown belt — LCT installers will be able to development, locational identify costs and timescales pricing signals, public transport for projects in real time. planning, localised community energy schemes and supporting — Major connections customers vulnerable customers. will be able to self-serve to We plan to build on the success obtain quotes for potential — Independent Connection of AutoDesign and heat maps connections to the network Providers and Independent to produce an intuitive open data up to 210kVA. Distribution Network Operators portal to allow our customers will be able to self-serve their to get maximum value from — Flexibility aggregators will requirements for network data our data. have visibility of the network and formal points of connection to identify potential network offers as and when they need to, constraints where flexibility further reducing the requirement opportunities lie and support for input services and supporting wider decarbonisation initiatives. competition. Their connections Phil Jagger will be faster and cheaper. Programme manager
Boston Spa energy efficiency trial (BEET) Phase one Now completed, proved that CVP3: dynamic Subject to successful trials in the existing methods of voltage control voltage optimisation remainder of the current period, we will available to us are not suitable for rapidly ramp up deployment to target voltage optimisation and therefore We will improve domestic roll-out of the technology and capability a new approach was required. energy efficiency through to 147 primary substations (27 per dynamic voltage optimisation cent) serving 1.0m customers over the to reduce customers’ bills 2023-28 period. Beyond 2028 we will Phase two and carbon emissions. complete the roll-out to a further 294 1 We are integrating smart grid substations, which will mean over the and smart meter systems to Our stakeholders have told us that project’s lifetime it will deliver benefits develop capability to undertake decarbonisation and affordability are to 3.1m customers. and implement a new voltage key priorities. optimisation technique within a trial area in Boston Spa. Our Boston Spa energy efficiency trial (BEET) innovation project is piloting using smart meter data in near real time to dynamically optimise the high voltage Phase three (HV) and low voltage (LV) network to We will explore whether this improve customer energy efficiency. new technique can be used to The project consists of three phases, 1. Eighty per cent of our primary substations. The provide other services, such as remaining 20 per cent of our network is either frequency response. and we are currently in phase two. technically incompatible with this solution or voltage optimisation is not required.
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Our Consumer Value Propositions
With our solution deployed we improved network operability due to the Our proposal will cost £8.1m estimate that on average customers identification and mitigation of voltage over the 2023-28 period, and will receive a reduction in their energy and thermal issues on the network. will deliver a net present value of bills of approximately £20 p.a. as well £31.6m based on an SROI of £4.52 as 27kg of lower carbon emissions Our proposal delivers above Ofgem’s for every £1 spent. annually per household per year as minimum requirements. It delivers we deliver optimised voltage levels. whole system benefits by leveraging In the event of non-delivery we propose Customers will be able to benefit from our assets and data to manage energy any reward is clawed back pro rata these savings without having to take efficiency behind the meter, generating on the proportion of customers for any action. Additional benefits will wider economic and societal benefits whom the solution is not delivered be felt by the wider system including while making the system more efficient. compared to the projection used to additional capacity to connect and calculate the reward.
In the event of non-delivery we propose a linear clawback linear clawback of reward based on the number of microgrids delivered during the period. CVP4: next-generation Our proposal will cost of £6.4m in energy systems the 2023-28 period delivering an NPV of £7.6m based on a SROI of We will undertake first-stage £1.40 for every £1 spent over a ten deployment of the blueprint year period. for a next-generation energy system, enhancing system We used the value of lost load and the resilience, particularly for costs savings microgrids can achieve remote customers. through deferred reinforcement that would otherwise be required between 2023-33 to calculate customer benefits. Our engagement has reinforced that reliability and resilience are particular A ten year period was deemed more concerns for our rural customers who suitable to capture consumer value as want to participate in decarbonisation. we look to prove the concept for future roll-out and capture some of the costs Through our innovation programme support the transition to a future energy savings from deferred reinforcement, we are currently testing the viability system which is becoming increasingly which will be required between of enhancing resilience through use of reliant on electricity. Through use of 2023 and 2050. storage and smart technology at remote storage and smart technology at remote substations to provide a step change substations we will support localised in resilience for remote customers, dependable energy as the number of Support for our plan facilitating communities to become energy vectors reduces. mutually supportive of one another in “The business planning process the event of upstream faults. Successful deployment will allow has been thorough and you for wider roll-out beyond 2028 and, by have articulated to the many Subject to successful trials, we plan to 2050, potentially up to 20 per cent stakeholders what the issues begin first stage roll-out in the 2023-28 of our network could be served by are and also what some of the period, demonstrating this solution on microgrids. The benefits however options are as you endeavour to our network by deploying 30 microgrids will be wider than just for our adapt to fundamental changes as a blueprint for the next-generation customers, as other Distribution in the energy sector.” energy system. Network Operators (DNOs) are able to adopt the solution in other parts Keith Jackson, Customers will experience a more of the country. Boston Spa community green resilient energy supply, protecting them group, member from the inconvenience caused by Our proposal delivers above the baseline of Northern Powergrid even very short interruptions. This will standards as it could demonstrate stakeholder improve customer service, particularly that power microgrids provide a more panel for customers in rural areas who are dependable whole system. susceptible to supply interruptions and
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Unleashing the Potential of Innovation
Unleashing the potential of... INNOVATION DATA & DIGITALISATION Innovation
WORKFORCE RESILIENCE
We have developed a sector-leading programme of exciting, cutting- edge innovation that accelerates the creation of next-generation energy systems and balances the targeted development and deployment of solutions demanded in our plan. We will explore high-potential transformational technologies to unlock unimagined benefits for current and future energy system customers.
Our plan recognises that innovation and lighting – it’s the benefit that the flexible connection arrangements, and is vital to enabling decarbonisation customers see that matters most. There perfluorocarbon oil leak tracers into while ensuring both the reliability of will be technical solutions, information business as usual. Voltage management our network and affordability of our and data-based techniques, commercial has created 4GW of capacity for services for all of our customers. agreements and other methods that customers to install domestic solar enable those changes, and all are within generation (creating a potential We approach innovation mindful of the scope of our innovation strategy. customer value of up to £75m).1 the fact that the customer benefit matters more than our methodology. Our track record gives us confidence in For instance, although an innovative harnessing the benefits of innovation. solution will often deliver technical We have delivered more than £23m of changes – for example, reduced benefits since 2015, with more to come, reinforcement to connect low carbon by rolling out innovation associated technologies (LCTs), or faster restoration with developments such as improved of customers’ power for heat, transport low voltage (LV) fault management,
1. Dependent on customer take-up of the opportunity. Based our ground-mounted substations, 75 per cent require no work or tap settings only and 25 per cent require replacement with an upgraded transformer.
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Unleashing the Potential of Innovation
Driving benefits through innovation
Building on this, in 2023-28 we will Additionally, we will embrace our voltage optimisation roll-out (see seek to provide higher value and better central role in the energy system by Consumer Value Proposition section services, connecting increased numbers looking beyond the services that have and annex 1.5 Detail on our Consumer of electric vehicles (EVs) and heat been familiar to our sector, applying our Value Propositions) using information pumps, and catering for the resultant thinking to the whole energy system and from smart meters is estimated to increased demand, while maintaining its supply chain, assisting communities generate £34m of energy bill savings for downward pressure on costs and and charities in their decarbonisation customers by 2028. ensuring vulnerable customers are work, and adopting data techniques and not at a disadvantage in the energy traditional or novel assets as appropriate This is a total benefit to customers in system transition. The innovation- for efficient and effective investment. excess of £320m in the 2023-28 period. related benefits in our 2023-28 business plan build on an already high level of Innovation is embedded To be able to roll out more beneficial deployment within 2015-23. We plan to throughout our plan, delivering innovation learning beyond the accelerate the deployment of innovation £278m of net totex savings in the 2023-28 period we are also investing benefits as the programme matures 2023-28 period. now for the future where there is a though 2021-28. reasonable likelihood of significant Innovation is embedded throughout the customer benefits. We will do this through a focus on four 12 output areas in our plan delivering strategic outcomes that address the significant savings. We will invest £24.5m funded challenges we face:1 via Ofgem’s network innovation Our plan contains £150.5m of allowance (NIA) mechanism is — Developing and deploying investment in business-as-usual (BAU) significant innovation associated with technologies and creative solutions innovation and roll-out of previously decarbonisation and the activities that enable faster, lower cost proven innovation in the 2023-28 that support it, including customer pathways to decarbonisation. period. This investment drives net vulnerability and ensuring customers — Working with partners to open up totex efficiency savings of £277.6m can depend on their decarbonised new channels that significantly, embedded in our cost forecasts (70 per energy supply. Additionally, we efficiently and effectively increase cent of the total efficiencies in our plan). expect to bid for further funding via the exploitation of data flows across the Strategic Investment Fund (SIF), the whole energy system. In addition to this, automating our Innovate UK, Horizon 2020 or similar — Increasing the reliability, resilience connections interactions will lead to routes as appropriate bid topics become and security of the power grid improved service levels but we estimate available. We set out more detail on our to improve not only its own that it will save customers using the proposed use of NIA and SIF funding in dependability, but also that of the connections process to around £10m annex 5.1 Innovation Strategy. overall energy system. in the 2023-28 period. Our dynamic — Promoting and safeguarding the interests of customers, 2023-28 period (£m)2 Investment in particularly those who may BAU innovation Net cost savings otherwise be significantly Output area and roll-out from innovation disadvantaged or left behind in the energy system transition. Decarbonisation 45.2 125.9
Reliability and Availability 21.1 24.2
Asset Resilience 19.7 83.7
Climate Resilience 1.7 2.6
Environment 37.3 41.2
Safety 8.1 -
Physical and Cyber Resilience 12.1 -
Customer Service 2.6 -
Vulnerability 1.8 -
Our Communities 0.8 -
Openness and Transparency - -
Subtotal: totex 150.5 277.6
1. These strategic outcomes are discussed in greater 3 detail in annex 5.1 Innovation Strategy. Connections customer savings 6.0 9.8 2. Excludes 2023-28 NIA costs and benefits 3. Non-discounted AutoDesign benefits in 2023-28 Energy bills savings4 8.1 33.8 period. 4. Relates to non-discounted cost benefits from our voltage optimisation CVP. Total 164.6 321.2
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Unleashing the Potential of Innovation
We have identified six key areas of — the need to be able to model transformational capability where flexibility power flows and benefits, we believe that a step change especially to address LV constraints; in knowledge and expertise is — the requirement to analyse, required in the 2023-28 period. understand and respond to changes in load diversity caused by mass The majority of our innovation activity adoption of LCTs and the flexibility is associated with the areas of our techniques that we expect to plan that demand significant change emerge; and and capability enhancement, which — the desire to enhance the £277.6m we refer to as ‘pull’ innovation. Pull notification and connections factors include: process to facilitate increased low of innovation benefits carbon installation and multi-vector embedded in our — the need to manage rapid load load use (e.g. hybrid heat pumps). 2023-28 costs growth on the existing network, particularly at LV, driven by decarbonisation;
Strategic outcomes
Charting the Collaboratively Achieving Ensuring all best course to unlocking the next-level customers net zero value of open energy system benefit data dependability
Transformational capabilities
Identify opportunities to Develop sophisticated data Enhance the connections process 1 accelerate the benefits 2 management and analytics 3 to facilitate higher volumes and of flexibility to inform energy system different types of connection, forecasting, planning and including the addition of loads via real-time decision making existing connection points
Increase the Remove barriers preventing Create capabilities to deliver a 4 dependability of 5 access to the energy market 6 next-generation local energy our customers’ for all customers including network that links up whole electricity supply access to energy data; system energy sources and particularly those not currently vectors, balancing in real time engaged or informed, vulnerable or less advantaged
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Innovation is also driven by the Innovation is also key to Collaboration is at the heart of development of new technologies and delivering our customer output our strategy to ensure maximum techniques often with the potential to commitments. benefits from innovation for our disrupt traditional approaches. This region, the industry and wider ‘push’ innovation is harder to predict as Innovation benefits drive many of the sectors. it is generally associated with emerging customer outcomes we are committing technologies. An example from the to in this plan. We are committed to maintaining a recent past would be the rise of electric culture and environment within our vehicles as a serious transport choice. Innovation has enabled simple business where new technologies and Going forward, artificial intelligence techniques – such as changing voltage learnings are sought out, shared and (AI), 5G, and internet of things (IoT) set points to improve access to our embraced to provide a modern local solutions are likely to offer potential that network for low carbon energy, freeing energy network where improvements has not yet been applied to situations up capacity for customers – and we can are always being made. such as ours, as are self-driving vehicles. build upon these as we go into 2023-28. But there will be other digitalisation Innovation is deliberately not a siloed technologies and data capabilities We aim to improve customer service area. We source ideas widely across as yet unknown that might be just by digitalising the connections and our organisation, from other companies as important. We need to remain agile notifications process, improving within our ownership group, and from and ready to seize the opportunities network data quality and facilitating external organisations and institutions. they will offer. faster installation of customer equipment. This builds on the improved We have a well-established ethos of Data and digitalisation is particularly convenience and time and cost savings partnership and collaboration with a relevant because it will offer both push of our AutoDesign system. diverse range of organisations; our and pull opportunities, especially as current innovation portfolio including we move to DSO world. Initially it will Rethinking restoration through our use our customer-led distribution system improve the way we deliver our existing of SilentPower vehicles for small LV (CLDS), activating community services – connecting customers’ load, faults has reduced both emissions and engagement (ACE), SilentPower, keeping the lights on, and facilitating running costs and we will expand this Integrated Transport Electricity and decarbonisation. But we expect this to as we decarbonise further, rolling this Gas Research Laboratory (InTEGReL), evolve to enable a host of wider whole solution out as part of our customer AutoDesign and MicroResilience system benefits for customers and some vulnerability plans. projects is testament to that.1 This of the two-way automated interfaces has been reinforced by the Energy we will need are yet to be conceived. Our microgrids roll-out (see Consumer Innovation Centre (EIC) ranking us The Boston Spa energy efficiency Value Proposition section and as the most collaborative electricity trial (BEET) combining network and annex 1.5 Detail on our Consumer network. customer data to drive automated Value Propositions) will improve the system optimisation is an embryonic dependability of energy supplies This is set to continue as we develop example of what closed-loop blended customers need as they decarbonise existing relationships and actively seek data might do for us. and as the energy system moves to out new partnerships and opportunities intermittent and seasonal renewable to collaborate. In a typical year around The relationship between the strategic energy sources. This dependability two thirds of the innovation ideas by outcomes, transformation capabilities benefit is particularly notable during value are suggested by third parties and push and pull innovation motives is extreme weather events driven by and 85 per cent of our innovation discussed further in annex 5.1 Innovation climate change. investment is with third parties. All Strategy. innovation proposals we undertake We will improve operational will continue to be subject to review performance via our innovation by our expert non-executive director including a richer understanding of with innovation oversight reporting our assets and of the implications directly into our board. and benefits of flexibility, minimising Innovation is key to ensuring disruption on the network and Northern Powergrid leads improving scheduling of network in decarbonisation delivery reinforcement and renewal. and system dependability by extracting value and creating customer opportunities in open data, digitalisation and network and customer flexibility.
Professor Phil Taylor Pro vice-chancellor for research and enterprise, Bristol University 1. Details of CLDS, ACE, SilentPower, InTEGReL, AutoDesign and MicroResilience and other projects in our portfolio can be found at https://www.northernpowergrid.com/innovation.
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Unleashing the Potential of Innovation
Our BEET and Community DSO Network Innovation Competition (NIA) SilentPower bid represented two excellent examples of third-party-generated projects SilentPower has allowed us to use a carbon-free alternative to reduce brought to us by a customer and running costs and support customers’ solar generation in 25 per cent of the engineering consultancies respectively. small faults previously restored by mobile diesel generators. We plan to roll Ofgem’s Strategic Investment Fund out six additional vehicles to support our customer vulnerability strategy in will further foster the opportunity to the 2023-28 period. develop collaborative and third-party driven projects in 2023-28, with more diverse parties and ideas taking part and opening up a wider set of benefits for customers.
Our approach to delivering innovation projects further embeds our culture of innovation. Project managers are selected from the parts of the business that will benefit from the eventual roll-out of the learning, and have responsibility for facilitating that roll-out. Members of our executive team take responsibility for the progress of our innovation activities in their operational units.
As part of our whole system approach to decarbonisation, it is essential that our collaboration includes other network companies and companies from other sectors. This includes working together to develop innovation projects but also disseminating the learning from the projects of others. We are doing that already through our work at InTEGReL and with Nissan, our discussions with the rail sector, and our dissemination of Distributed Solar and Storage Study AutoDesign (DS3)1 learning to developers. This will only increase in the 2023-28 period. AutoDesign has reduced connections costs and allowed more than 2,850 small LV designs to be produced by customers to generate indicative connections costs, reducing timescales from 10 working days to just a few minutes. AutoDesign also allows customers to choose the cable route on their property and see relative costs of different routes.
1. Learn more about our DS3 project: https://www. northernpowergrid.com/innovation/projects/distributed- storage-solar-study-nia-npg-011
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Unleashing the Potential of Innovation
Supporting our objectives
Impact on output areas
Innovation transformational
Ref. capabilities Benefits Decarbonisation EAP Safety Reliability and Availability Asset Resilience Climate Resilience Cyber and Physical Resilience Service Customer Customers Vulnerable Communities Our Connections Transparency and Openness
IN1 Identify opportunities — Allow use of low cost energy at times of plentiful generation to accelerate the — Contain network costs by avoiding reinforcement benefits of flexibility — Facilitate faster connections and installations of customer equipment — Minimise disruption at times of reduced network or generation availability — Improved scheduling of asset reinforcement and renewal – lower ● ○ ○ ● ○ ● ○ ● ○ ○ ● ○ cost, disruption to customers, smarter works coordination — A richer understanding of the implications and benefits of flexibility, how best to deploy it and the mechanisms to use it most effectively
IN2 Develop — More targeted, lower-cost reinforcement and flexibility purchasing sophisticated data — Allow energy matchmaking in the connections process, reducing management and connections costs analytics to inform — Interconnected systems giving faster speed of response, more energy system efficient processes and easier access to information — New opportunities to exploit mass data streams through integration forecasting, planning ● ● ● ● ● ● ● ● ● ● ● ● and real-time and access to key information decision making — Improved scheduling of asset reinforcement and renewal – lower cost, less disruption to customers, smarter works coordination — Cost reduction via artificial intelligence (AI) in place of labour- intensive processes
IN3 Enhance the — Ensure that the electricity network is not a barrier to decarbonisation connections process — Lower cost for connections to facilitate higher — A quicker and more tailored connections service, driving improved volumes and different customer satisfaction types of connection — Longer opening hours and more convenient access to our services ● ○ ○ ○ ○ ○ ○ ● ○ ○ ● ○ — Transparency of connections design and pricing decision making — Greater internal capacity to facilitate more low carbon technologies (LCT) connections that contribute towards our net zero ambitions
IN4 Maintain the — Energy remains dependable even with a reduced number of energy dependability of the sources energy system as — Customers can expect power to their homes particularly when they seen by the customer need it most (e.g. during storms) during the energy — Power for all uses including heat, transport, and information systems ● ○ ○ ● ● ● ● ● ● ○ ○ ○ system transition and will be available throughout the seasons decarbonisation — Summer minimum and winter maximum demands and corresponding generation loads catered for
IN5 Remove barriers — Customers know they can depend on the whole energy system to preventing access to provide power to meet their needs as they become more reliant on the energy system, electricity including access — Customers support the work programmes and initiatives we run to to energy data, manage the network ● ○ ○ ● ○ ○ ○ ● ● ● ● ● particularly for those — Customers are more inclined to transition to LCTs not currently engaged or informed, vulnerable or less-advantaged
IN6 Create capabilities — All customers understand the benefits of a smart flexible energy to deliver a next system and know how to access them generation local — Facilitating a fair and equitable transition to a low carbon energy energy network that system links up whole system — A faster route to net zero with more customers able to access low ● ● ○ ● ● ● ● ● ● ● ● ○ energy sources and carbon energy vectors, balancing in — Enhanced energy system reliance to physical and cyber disruption real time
Key: ● Major Impact ● Minor Impact ○ No Impact
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Unleashing the Potential of Innovation
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we engaged ... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 2 dedicated events Stakeholders engaged: 4,762 total – 61 unique interactions
Wave 1 findings Details Open data and information sharing will — Stakeholders wanted us to share more information and open-source data with them support innovation to deliver net zero and customers to increase the quality of messaging and to increase innovation Utilising innovation to provide additional — Stakeholders urged us to expand engagement to explore how innovation can develop support for vulnerable customers and solutions to provide support for vulnerable customers and leverage emerging communities is welcomed technologies
Wave 2 Events: 135 total – 5 dedicated events Stakeholders engaged: 15,475 total – 187 unique interactions Options with levels of Most customers stated that we should invest in innovation projects linked to reliability of our network, as this ambition were explored was viewed as being central to our role as a DNO. Customers supported continued investment in innovation to help customers projects, especially when linked to decarbonisation. However, they recommended we do more to consider understand the benefits customer outcomes and financial returns when making innovation funding decisions in other areas of the service levels proposed
Wave 3 Events: 91 total – 9 dedicated events Stakeholders engaged: 32,500 total – 417 unique interactions During Wave 3, the role of innovation to enable a net zero transition and network resilience was explored with stakeholders. Initiatives to support vulnerable customer and communities were debated with an emphasis on the importance of demonstrable outcomes and benefits
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Flexibility is important for a successful energy transition — We will work with stakeholders, IN1 Link Most domestic and business customers and 67% of rural industry partners and flexibility customers voted for the upper levels of ambition (options D or E) providers to develop our current and to create high levels of flexibility and connectivity future flexibility market offer
— Open data with greater availability of network data is — We recognise the important role open IN2 Link supported data plays in supporting an effective Most stakeholders support increased collection and sharing energy transition and we will develop of data on energy consumption. Most domestic and future data capture and analysis capabilities customers are comfortable with us sharing data on household- to support future dynamic network level energy use management
— We should invest ‘ahead of need’ to support flexible — We will progress the development IN3 Link connections of agile connections practices and Local and national authorities, interest groups, and councillors processes to support an acceleration emphasise their support for the increased use of solutions such in LCT connections as heat pumps, hydrogen, smart meters, solar farms, geothermal generation, or even direct current, with several constituencies actively planning for investments
— We should develop a network for the future — We will continue to prepare the IN4 Link Stakeholders perceived that we have a key role to play in the network for the energy transition, IN6 transition to net zero by ensuring that the required infrastructure maintaining resilience and reliability is in place to facilitate new connections for LCTs for our customers
— Future energy services and data sharing is supported — We will work collaboratively with IN1 Link Many stakeholders are eager to explore methods to better share partners and stakeholders to identify IN5 data more actively to facilitate the transition to DSO ways to mitigate future barriers preventing access to the energy system for our customers
— Stakeholders support our collaborative approach to innovation — We will continue to develop a whole IN6 Link Stakeholders want us, the government and the regulator to work system approach to the development together to ensure that policies and regulations are in place to of a smart, future-proofed network for allow peer-to-peer trading. This will mean that more communities our customers can benefit from using local energy
— 79% of customers agree that Innovation — Innovation acceptability score: 79% is crucial for the successful delivery of - Link the plan
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Unleashing the Potential of Data and Digitalisation
Unleashing the potential of...
INNOVATION DATA & Data and DIGITALISATION
WORKFORCE Digitalisation RESILIENCE
Changing customer needs and the decarbonisation challenge require an increasingly decentralised and digitalised energy system. That includes the value in sharing data openly both within the sector and with wider stakeholders. These, along with stakeholder feedback, are the key factors that have shaped our vision for data and digitalisation.
We have been on our digitalisation substations in 2015-23. This programme — Openness and transparency journey for some time. In the 2015-23 allows us to respond in real time to – enabling innovation and period, we invested to capitalise on new information about power flows on our development of new markets and emerging technologies to increase network, which contributes to reliability while delivering net zero at the our digital capabilities and secure and availability. lowest cost. your information and power supplies. — Whole system efficiency – We undertook significant investment These examples are the building blocks preparing for both a cost- and of more than £21m in digitising our in which we will continue to invest carbon-optimised whole energy asset records and implementing to build our digital capability. Our system. system design tools to model a wide investments to date have provided — Service excellence – delivering variety of operational conditions as we a stable foundation, allowing us to seamless, efficient service with transitioned to a more active network focus on providing the technology more choice and personalisation. operation. In the same period we to underpin the next phase of the — Cyber security – responding to invested £26m in cyber resilience, journey. Decarbonisation, and all its and mitigating the cyber threats of meaning that we can continue to secure opportunities and challenges, will be increased digitalisation. your existing and future services while front and centre, but our comprehensive — Reduced cost – driving lower-cost, reducing costs. (Read more in the data and digitalisation strategy covers efficient operations in both the front Physical and Cyber Resilience section.) the entire plan. To deliver those and back office. requirements involves a relatively We are well advanced in the complex set of detailed, interconnected deployment of our smart grid enablers and inevitably technical workstreams. programme, which is transforming But the key guiding principles on which our ability to monitor, control and we have based our strategy are things communicate with more than 860 major that we think make sense to everyone in substations and 5,500 distribution our business and to our stakeholders:
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We are planning to deliver an increased Our extensive engagement has In our latest iteration of DSAP we have level of digitalisation of our network confirmed that you support our formalised our stakeholder engagement in both scale and sophistication. In some plans to open up our data and to methodology in annex 5.3 Digitalisation cases, that will call for a widespread invest in technologies needed to Strategy and Action Plan. In developing roll-out of technology applications drive decarbonisation as part of the our plan we first developed a list of that we might already be experienced whole energy system. stakeholders that we wanted to connect with. In others, we will need to augment with – a mix of new and established our capabilities to keep pace with We have engaged with our stakeholders relationships selected on the basis the requirements and unlock the specifically on data and digitalisation, of their industry, use of data and value associated with more complex while also ensuring that we reflect the subject matter expertise. This included interactions. reality that this is not an end in itself. individual customers, organisations and It is a cross-cutting theme that runs institutions such as universities, central In particular, we expect to significantly right through our business plan and the and local government, major industries expand our use of data for planning and associated engagement programme. and green energy groups. We then operation of network and customer The development of our digitalisation directly contacted this list, comprising assets and we are anticipating that that strategy and action plan (DSAP) is not a more than 1,700 stakeholders, alongside to lead to applications where mixed data brand-new initiative. We have published distributing a press release and utilising sets (both from within and outside our three versions of our plan so far, social media to further publicise system) combine with analytical and engaging widely with our stakeholders our DSAP, inviting further comment. control capabilities to exert a level of as we have refined our thinking and Specifically using social media, automatic, closed-loop control over our aligned our data and digitalisation we used polls to ask for feedback assets and those owned and operated plan ever more closely with our wider on key questions. by others. business plan. To ensure that we have sought The pace of change will be determined To ensure our plan is fit for purpose and well-balanced, specific and by the need. It is not efficient to deploy focused on the right initiatives, we have 360-degree feedback, we have solutions where there are no problems, undertaken research into stakeholder incorporated it into each iteration of but we must also be ready to efficiently requirements and have engaged with our DSAP, and introduced a continuous deliver solutions when problems multiple categories of stakeholders stakeholder review process, where arise. To ensure that the technologies through a series of events, targeted we horizon scan for new stakeholders available at the earliest stage of maturity engagements and subject matter as well as constantly refining our can continue to deliver at the highest expert conversations. stakeholder list to further understand levels of maturity, we have and will their needs and interests so we can continue to select solutions that are tailor our engagement. scalable, so can grow and shrink as our needs change, extensible, to allow us Engaging discretely on data and to take a modular approach to plugging digitalisation was challenging, as in new capabilities, and interoperable, We will increase our open data independently, our initiatives offer to drive a loosely coupled architecture products by at least 70 per cent, little consumer value in isolation of that is flexible both internally and when made possible by the investment the business outcome they support. connecting with external sources too. we will make in our own analytics However, when we were able to capabilities, an enabler for engage on it alongside other areas For instance, we plan to utilise decarbonisation. of our plan, stakeholders were better cloud-based analytical services to able to contextualise the enabling initiate the capability early in our plans, nature of data and digitalisation and providing common data warehousing provide clearer insight. We have built early, but utilising the modular and Paul Fitton this into our engagement methodology scalable nature of this architecture Head of in our DSAP. to add artificial intelligence (AI) and information machine learning when the time is systems We have interacted with over 27,500 right, growing the storage capacity stakeholders through more than 350 automatically as the amount of data events and activities across our regions, increases with our maturity. This model seeking their views and gaining input will also allow us to easily bring in into our business plan which has shaped external data sources systematically our data and digitalisation offering. while providing the platform upon which We will continue to engage with, and we can build our open data portals and respond to, our stakeholders’ needs customer-facing analytical services. throughout the 2023-28 period.
Northern Powergrid: our business plan for 2023-28 – 160 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Unleashing the Potential of Data and Digitalisation
Our data and digitalisation plan Our data and digitalisation strategy a structured manner to share it across accounts for all the technology details the systems that we need to internal and external systems. That investments required to support invest in during the 2023-28 period, activity lays a foundation that means decarbonisation and deliver the while the DSO Strategy details how we can ensure that our open data is propositions in the rest of our and why we will use these systems interoperable with other Distribution business plan. – see annex 4.2 DSO Strategy. Our Network Operators (DNOs) and the investments in systems will enable us Electricity System Operator's published Ultimately, we recognise that the costs to capture, manage, analyse and share models and datasets. We will use a of data and digitalisation are significant, data – both for our own use and for our data vocabulary that is consistent with but we are committed to keeping customers. A summary of the mapping industry standard (Data Management base costs flat compared to 2015-23 between the two strategies is included Body of Knowledge) while our data and will introduce new incremental in our DSO strategy. and digitalisation transformation investment only to support our plans for office will further ensure alignment decarbonisation. New and increasingly more complex when designing data models, by ways of managing and continuously adding additional application planning In total, we plan to spend £234.5m on balancing the network are key to our interfaces (APIs), formats and reporting data and digitalisation initiatives in the decarbonisation plans, and we need of our datasets. 2023-28 period, an average annual cost unprecedented levels of data and of £46.9m. This is an £10m increase digitalisation to be successful. Our Once the data is cleansed, structured compared to the average annual initiatives will provide the capability to and stored, it can be analysed to extract expenditure in the 2015-23 period optimise the management of distributed value and inform decisions for network of £36.9m, made up entirely of new energy resources, customer flexibility, planning and network operations. investments to support decarbonisation. our low voltage (LV) network, the need Advanced analytics capabilities will be This expenditure includes £112.2m of for new connections and our interaction implemented allowing our planning and capex and £122.3m of opex. For more with the wider market. Although we will operations forecasting to be enhanced detail on our data and digitalisation primarily create and utilise these rich through further refinement of our power costs see annex 6.2 Our costs in detail. data sources, such as the digitalisation flow models and by supplementing our of the LV network, to ready ourselves for forecasting and scenario data to predict Our entire suite of initiatives – see annex decarbonisation, we are able to utilise future power flows under different 5.3 Digitalisation Strategy and Action the same source data to produce the decarbonisation scenarios. Plan – is closely aligned to our business open data products and services we plan areas. Each initiative has been know you would like to see. Data and digitalisation will enable mapped to at least one, but in most us to offer you with an improved, cases, multiple outcome areas that in We will significantly enhance our data personalised, proactive service and give turn deliver the benefits you will read and analytics capabilities, skills and you choice in how and when you do about in other parts of our plan. Some platforms, enabling the capture and business with us, including the ability examples of how our investments in data analysis of network and market data to serve yourself. For example, we and digitalisation unlock efficiencies set and increasing our ability to share high- will enhance our AutoDesign tool so out in our plan are shown in figure 2 and quality open data and create open data that connection customers can self- explained in our costs section. products and services in near real time. serve and generate quotations for LV demand and load increases and create The key driver behind our data To do this, we must first understand budget estimates for new generation and digitalisation strategy is the the quality and completeness of our connections. need to support our plans for energy system data, capture more of decarbonisation through our it, enhance its integrity and store it in Distribution System Operator (DSO) strategy and Enabling Whole System Solutions propositions.
Our data and digitalisation investment will ensure that we can facilitate our region’s decarbonisation in a flexible, affordable way. We believe that the best way to deliver decarbonisation will be through a decentralised energy system based around locally connected renewable generation, electricity storage solutions and demand that can flex to help keep overall costs down, facilitated by a network that is smarter and more flexible than ever.
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Unleashing the Potential of Data and Digitalisation
Supporting our objectives
Digitalisation underpins our cyber controls and tools to maintain power network; and business plan. a robust cyber security posture, — DD10) provide future-proofed, aligned to the threats emerging from agile solutions in order to be flexible The stakeholder engagement we have increased digitalisation; enough to adapt to the change in the carried out has helped to identify 76 — DD5) modernise the back-office energy sector. initiatives, which we have grouped into environment to reduce risk, secure 10 focus areas. These underpin both information and improve colleague In figure 1, we show how the 10 our decarbonisation outcomes and the experience; focus areas deliver the functionality improvements we are committing to — DD6) introduce improved required by each of the business plan across the rest of the plan. In 2023-28 field-force, work and asset performance areas, demonstrating we will: management processes to improve the holistic nature of our data and operational performance; digitalisation strategy and how it cuts — DD1) provide high-quality open — DD7) deploy robotics and across each area of our plan. You can data to a wide audience so that automation to reduce the cost of see, in each of our performance area stakeholders are empowered to low-value, high-volume tasks and sections, we have marked with a symbol become active participants in a deep improve customer and colleague ( ) where a deliverable is enabled and liquid energy market; experience; by one of the data and digitalisation — DD2) upgrade technology and — DD8) implement self-serve, initiatives but you can find more detail of tooling to improve network personalised web technologies these initiatives in our DSAP in annex 5.3 management, planning and to be ready for greater customer Digitalisation Strategy and Action Plan. investment to increase efficiencies in demand, providing insight and operating the power network; interaction portals to improve We will update our digitalisation action — DD3) introduce data and customer experience and reducing plan on a six-monthly cycle to show our applications at the point of need cost to serve; progress and to further engage with our in order to improve colleague — DD9) enable advanced analytics stakeholders to develop our approach. efficiency and effectiveness; and real-time visibility of our assets — DD4) continue to invest in advanced to improve the operation of the
Figure 1: data and digitalisation – our 10 focus areas
Enhanced customer Open data Self-service interfaces web
Maximising Advanced analytics value from data and technology Robotics and automation
Enabling Enhanced network decarbonisation management
Driving Field-force Data at the point Modern efficiency management of need back office
Future-proofed agile solutions Ability to adapt Cyber security controls
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Figure 2: data and digitalisation impacts across our plan
Impact on output areas
CAPEX
Focus areas (£m) Decarbonisation Plan Action Environmental Safety Reliability and Availability Resilience Asset Environmental Resilience Cyber Resilience and Physical ServiceCustomer Customers Vulnerable Our Communities Connections Transparency Openness and
DD1 The journey to open data 10.1
Network management capability 23.1 DD2 to enable net zero
DD3 Data at the point of need 8.9
DD4 Cyber security and resilience 8.0
DD5 Modern back office 3.2
DD6 Field force management 7.7
DD7 Robotics and automation 5.8
DD8 Enabling customers to self-serve 21.9
DD9 Advanced analytics 19.6
DD10 Future-proofed agile 3.9
TOTAL 112.2
Figure 3: data and digitalisation capabilities unlocking savings in our plans
Data and Advanced analytics Enhanced network digitalisation capabilities management releasing utilising cloud platforms to and real-time decision improve planning, design making from low voltage benefits and forecasting (including £6.6m (LV) monitoring and our £22.9m automation and artificial flexibility customer intelligence (AI)) investment platform investment
Enabling… Enabling…
£42.5m net saving from Thor hammer £21.3m net saving from LV data analytics to better target our monitoring through managing replacement and inspection programmes constraints and deferring reinforcement on older wood poles in worst condition
£12.3m net saving from Distribution £6.0m net saving from analytics to Network Operator (DNO)-contracted target replacement of worst-performing customer flexibility LV cables
£8.1m net saving from analytics to target high-risk cut-outs
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We are committed to a ‘presumed We currently publish 14 manually Our data and digitalisation plans open’, best practice approach to refreshed open data sets including are ambitious, but we know they data visibility. real-time power cut data. Based on what are deliverable. we have heard from you, we intend to One of the areas where we expect to increase the number of available data We have fully costed our initiatives see change is in relation to the role that products and services by 70 per cent, to include business change and have we play in modernising energy data 45 per cent of which will refresh in real sequenced our plans, working with and making it more accessible to a time via automated processes delivered our strategic technology partners to wider set of customers, stakeholders through APIs as well as dedicated ensure we can deliver using our existing and partners. We are committed to portals. You will have access to at least delivery models, supplemented by new following Ofgem’s data best practice 10 new open data products and services models that we will deploy in the period. guidance principles and Energy Data (already identified through stakeholder Taskforce recommendations on the engagement) equating to gigabytes Our reliance on data and digitalisation visibility of data and assets, especially of interconnected data that can be means that it is essential that our data regarding ‘maximising value of data’ layered over or combined with external and digitalisation plans are deliverable and demonstrating adoption of the and internal data and inputted into and sustainable throughout 2023-28. ‘presumed open’ approach. There is models and simulations, e.g. complex Following a deliverability review, we much to do to deliver on this; however decarbonisation modelling. have concluded it is necessary to we have started on the journey. employ a delivery model that utilises a We will provide access to our data mix of internal resources and external Our starting point is that all energy through a user-centric and future-proof partners, such as the one we have in data is ‘presumed open’ – and then data platform using open standards place today. evaluating the justification for imposing such as RDF, XML, CGMES, CIM and any limits. This will be achieved by (1) the Dublin Core Metadata Structure.1 Each of our initiatives has been costed taking security, privacy and compliance At least 40 per cent of our key datasets using a model that includes the required as a key driver in our new data platform, will materially improve through data planning and design effort, the cost of (2) identifying and agreeing a clear cleanse activities, which will become the solution itself (covering hardware, roles and responsibilities matrix in our the cornerstone of our data catalogue. software, testing, project management new data governance structure and The data catalogue will have an external and integration costs), solution processes, (3) actively monitoring our interface and links to sector open data implementation and the business data management dashboard, and (4) aggregators so that you can understand change required to ensure that we not taking a continuous effort to empower the data we are providing, and we will only deploy technology, but we also all users, including our collegues, with create data dictionaries and usage embed it within the business. skills and awareness. For further details vignettes that will accompany our open see our Workforce Resilience section. datasets, data products and services. We have also modelled resources across This will be in place for all new open the five-year period to ensure we have Our plans include significant investment data products and services planned for the internal capabilities to deliver the in the platforms, processes and skills to 2023 and beyond. initiatives as envisaged and finally, enable a more digital- and data-centric we have sequenced the initiatives as organisation able to meet the needs We already have strong measures in programmes of work, factoring best of a changing energy sector. We have place to protect our data and systems in practice insight from our strategic identified and defined multiple data accordance with security, privacy and technology partners in setting out the roles on our way to becoming a data resilience best practice so this is not plans to deliver the work required. mature organisation, including the considered a gap, but we will continue roles of data custodian and data user(s). to strive to improve further in this area. Finally, being part of Berkshire These roles will provide a dedicated We have a solid cyber security footprint Hathaway Energy provides us with data contact point for you, as potential at present that robustly protects significant benefits, such as strategic data users, to raise queries or request our corporate information. We have relationships with software and additional core supporting information ISO27001 accreditation, which deals hardware vendors, and a large economy you might need. with information security in our business of scale when it comes to system operations and are working towards provision. We are able to utilise top-tier We are developing an ‘open data triage ISO270019 accreditation, which applies enterprise and application providers approach’ along with transparent similar principles to our operational to provide a best-in-class integrated justification and mitigation processes technology environment. suite of applications. That core suite for where our data cannot be shared. of capabilities covers almost all the Open Data Triage is a process to We have cyber-incident response plans requirements of our DSAP. The benefit systematically identify issues (privacy, that incorporate the impact of a data of this approach is that our increasing security, commercial, negative breach, but we recognise that as our reliance on data and digitalisation will be consumer impact or legislation and capabilities grow and we continue to enabled by tried and tested systems and regulatory barriers) with a dataset that publish more open data, we will need to processes, at an efficient cost. limits their potential openness and then keep pace. identify what techniques can be used to mitigate these issues.
1. RDF – Resource Description Framework data format; XML – Extensible Markup Language; CGMES – Common Grid Model Exchange Standard library; CIM – the Common Information Model standard.
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Unleashing the Potential of Data and Digitalisation
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 8 dedicated events Stakeholders engaged: 4,762 total – 529 unique interactions Wave 1 findings Details
Open data and data sharing is welcomed — Support existed for more information and open-source data sharing with stakeholders Developing future data and digital skills is — Employees should be supported through additional training to have the digital skills important needed for their current and future roles A blended digital approach with self- — Stakeholders wanted a balance of digital (including self-service) with human service, service and guidance is needed providing choice for customer experience Wave 2 Events: 135 total – 3 dedicated events Stakeholders engaged: 15,475 total – 257 unique interactions Wave 2 options A B C D E
Options with Enabling a baseline Investing in Further investing Enabling Going further by levels of ambition for data analytics technology to in technology that decarbonisation using cutting edge were explored to and intelligent begin the journey can improve our and enhanced and emerging help customers automation whilst to digitalise the network operations customer technology and understand the improving data network and enable and increase our experience through data capabilities benefits of the transparency the workforce with ability new digital and data service levels new and improved capabilities proposed digital capabilities
Customer ambition Option E was the most frequently selected when stakeholders were asked about our plans for the use of data and and broader digitalisation. Customers expect that a move to greater digitalisation is inevitable, and it is important to be able to findings quantify the benefits for customers
Wave 3 Events: 91 total – 14 dedicated events Stakeholders engaged: 32,500 total – 832 unique interactions Wave 3 explored stakeholders’ data ambitions, priorities and expectations as to the ease and availability of data and supporting analytics. Future digitalisation skills and capabilities and the need to provide confidence to customers about cyber risk were discussed
Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Enabling self-service for customers is important — We will continue to work with our stakeholders DD1 Link Stakeholders said the introduction of a self-service to understand their data needs, developing DD8 system for connections and open data was particularly an open data capability to support net zero DD9 important planning
— Advanced network data visibility will underpin the net — We will develop our open data capability to DD1 Link zero transition support the transition to net zero and to meet DD2 Technical experts in particular supported plans to our customers’ data needs improve visibility of network operating conditions
— We should use use digital technologies to drive — We will make enhancements in business DD1 Link efficiency applications, ensuring real-time data is available DD2 Technology is seen as an opportunity to reduce costs for to support improvements in our process DD8 customers DD9
— Skills and capabilities in cyber security are important to — We will continue to grow our cyber capabilities DD4 Link customers alongside increases in digitalisation, supporting DD5 Willingness to pay exercises indicated that cyber security robust network resilience is viewed as a growing threat and, therefore, as essential to prioritise in the future
— Develop and optimise high performing back-office — We will future-proof our back-office systems DD3 Link systems and processes in readiness for greater DD5 digitalisation and new ways of working in a DD6 smart energy future
— Improved network resilience supporting reliability — We will develop new capabilities, enhanced DD1 Link gains for customers is supported data and digital systems and processes to DD6 support our field operations team’s delivery DD9
— Deliver a tailored future customer experience — We will deliver improvements in customer DD1 Link Customer service should be proactive, personal and experience through digitalisation enabling DD8 flexible, even if that means customers sharing data to greater levels of self-service and a more DD9 enable this personalised, efficient customer journey
— 79% of customers agree that Data and — Data and Digitalisation acceptability score: 79% Digitalisation is crucial for the successful plan - Link delivery
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Unleashing the Potential of Our People
Unleashing the potential of... INNOVATION DATA & DIGITALISATION Our People
WORKFORCE Our workforce and extensive contractor base are central to the RESILIENCE delivery of our ambitious plans for the 2023-28 period and continuing to provide outstanding personal customer service.
The responsibility we carry as a major operational and digital skills Our workforce priorities are strongly investor in the region and as one of the required to manage an increasingly supported by stakeholder feedback. leaders in the journey towards net zero smart, digitised and connected During the COVID-19 pandemic our creates exciting opportunities for us energy system.IMAGE teams demonstrated strong personal to increase the pace at which we build — Increasing workforce engagement resilience to quickly adapt so we an increasingly diverse, skilled and and satisfaction – continuing to could maintain our 24/7 services, resilient workforce. actively engage with our colleagues underlining the critical role our people and their trade unions to improve play in the region, with more than Our Workforce Resilience strategy is their experience, increasing 85 per cent of our workforce designated designed with these challenges and the extent to which they feel as key workers. opportunities in mind. It underpins empowered to innovate and take delivery for every area of the plan by ownership to deliver the highest As a major employer, we have an focussing on four strategic priorities. levels of service for our customers. important role in the post-pandemic — Becoming a more diverse and economic recovery in our region, to — Expanding our workforce – inclusive organisation – opening provide fairly paid, skilled jobs and attracting, recruiting, training and up career and development progression opportunities for fulfilling developing more than 1,000 people opportunities for existing and future careers at a secure business. Investing to meet the immediate and future colleagues, attracting more talent in the development and upskilling of needs of our customers, driven by from underrepresented groups, and our existing colleagues, we will use the decarbonisation agenda. enhancing our business innovation, our recruitment power to help build a — Investing in upskilling – building decision making and delivery more diverse and inclusive organisation more training capacity and through more diverse teams. where we support equal access to capability to upskill our existing opportunities for all. colleagues in the evolving technical,
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An increasingly diverse and resilient team
The groundwork for our workforce way we serve the diverse needs of — enhancing the onboarding resilience plan has already begun the customer groups and natural experience for new colleagues and, by the end of 2021, we will have geography of the areas we cover, joining our business; and developed our detailed delivery plan. and created new management — starting on the journey to address As this section of the plan is ultimately opportunities for emerging talent; the gender pay gap by targeting about our people, we want them to — developing a new, modern recruitment of more women into help shape how we will deliver it and technical competency framework the higher-paid engineering roles we will be running a comprehensive in partnership with trade unions, and supporting career development programme of engagement in the refreshing the collectively bargained for all with a range of flexible second half of 2021. We will focus on pay deals and creating the blueprint working options. four key stakeholder groups: for co-developing future progressive framework agreements; We need long-term workforce — internal stakeholders (colleagues, — maintaining high levels of loyalty capacity and capability to help future workforce, and trade unions); that mean we have a good track us to decarbonise, reach net — utilities working groups and record of retaining talented and zero and take on the functions partnerships, such as Energy & skilled people in our business; of Distribution System Utility Skills (EU Skills) and the — improving the safety, security and Operation (DSO). National Skills Academy for Power wellbeing of our work environment (NSAP); for our colleagues with our We know that the significant growth — community interest groups such lowest-ever accident rates and in network investment means that we as Women into Science and the introduction of new wellbeing are going to need a larger workforce Engineering (WISE); and support measures; with a skillset that has evolved to meet — external partnership organisations, — developing a common ‘job the emerging needs of managing a with whom we will increase our architecture framework’ to organise smarter, more connected and digitised collaboration (such as schools, roles across the business and energy system. We have factored in an universities and local government strengthen career pathways; additional £0.6m p.a. to cover the cost associations). — expanding learning and of this additional investment in training development programmes to help and development. We will head into the future having structure our colleagues’ upskilling; made great strides with our people agenda over the past few years:
— creating over 1,000 job opportunities, largely through our Employment group % of Men Women workforce renewal programme, workforce which has developed top class apprenticeship programmes that 80% 20% have enabled us to make significant progress to address the issue of Operational crafts 41% 96% 4% an ageing workforce, while being Engineering and technical 31% 93% 7% able to tap into their vast wealth Business support 17% 33% 67% of experience as part of training Management and specialists the next generation of engineers 11% 56% 44% and technicians; — establishing a more locally focussed 43.2 16 5% (37) 24% (16) delivery organisation to take the Average Average Women in Women leadership of our service operations age years length engineering/ in senior closer to our customers and their of service STEM roles leadership roles communities. This has improved the
Adding to our skillset We’re excited about the career All opportunities our plan creates Digitalisation DSO colleagues Management for existing and future colleagues – including attracting and retaining talented people from underrepresented groups that better reflect the communities we serve. managing a deploying digital and building diverse more digital analytics skills, Angie and managing teams and network; smart customer Patterson network an inclusive Director of technician roles flexibility service and workplace culture, organisation communication optimising remote development team working
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Unleashing the Potential of Our People
Meeting the demand for skills
Through upskilling existing field staff, recruits were women and four per — build a workforce with more recruiting the next generation of cent identified as being from a Black, varied backgrounds, perspectives engineers and technicians to replace Asian or minority ethnic (BAME) and experiences to enhance our those who retire and leave the business, background. We want to attract more, performance and contribution to the as well as expanding the size of the talented people from a wider range of region; and workforce, our workforce renewal and backgrounds to our company as we — open up the way we work to create training programme will equip us with grow and develop our workforce. a more flexible, inclusive and a highly skilled and resilient workforce. equitable workplace where there We will continue to collaborate across By the end of 2021 we will have is space for everyone, people feel the energy sector through partnerships developed and published our diversity valued, confident and can thrive, such as EU Skills and the NSAP to and inclusion (D&I) plan, following leading to our business benefiting work together on the significant skills a comprehensive colleague and from a greater range of talented challenge we face as an industry. stakeholder engagement programme. people who want to join our team This will identify the initiatives and and stay with us. Adapting to the significant increase in measures we will undertake to: digital technologies and use of data that will become the norm in maintaining — bring in and develop the diverse and managing the future energy system skills required to deliver our current is a skills challenge for our entire and future business needs; workforce. We expect to see more specialist digital and data roles in our business than today but we also know Strategic recruitment approach to initiatives – how they work together that our upskilling programme must ensure that our colleagues are proficient in the new digital technologies and Greater diversity Creating a strong More applicants data management techniques that are of people pipeline of future from diverse relevant to their roles. joining Northern leaders groups Powergrid We will be expanding our innovation programme in 2023-28 as a key enabler for delivering our plan and our colleagues will play an increasingly important role in identifying More entry routes Partnerships opportunities to be innovative. We must – Apprenticeships – Universities – Placements – Diversity groups ensure we create the environment for – Work experience – Local government colleagues to think creatively and foster – Variety of roles and disciplines – Power Academy new ideas. – Non-academic entry requirement STEM PIPELINE – EU Skills
To attract a more diverse range of Schools programme applicants, we will enhance our recruitment activities to reach and Secondary schools Colleges and universities appeal to all underrepresented groups — Promoting STEM subjects — Promoting STEM subjects and create more opportunities to apply — Providing placement for careers with us. These changes will opportunities make our business more appealing to a broader range of potential colleagues. But to better reflect the communities we serve, we will focus particularly on women, people from ethnic minorities and those from less socio-economically advantaged backgrounds. Support for our plan We recognise the business “With the twin challenges of net imperative to increase the diversity zero and smart networks, we need to of our workforce and develop broaden and deepen distribution net- a more inclusive workplace works staff skills. We have discussed culture along with the broader the strategic impact with Northern benefits these bring to the Powergrid to develop a plan to renew and rejuvenate its workforce that communities we serve. reflects our colleagues’ passion for engineering excellence and superior Creating a more diverse, inclusive customer service.” and equitable organisation is critical to ensuring we can meet the evolving Mike MacDonald needs of our business, our colleagues Full time officer, and our customers. In the past five Prospect Union years, around 27 per cent of new
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Unleashing the Potential of Our People
Our immediate D&I commitments (summarised below) reflect ongoing engagement with colleagues, our Our diversity and inclusion commitments Customer Engagement Group (CEG), D&I framework for action, More flexible and hybrid trade unions and other sectors guiding accountability and ongoing working options our approach. So far, the messages are engagement clear: Education and awareness More women and people programme — we should strive to be a more from ethnic minority diverse, inclusive and equitable backgrounds in technical, More collaboration within organisation; engineering and leadership our sector and beyond — diversity goes beyond gender roles and ethnicity and we should be More partnerships with considerate of all demographics Targeted action to open specialist D&I organisations and characteristics, such as sexual up access to employment orientation, neurodiversity and opportunities for people Annual reporting on socio-economic backgrounds; from disadvantaged progress made to — everyone should have equal backgrounds improve D&I access to opportunities for new roles, development and career progression and roles should be awarded on merit; — everyone has a role in improving that they are better at recognising strong relationships with trade diversity, inclusion and equity but the potential that a person has to be unions by engaging on all aspects of the tone, direction and meaningful a successful part of our team. our people agenda. action come from the top; and — we need to be open to learn from The way we structure and operate The success of our business rests on others in our sector, and beyond, our business must evolve to the ability of our colleagues to do their to adopt good practice and meet new, changing demands jobs in a safe and secure environment. coordinate our efforts to address in the 2023-28 period and to We have already introduced a network sector-wide challenges. provide a rewarding experience of mental health champions across the for our colleagues. business, adopting a similar model to Meaningful and sustainable change the successful safety representatives will be a multi-year journey. We are Taking on the functions of DSO and we have for field staff, focussed on prepared for this and recognise the other significant changes on the horizon improved mental wellbeing. Mental need to evolve our commitments in line mean that our organisation needs to health has, in particular, moved to with our business and employee needs, be set up and structured effectively to the forefront during the COVID-19 and societal shifts. deliver an efficient, high-quality and pandemic and we will be expanding our reliable service for customers. programme of support measures for We will be tracking and communicating colleagues, to include: progress against our core commitments Our job architecture framework will be and, where we have robust and relevant used to open up opportunities to: — proactive awareness, personal employee data, we will set specific resilience and mindfulness training; forecasts in our plan. They represent — create clearer career pathways — more workplace mental health realistic but stretching steps towards and development through champions, with regular training; meeting our desired outcomes. improved visibility of roles and the and requirements; — a range of practical support tools For example, our forecast for increasing — enhance productivity through more and resources for colleagues and the percentage of women at Northern effective team structures with clear managers. Powergrid will reflect our ambition distinction of accountability; and based on the positive actions we will — facilitate improved talent analytics, We believe in shared values, goals and take to attract and retain more women enabling identification of where success. The different pay structures in the company. changes to job design can improve for all our colleagues have elements that access to opportunities for all. reward the delivery of our business plan We remain committed to recruitment commitments and we will be continuing processes that seek to identify the We have a highly skilled and committed with this approach into the 2023-28 people who will best fit the needs workforce. The average length of period. We explain more about our of the company. So, in relation to service is 16 years and to retain the workforce plans in annex 5.2 Workforce increasing the involvement of any under- valued skills, knowledge and experience Resilience strategy. represented group, our focus will be on: we will: Our individual strategies for Innovation, — broadening the pool of candidates — regularly engage with our colleagues Data and Digitalisation and DSO contain for selection by providing greater to continuously improve how we more information on how we see our access to job opportunities to a operate and about their experience colleagues enabling success in those more diverse set of candidates; and of working with us; and areas of our plan. — refining our selection processes so — continue to build and maintain
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Output measure/1 Customer indicative input ED1 ED1 ED2 outcomes Benefits Deliverables measure to date forecast target
WR1 Create more — Meet current and WR1.1) Create more than 1,000 new job than 1,000 emerging customer opportunities through expansion of our No. job needs, delivering on Workforce Renewal and apprenticeship opportunities 855 1,175 >1,000 high-quality job the significant increase programmes, and develop new entry created opportunities and in work volumes and pathways across a variety of roles attract talented changing demands Review and upgrade recruitment people to the — Future pipeline of highly WR1.2) Internally, we will be tracking our progress in 2 processes to increase access to energy sector skilled and experienced increasing the attraction by the average number of engineers opportunities at Northern Powergrid and the attraction and hiring of talent from applications per role overall, % of applicants and — High-quality job underrepresented groups % successful applicants from underrepresented opportunities, supporting groups (women, employees from ethnic minorities the local economy and employees from less socio-economically WR1.3) Review and upgrade our internal advantaged backgrounds). We are improving data — More opportunities and external selection approach to support collection of applicant demographic data in 2015-23 for candidates from equal access to opportunities with robust to provide a richer picture of our baseline position underrepresented groups and inclusive processes WR1.4) Develop our education outreach programme, targeting underrepresented We will track: groups, to coordinate activities that no. students engaged in activities that promote promote our sector, uptake of STEM STEM careers subjects and employment opportunities
WR2 Upskill and — Highly skilled workforce WR2.1) Provide a sector-leading training with skill range to programme to equip our workforce with multiskill our manage increasingly the evolving skills and techniques required % employees workforce complex energy system to manage the future energy network completing to provide training related 100% — Rewarding careers for to future skills rewarding our workforce WR2.2) Develop a new smart grid career paths technician apprenticeship programme to and develop the — Personal development train people for new, dedicated roles in new capabilities and career progression managing the digital network and functions required for of DSO managing our WR2.3) Train our people in data We will track: future energy management, analysis and use of new % of colleagues attaining career progression network3 technologies to accelerate adoption of enhanced data and digital capabilities throughout our business
WR3 Increase — Improved levels of WR3.1) Enhance our colleague health service for our customers and wellbeing programme and manager workforce training to reduce the stigma around mental engagement — Improved mental and % attendance physical wellbeing health, better identify colleagues in need 97% 97% 97.5% and strengthen of help, and provide a range of proactive, rate partnerships with — Improved job satisfaction diagnostic and responsive support options trade unions to become an even better, safer and WR3.2) Continue to actively engage trade rewarding place unions on people and strategic issues to to work for our keep improving our colleague experience employees4 We will track: WR3.3) Improve our digital-enabled % of new joiner retention after two years workforce planning capabilities to maximise deployment of our workforce to deliver an effective and efficient customer service WR4 — More talent from Increase the WR4.1) Provide more flexibility in the % of women – 20% diversity of underrepresented groups working arrangements and range of total workforce joining and staying with benefits available to increase access to our workforce the company job opportunities and career progression, % of women – and develop a allowing all colleagues greater choice to more inclusive — Opening up more job engineering/ 5% opportunities in all support their individual needs STEM roles workplace the communities we culture, serve, supporting social WR4.2) Raise awareness and educate % of women – 24% supported by mobility employees on D&I and, through ongoing leadership roles increasingly — More diverse teams top down and bottom up activities, help effective data enhancing innovation, create a more open environment where Mean gender pay insights decision making and people feel valued, confident and can gap in average 21.4% delivery thrive hourly pay (%)
WR4.3) Extend and upgrade our Leadership Expectations framework to incorporate D&I expectations and equip Internally, once the employee data is available to leaders with the knowledge and tools to us, we will also be tracking our progress on % of deliver these and act as role models employees from ethnic minorities % of employees from less socio-economically advantaged WR4.4) Work collaboratively with external backgrounds overall and in leadership and partners and fund research to develop engineering positions innovative approaches to address key D&I challenges in our organisation and the sector
Innovation | Data and digitalisation | Diversity, equity and inclusion 1. Numbers shown may be subject to rounding. See annex 1.4 Key measures in our plan for profiled targets. 2. Decarbonisation DSO4.5) Upskill and recruit engineers to use whole energy system thinking and DSO5.5) Create a team of flexibility relationship managers; Vulnerable Customers VN2.4) Establish a new support team to provide additional on-site support; Communities CO3.2) Establish community energy advisors in each of our regions; Communities CO2.1) Develop relationships with educational institutes and CO2.3) Regional recruitment activity. 3. Physical and Cyber Resilience PC2.2) Develop and implement an OT cyber-specialist training programme; Connections CN5.2) Upskill LV/HV design engineers to facilitate better and more frequent discussions with customers on flexible connections. 4. Safety S1.1, S1.2, S3.1, S3.2 and S3.3 )Colleague safety, health and wellbeing programmes; Openness and Transparency 2.3) Trade union meetings with board; Reliability and Availability RA.5) improving our ability to track and deploy staff.
Northern Powergrid: our business plan for 2023-28 – 170 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Unleashing the Potential of Our People
How engagement with you has shaped our plan
Wave 1 – open engagement Wave 2 – optioneering Wave 3 – refinement and finalising Who we engaged... Domestic Vulnerable Communities Suppliers Government Experts Employees Regulators and how... Face to face Interview Panel Focus groups Workshop Survey Microsite Conference
Wave 1 Events: 103 total – 13 dedicated events Stakeholders engaged: 4,762 total – 455 unique interactions
Wave 1 findings Details Apprenticeships should be a key priority — We should continue to leverage the apprenticeship programme to reduce the average for us age of the workforce and provide new entry opportunities — To attract a more diverse workforce, prospective candidates need to see people like Increasing diversity and inclusion was them working successfully in the sector (women, BAME role models and mentors). deemed important by all stakeholders Working and training practices should be adapted for the workforce to increase inclusivity and diversity (including unconscious bias training) Upskilling and training employees for the — To ensure high retention rates, the workforce should be supported through additional energy transition is an important goal training to have the digital skills needed for their current and future roles
Wave 2 Events: 135 total – 25 dedicated events Stakeholders engaged: 15,475 total – 380 unique interactions
Overall Most stakeholders believed that our workforce resilience efforts are ‘about right’ in scope and ambition. They recommended diversity and inclusion, workforce renewal, training, and employee wellbeing as areas for future focus. Additionally, stakeholders believed that we should focus on the workforce renewal programme to create job opportunities, with apprenticeship programmes particularly highlighted
Decarbonisation The net-zero agenda will drive a significant increase in work volumes as well as a change in the industrial and workforce and skills technical skills requirements for our operational workforce. Digital knowledge and skills are becoming increasingly challenge important for our workforce. Stakeholders recognise the need to meet this challenge with the capacity and capability to upskill our workforce
Post-COVID-19 Our role in the region as a major employer and investor in infrastructure places us well to support the recovery post-COVID-19 economic recovery by creating job opportunities directly and through our supply chain
Diversity and All stakeholder groups recognised and valued the importance of having a diverse workforce. The general inclusion consensus was that jobs should be awarded on merit and not by quotas. There is a need for greater clarity of our position on diversity and inclusion and the positive actions we are taking to address the challenge
Wave 3 Events: 91 total – 9 dedicated events Stakeholders engaged: 32,500 total – 417 unique interactions Wave 3 consulted with groups such as trade union representatives, expert stakeholders and customer representatives to test the extent to which we should proactively take steps to address diversity and inclusion and develop the skills and capacity for the challenges of a smart energy future Outcome Wave 3 findings How this has been addressed in our plans Ref Annex
— Develop a workforce to meet the future needs of — We are creating new job opportunities to build our WR1 Link the energy transition workforce capacity Trade unions and internal stakeholders recommend — We are enhancing recruitment processes and entry that we work to improve recruitment pipelines, pathways and programmes to attract more people partnering with schools to attract diverse skillsets from a wider set of backgrounds to our company and invest in upskilling existing workforce
— Optimise and develop a high performing, — We will introduce more flexible working and WR3 Link supportive culture benefits options to increase access to job Trade unions and other internal stakeholders thought opportunities and career progression that we could improve workforce motivation through — We will engage regularly with trade unions and developing reward programmes, clearer career colleagues on key issues and report on actions we pathways, and promoting the ‘employee voice’ take to improve satisfaction
— Invest in developing future skills and multi-skilling — We are investing in upskilling our existing workforce WR2 Link workforce in the new skills required to manage a more Academics and training partners emphasised the digitalised energy network and creating new roles in importance of upskilling and multiskilling to grow the our business to manage a smarter network skillsets of our existing workforce
— Take further steps to build a diverse workforce — We are increasing our leadership expectations and WR4 Link Stakeholders recommended that we proactively education and awareness as part of our strategy to address diversity and inclusion issues through improve workforce diversity and inclusivity targeted recruitment campaigns and increasing the — We are retaining our ‘best person for the job’ visibility of underrepresented groups in our publicity position and are taking positive action to increase access to opportunities for all
— 79% of customers agree that Workforce Resilience — Workforce Resilience acceptability score: 79% - Link is crucial for the successful delivery of our plan
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Costs – Overview
EXPLAINING OUR COSTS
Over the course of the 2023-28 opportunities, where we will period we plan to spend a total of efficiently add extra capacity £3.2bn,1 which equates to £642.1m required for the future as we per year. Three of our 12 output areas replace or refurbish degraded account for 87 per cent of our total parts of the network. costs: Asset Resilience (33 per cent), — The investment needed to Decarbonisation (30 per cent) and deliver the significant reliability Reliability and Availability (24 per cent). improvements we are targeting accounts for a further £14.2m Total expenditure is increasing by p.a. increase compared to the £170.9m p.a. (36 per cent) compared current period. to the average we are expecting for the — A further increase of £5.2m p.a. 2015-23 period. As figure 1 shows, this is driven by the impact of our increase is driven primarily by the need decarbonisation objectives on to enable the ambitious decarbonisation some of the other output areas of pathway our country is on. our plan. For example, we expect to spend £3.5m p.a. as part of our — Decarbonisation plan expenditure, connections expenditure to allow required to provide significant new generation and low carbon amounts of new capacity to cater for sources of demand to access growth in technologies such as heat our network. pumps (HPs) and electric vehicles — The total cost to deliver the (EVs), and to add the required other services, inclusive of digitalisation and smart grid enabling the proposed upgrades, in the solutions, totals £189.3m p.a. This remaining nine output areas will is an increase of £148.1m p.a. and reduce by £7.5m p.a. accounts for 87 per cent of the increase in our total expenditure. — Asset resilience expenditure is our largest area of expenditure; it increases by £10.9m p.a. to a total of £214.9m p.a. to keep our asset in good condition and retain their resilience. This category would reduce by £6.0m p.a. if we were not proposing to build in £16.9m of ‘two-for-one’ investment
1. The costs covered in this plan are part of ‘totex’. Totex generally consists of all the expenditure related to our regulated activities that are under our control and are funded through the price control. Some costs we incur are not defined as totex as these are either funded directly by the customer or are ‘pass-through’ costs; these are covered in the ‘non-activity based costs’ section.
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Costs – Overview
An overview of our costs
By any measure, this represents a Figure 1: average annual spend – 2015-23 to 2023-281 significant investment in our region. It also presents a great opportunity 700 to save money for the long term. The 5.2 (7.5) 642.1 16.9 (6.0) 14.2 similarities and overlaps that exist in the 148.1 two biggest components of our plan 600 create lots of potential for ‘two-for-one’ efficiencies – and we have factored that 9 other output areas – into our plan. more for less 500 471.2 It is our responsibility to find and release those benefits on behalf of our customers, which can be very 3 step-up investment areas significant. For example, the £16.9m p.a. 400 of ‘two-for-one’ synergistic investments that we have factored into our asset resilience programme amounts to 300 £84m over five years in a programme 2015-23 Decarb. Decarb. Asset Reliability Decarb. Remaining 2023-28 costs plan investment Resilience and investment costs for costs of around £1bn. Our analysis shows within asset base availability supporting other service that the long-term benefits of that resilience investment all other plan improvements areas £84m are likely to exceed £400m because we invest a relatively small premium to create additional capacity ‘two-for-one’ resilience benefits, customer bills low. The significant cost as we renew the asset. That capacity without which the asset resilience costs efficiencies that we have factored into will ultimately be needed on the in our plan would have been higher. our projections, coupled with reductions decarbonisation journey, well within the in financing costs, help to limit the lifetime of those new assets – so the We believe that our plan strikes the right impact on customer bills of the step future reinforcement cost is avoided. It balance between enabling the drive up in investment that we are proposing works the other way too. The 2023-28 towards decarbonisation, improving to make. decarbonisation investment creates services for customers, and keeping
Variance to ED1
Reliability Costs for other ED2 expenditure Decarbonisation and service £m (p.a.) -related costs availability improvements Total % Decarbonisation 189.3 148.1 - - 148.1 359.5% Asset Resilience 214.9 16.9 - (6.0) 10.9 5.3% Reliability and Availability 155.2 - 14.2 - 14.2 10.1% Subtotal 559.4 165.0 14.2 (6.0) 173.2 44.8% Environmental Action Plan 25.7 1.0 - (3.2) (2.2) (8%) Safety 3.0 - - - - -% Climate Resilience 16.0 - - (6.5) (6.5) (28.9%) Physical and Cyber Resilience 14.1 0.3 - (1.9) (1.6) (10.2%) Customer Service 4.2 - - 0.2 0.2 5.0% Vulnerable Customers 3.9 - - 3.1 3.1 387.5% Our Communities 1.6 0.4 - 0.6 1.0 166.7% Connections 13.5 3.5 - - 3.5 35.0% Openness and Transparency 0.7 - - 0.2 0.2 40.0%
Subtotal 9 other output areas 82.7 5.2 - (7.5) (2.3) (2.7%)
Totex 642.1 170.2 14.2 (13.5) 170.9 36.3%
1. All costs are stated in 2020-21 prices.
Northern Powergrid: our business plan for 2023-28 – 173 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Costs – Overview
— The investments needed to facilitate The cost increases we expect are Keeping bills low for our customers decarbonisation would, on their primarily driven by the need for and providing value for money means own, increase the bill by £6.63. greater network investment to support constantly challenging ourselves to be — The additional resilience investment decarbonisation. Away from that most more efficient in how we deliver our we are proposing will add a further significant factor, the other driver of services. In the remainder of this section £0.49. the increase in network investment we explain how we are controlling our — Our proposals to make the network costs is asset resilience, which is lower costs through efficiency and innovation. more reliable would push it up than it would be if we were not going It includes: another £0.64. to get the asset health improvements — But everywhere else we will do that will be a by-product of the — the reasons why we are confident more for less, which, alongside decarbonisation investments but is that these costs are efficient, significantly lower financing costs, higher than the current spend levels representing a significant knocks off £3.17. because it incorporates the ‘two-for- improvement on what is already — When combined with the other one’ synergistic investments that will an industry-leading efficiency factors that impact customer bills, create long-term savings. performance; including a regulatory depreciation — breakdowns of our main cost period that spreads the costs fairly Decarbonisation also drives a £32.8m categories, focussing particular across generations, the result is an per annum increase in our indirect attention on areas where our costs overall increase in bills of £4.59. costs (closely associated and business are materially changing compared to — This represents a five per cent bill support) and non-operational capex, the current period; and increase in return for significantly which drives all of the variance in — descriptions of the options we improved service levels and a 36 per these areas relative to the current have considered and justification cent increase in investment. period (£26.7m). for our choices.
In order to provide a detailed breakdown For stakeholders who want to examine of our costs that reflects the services the cost projections and justification we provide and the cost categories more closely, annex 6.2 Our Costs in that our regulator uses to analyse Detail provides even more information. the performance of companies, we have mapped the overall costs against both our 12 output areas and Ofgem’s cost categories.
Ofgem cost category
Network Closely Non- Network operating associated Business operational £m investment costs costs support costs investment Total
ED1 totex 194.7 122.9 84.2 49.9 19.5 471.2
Decarbonisation 114.3 - 20.4 6.4 7.0 148.1
Asset Resilience 6.4 4.5 - - - 10.9
Reliability and Availability 13.1 (2.6) - - 3.7 14.2
Environmental Action Plan 0.4 - (2.3) (1.3) 1.0 (2.2)
Safety ------
Climate Resilience (3.0) 0.4 (2.4) (1.5) - (6.5)
Physical and Cyber Resilience (0.1) - (1.0) (0.1) (0.4) (1.6)
Customer Service - 0.3 (0.1) - - 0.2
Vulnerable Customers - 0.5 0.7 1.3 0.6 3.1
Our Communities 0.3 - - 0.7 - 1.0
Connections 3.6 - (0.1) - - 3.5
Openness and Transparency - - - 0.2 - 0.2
Subtotal 9 other output areas 1.2 1.2 (5.2) (0.7) 1.2 (2.3)
Totex variance 135.0 3.1 15.2 5.7 11.9 170.9
ED2 totex 329.7 126.0 99.4 55.6 31.4 642.1
Northern Powergrid: our business plan for 2023-28 – 174 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Costs – Plan Efficiency
Ensuring our plan is efficient
Our long-term approach is to minimise — the first step in evaluating the periods, covering 10 years of data the total cost of running our network, efficiency of the costs in this in total, to illustrate our long-term and in doing so deliver the best value for plan; and approach to efficiency; and money for our customers. — an important element of our — we have also presented results using track record. a customer-centric cost driver that We are confident that our plan is was externally endorsed at the last efficient and offers excellent value for In assessing our existing cost base, we price control review,2 and with and money for customers, because: have focussed on comparisons to the without our regulator’s adjustment other companies operating in our sector. for labour cost differences in London — we are building on a sector-leading They undertake the same activities and and the South East.3 efficiency position; and offer the closest possible comparison. — we are also including efficiencies The headlines are that: worth a total of £1.0bn to customers: Total cost benchmarking shows – £396m of totex efficiencies our entire cost base is efficient — our group level results are embedded in our plan; compared to our peers. consistently close to an upper- – £471m of decarbonisation quartile totex benchmark, within synergy savings beyond the plan Total cost benchmarking is the only about one to two per cent; period, over 2028 to 2050; and approach to benchmarking that fully — we are the most efficient group on – £136m of financing savings accounts for trade-offs between several of the results and compete forecast in the 2023-28 period.1 different parts of the cost base. Doing closely with one or two other groups so avoids the risk of these trade-offs for the most efficient position across The subsections below expand on these distorting the outcome. all of them; and four strands of evidence. — each of our licensees has costs To provide an entirely objective, below the efficiency benchmark on The foundation of this plan, our externally set measure of our cost at least one of the two cost drivers existing cost base, is efficient. efficiency, we have used the same ‘top used, demonstrating that they each down totex’ approach that our regulator have efficient costs. Our plan builds on our existing cost used during the previous price control base, which currently supports our review. In addition: The group level results supporting these ‘baseline’ activities. The efficiency of our headlines are set out at figures 2 and 3. current costs is therefore both: — we have presented the results for each of the last two regulatory
Figure 2: total cost regression benchmarks using the ED1 top-down cost driver
Costs over 2010-15 Costs over 2015-20 Regional labour cost adjustment Regional labour cost adjustment Not applied Applied at ED1 level Not applied Applied at ED1 level Efficiency Rank Efficiency Rank Efficiency Rank Efficiency Rank Northern Powergrid 100.58% 2 100.95% 2 101.40% 1 101.70% 2 ENW 107.75% 3 108.36% 3 102.23% 3 102.67% 4 WPD 114.62% 6 115.11% 6 114.82% 5 115.24% 5 UKPN 113.85% 5 108.94% 4 101.87% 2 97.98% 1 SPEN 111.21% 4 111.52% 5 115.30% 6 115.63% 6 SSEN 89.73% 1 88.28% 1 103.74% 4 101.90% 3
Figure 3: total cost regression benchmarks using customer numbers as a cost driver
Costs over 2010-15 Costs over 2015-20 Regional labour cost adjustment Regional labour cost adjustment Not applied Applied at ED1 level Not applied Applied at ED1 level Efficiency Rank Efficiency Rank Efficiency Rank Efficiency Rank Northern Powergrid 99.79% 1 102.50% 1 101.57% 3 101.79% 3 ENW 104.69% 2 107.98% 4 100.29% 1 100.89% 2 WPD 113.43% 6 116.58% 6 114.42% 4 114.75% 4 UKPN 107.99% 4 106.37% 3 100.79% 2 97.27% 1 SPEN 110.74% 5 113.56% 5 115.05% 5 115.19% 5 SSEN 104.95% 3 105.21% 2 118.78% 6 116.07% 6
1. Calculated using a 5.8 per cent cost of equity – Ofgem’s working assumption of 4.65 per cent would increase the saving. 2. See Ofgem’s cost assessment working group study on totex benchmarking, undertaken by Frontier Economics. 3. The water regulator (and the appeal body for the water sector, the Competition and Markets Authority) has also concluded these types of adjustment can be unnecessary, depending on the cost driver used.
Northern Powergrid: our business plan for 2023-28 – 175 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Costs – Plan Efficiency
The disaggregated benchmarking of Our track record of achieving We have embedded £396m of our cost base confirms us as a leading value for money for our customers totex efficiencies in our plan, operator in some cost categories, through sustainably low long-term equivalent to 12 per cent of our and closer to the middle of the pack costs is second to none. total 2023-28 forecast costs, while in others. Although the analysis delivering more for customers. does provide some useful insights, The results set out in figures 2 and 3 disaggregated benchmarking suffers also demonstrate our unparalleled As well as starting from an efficient from some serious problems, primarily long-term track record of achieving base, we have also embedded sizeable that it cannot take into account the value for money for our customers efficiency benefits into the plan. As trade-offs that are essential to a through sustainable cost control. explained in the next section, we have business optimising its total costs, which sought to optimise our plan across the is what matters in the end. For those — Our efficiency position is entirety of our cost base and output reasons, we do not support its use as the consistently strong not only on our commitments. This has yielded totex basis for a regulator setting cost targets latest costs but also over a much efficiencies of £396m – figure 4 for companies. What can be said is that longer period. illustrates the efficiency savings we have combining these benchmarking results — Some other Distribution Network embedded into our plan.2 supports all the same conclusions as the Operators (DNOs) – UK Power total cost benchmarking. Networks and Electricity North Our ongoing performance is not only West – have delivered catch-up built on our current efficiency in a More detail supporting each of these efficiencies, but not setting a new numerical sense, but it also results from results are set out in annex 6.3 Cost benchmark relative to us. applying the same rigorous approach Benchmarking, including licensee that we have consistently applied over level results.1 Our efficiency record stretches back the years, which gives us confidence to before 2010, where we consistently that our plan is efficient, as briefly benchmarked well on the basis of described later in this section. the costs and methods that Ofgem analysed at the time. Our performance has been sustained over many years Our plan builds on the and reflects our continued focus on efficiencies we have delivered minimisation of totex to deliver the in the current period to outputs for customers. deliver enduring benefits for our customers. We believe that this track record means that our customers can be confident that not only can we achieve the low costs that are factored into the starting Vicki Starkey point for this plan, but we can credibly Distribution commit to continuing to achieve them. financial controller
Figure 4: totex efficiencies embedded in our plan
2023-28 Totex efficiencies benefit £m Description
Volume efficiencies 111.2 Synergistic and innovative solutions in our core asset renewal programmes
Unit cost efficiencies 18.9 Unit cost efficiencies relative to our 2015-23 unit costs Flexibility and smart grid 169.2 Benefits factored into our investment plan from using flexibility first and solutions smart grid solutions Core asset plan targeting 65.9 Enhanced monitoring to improve targeting of asset refurbishment, unrelated to decarbonisation Service improvement 30.7 While delivering higher levels of service across all of our business plan, 9 of our 12 business plan sections are doing that for less overall cost
2023-28 plan – Equivalent to 12% of our forecast totex embedded efficiencies 395.9
1. We have absorbed within this assessment some region-specific factors that add to our direct costs, such as operating in sparse areas and also with unique network configurations. Depending on how our regulator assesses costs, these factors could become relevant later in the price review. 2. More detail on our embedded cost efficiencies is set out in annex 6.3: Our Costs in Detail.
Northern Powergrid: our business plan for 2023-28 – 176 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Costs – Plan Efficiency
Continuing to drive efficiency
Our embedded efficiencies are rooted in our optimised approach to planning and delivery.
Our efficiency performance, both — Exhaustive optimisation at the creates the need to, at its core, solve historically and in prospect, is the planning stage – we deliver our a highly complex spatial optimisation consequence of an active approach to outputs at least totex by seeking problem over multiple time periods, system management that we have been out synergies across activities, which requires high skills and enabling applying for many years. At its core, it plans and options, over time and technologies to be deployed, both at the has four components. across the network; and also by planning stage and in real time. assessment and execution of some — Clear strategic focus – on careful and conscious trade-offs While the need to invest in the minimising the totex required to (within the technical and legal limits decarbonisation of the energy system deliver our outputs. we are allowed to operate in) where at the scale we are contemplating is — Clarity of output objectives – objectives may conflict. new, our approach to minimising the the objectives of our investment — Continued optimisation in real time costs of doing so (in combination with strategy are to: – as new information comes to light all other costs on the system) has been – ensure all the credible pathways we don’t just stick to the plan, but developed over many years and gives to decarbonisation remain open we are continually evaluating further us confidence that our plan is efficient. after 2028; scope for cost reduction or output Indeed, we have actively sought out – maintain a resilient and reliable enhancement. the ‘two-for-one’ benefits that the network, particularly in relation investment in decarbonisation can to extreme weather; Effective electricity system planning potentially create on the system. – contribute to the resilience of the reflects the understanding that any wider system; and investment or intervention on the – adhere to the legal requirements network will both be long-lived, and will placed upon us in respect also impact on assets and interventions of health and safety and elsewhere on the network, affecting environmental impact, etc. both costs and output provision. This
Example of our approach: optimising our asset renewal requirements with decarbonisation priorities…
As well as the cost savings we have Instead we have developed an — defer asset replacement where factored into our plan for 2023-28, the optimised asset renewal plan, which will there is less certainty over future way we respond to decarbonisation create significant additional capacity network capacity requirements, and presents many ‘two-for-one’ in the areas that most need it; and limit where we judge we can accept and opportunities for our customers beyond the increase in total cost to £84m by manage the risk of ageing assets 2028 – provided that we maximise minimising asset renewal expenditure through enhanced inspections or synergies between reinforcement and on those areas where the future monitoring combined with asset life asset renewal investment. requirements for additional capacity are extension techniques. less certain. Specifically, we will: If we were setting our plan without the future imperatives of net zero, we would — use the latest data from network plan to spend approximately £866m monitoring and analytics to ensure on asset renewal – which we term our effective identification of priorities, baseline asset renewal scenario. This whichever pathway to net zero would inevitably create some additional is followed, and deploy capacity capacity, for example because some increasing solutions such as full assets are only available in larger substation replacements, overhead sizes today than when they were first line rebuilds and circuit overlays, installed. But this would be limited; and where the network constraints not necessarily that well targeted. are the most onerous and will bite soonest under any scenario; and
Northern Powergrid: our business plan for 2023-28 – 177 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Costs – Plan Efficiency
… to create £471m of decarbonisation synergy savings between 2028 and 2050.
Our optimised asset renewal and In the context of the overwhelming Even where part of the risk falls on our enhancement plan will cost £950m feedback from our stakeholders that we customers, for example if old assets and is the basis for the costs set out in need to meet the net zero challenge, we cause more power cuts, we are exposed this plan; a net increase of only £84m think this trade-off is worthwhile. Much to these outcomes through Ofgem’s compared to our baseline plan. of this additional risk falls directly on us, incentive schemes and so our interests and so is ours to accept and manage as asset managers are fully aligned with The additional capacity it will deliver will (provided Ofgem allows a reasonable those of our customers. future-proof sections of our network rate of return on our investments). that, if not reinforced now, would require expenditure of up to £555m Figure 5: cost-benefit of our optimised plan (relative to our baseline plan) between 2028 and 2050; reinforcement that we can confidently predict will be Approach required over this time frame under the government’s 10-point plan for net zero. Optimised Costs £m Baseline plan plan Variance This future saving of £555m for an £84m investment in the coming five 2023-28 866 950 84 years represents a real-terms return of £471m, which translates to about Post-ED2: 2028-50 555 - (555) a 550 per cent financial return for our customers. Total 1,421 950 (471)
Our plan also includes £136m of financing savings in the period.
Ofgem sets a number of key financial Our estimate of the potential savings has assumed in its working assumption parameters in its determinations that based on a 5.8 per cent cost of equity (in businesses such as ours, which have a material impact on allowed is lower than it would be using Ofgem’s also have a large amount of debt revenue. The parameters for 2023-28 working assumption of 4.65 per cent, finance). Further information on will lead to lower financing costs – since we do not think that equity finance financing parameters is set out in our reflecting the savings that we and other can be obtained as cheaply as Ofgem Financing section. companies expect to be able to make in capital markets. Figure 6: savings from key financing assumptions Figure 6 summarises the impact of each key financial parameter that totals a £27m annual reduction in Revenue allowed revenue (£136m over the impact 2023-28 period). (p.a.) Key financing assumptions 2015-23 2023-28 £m
Inflation basis RPI CPIH1 CPIH
Allowed cost of equity 6.00% 6.98% 5.80% (15.4)
Allowed cost of debt 2.03% 3.01% 2.09% (20.6)
Gearing 65% 65% 60% 8.7
Total (27.3)
1. See Ofgem, 2004, DPCR4 final proposals, page 77; rebased to use the Office for National Statistics’ Consumer Prices Index including owner occupiers' housing costs (CPIH) rather than the Retail Price Index (RPI), assuming a 100bps delta between the two measures.
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Costs in Detail
Investing in the network
At £329.7m, average annual increased, particularly to severe 12 output areas. In particular it the investment will be £135m weather; primary driver of the improvements higher than in the current — safety and other legal standards are we are targeting in relation to period, primarily to enable the maintained; and decarbonisation, asset resilience, and decarbonisation transition. — the environment is protected. reliability and availability.
The network investment category is by In developing our plans, we have In 2015-23 we expect to spend £194.7m far the largest component of our cost continued our approach to minimising p.a. on network invesment costs (NICs), base. It accounts for around half of totex to deliver the outputs. Two which contributes to our overall position totex. We have made it clear throughout key themes run throughout the cost as the most efficient group in our sector this plan that the transformation categories below: first, they result from on a totex basis. During the next price in energy use that is part of the a detailed optimisation of our costs, control we expect these investments decarbonisation path that our nation reflecting the different synergies and to increase by £135.0m p.a. (+69.4 per is taking has a major impact on our trade-offs that exist, both across the cent) relative to 2015-23. This increase investment plans. network and over time. Second, once is mainly driven by the need enable that plan has been developed, we decarbonisation (that impacts on our While decarbonisation is the major keep driving efficiency in our plan by reinforcement and operational IT and driver of the increase in investment, assessing options to select the best telecommunications (IT&T) costs). Our around £1.0bn of the £1.6bn of approach to deliver, and by continuing network investment for the 2023-28 expenditure needs to be deployed our approach to monitoring and driving period is broken down across Ofgem’s around the network to ensure that: down unit costs. cost categories as shown in figure 7.
— the asset base stays in good The expenditure covered within the condition for the long term; network investment category underpins — reliability and resilience are our delivery commitments in all
Figure 7: network investment costs
Variance Cost area 2023-28 2023-28 2015-23 £m total average average £ %
Load-related expenditure 645.5 129.1 24.8 104.2 420.2%
Reinforcement 588.5 117.7 20.0 97.6 488.0%
Connections 57.0 11.4 4.8 6.6 136.1%
Non-load: asset renewal 634.0 126.8 122.8 4.0 3.3%
Refurbishment 69.0 13.8 14.9 (1.1) (7.4)%
Asset replacement1 532.0 106.4 103.0 3.4 3.3%
Civil works 33.0 6.6 4.9 1.7 33.9%
Non-load: other 368.6 73.7 47.1 26.6 56.4%
Operational IT and telecoms 104.3 20.9 7.2 13.7 190.1%
Flood mitigation 6.0 1.2 5.8 (4.6) (79.1)%
Quality of supply (inc. WSC)2 66.7 13.3 4.4 8.9 202.0%
Environmental 60.0 12.0 2.8 9.2 332.7%
Legal and safety 45.5 9.1 7.6 1.5 19.7%
Overhead clearances 29.0 5.8 1.2 4.6 370.5%
Diversions and easements 57.0 11.4 12.1 (0.7) (6.0)%
Other 0.5 0.1 6.0 (6.0) (100)% Network investment 1,648.5 329.7 194.7 135.0 69.3%
1. Includes Rising and Lateral Mains. 2. Worst-served customers (WSC).
Northern Powergrid: our business plan for 2023-28 – 179 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Costs in Detail
In order to ensure that our overall and requirements. This will enable us On unit costs, a key driver of efficiency total costs are efficient, we focus to make the most of flexibility in energy is our contracting and procurement on making investment decisions use from customers and integrate strategies, because much of the activity that deliver synergies across our smart grid solutions into our network involved in our network investments obligations, achieving multiple benefits operation. These will be important tools is carried out by contractors or is cost wherever possible. In order to identify in the management of uncertainty and associated with the supply of major these opportunities and target our optimisation of interventions enabling pieces of equipment. This brings the investments, we utilise a number of us to get ahead, and stay ahead, of benefits of competitive pressure and analytical techniques in determining the the curve, allowing our customers to market innovation into our cost base level of network investment needed. reduce their carbon emissions and and helps us manage our resource These include: maximise the use of low carbon energy needs across peaks and troughs of through connecting in excess of 831k network investment. It also gives — asset risk modelling using common electric vehicles and 251k heat pumps. the option to bring in the specialist network asset indices methodology expertise and equipment that we might (CNAIM) that drives 68 per cent of In relation to the first area, we have need for a particular set of investments, asset replacement expenditure; carried out extensive optioneering without customers having to fund the — statistical population modelling; on every major category of network upfront costs of training and costly — historical performance analysis; investment. In each area, we have machinery which we may not need to — socio-demographic analysis; identified the range of feasible use very often. On the other hand, if is — techno-economic intervention investment options or strategies. more economic to bring the work modelling; and Having eliminated any options that in-house, we have the option to do that. — analysis of the external do not deliver acceptable outcomes, environment. we have weighed up the costs and We provide additional detail on the benefits, factoring in the stakeholder practical implementation of this Our use of data and analytics will feedback we have received. We select approach in the following section. increase very significantly in the the option that delivers the best You can read more about this element coming period. In particular, we will be overall value for money, including any of our approach in our Delivery deploying much more granular network benefits associated with keeping open Strategy (annex 7.1). monitoring and intelligence in order to options in an area where there monitor and pinpoint emerging trends is significant uncertainty. Investing in a low carbon future Load-related expenditure will increase by £104.2m compared to 2015-23 as a result of the impact of decarbonisation on our projected reinforcement and connections volumes.
Decarbonisation represents the single £113.2m in avoided network costs. voltage level to support net zero also largest cost driver for 2023-28 relative — We will manage the constraints contributes towards the management to the current period. Our planning by deploying DNO-contracted of asset resilience risk, creating a scenario for enabling net zero drives our customer flexibility of £5.0m and synergy saving in asset resilience costs forecast reinforcement to increase by network flexibility through £9.5m in 2023-28, effectively providing asset 488 per cent, equivalent to £97.7m p.a. of smart solutions. These actions health benefits for ‘free’. combined with the LV monitoring We will take a flexibility-first approach proposed in our DSO Strategy save In contrast, the synergies are less to network investment through £88.2m in network costs. widespread at the higher voltage levels, prioritising flexibility-enabling actions — We will build additional capacity and this has required us to critically through the DSO strategy. Our plan where there is more certainty in assess potential high-value extra high contains a blend of price-driven and future growth through £505.7m voltage (EHV) projects to ensure they DNO-contracted customer flexibility, of load-driven network are needed in multiple decarbonisation smart solutions and conventional reinforcement and £74.3m of pathways in order to minimise asset network reinforcement to deliver the fault-level investment. stranding risk. best value for our customers. The synergies available vary across the Our analysis and discussion around our — We will invest in flexibility enablers network, and we are actively seeking decarbonisation supporting investment as part of our DSO Strategy these out and optimising them. For plans are set out in more detail within investment of £87.4m, which example, the low voltage infrastructure the Scenarios and Investment section includes £20.8m in low voltage has a very high probability of requiring of our plan and its accompanying annex (LV) monitoring to increase additional capacity in all plausible net Scenarios and investment (annex 4.1). visibility of network conditions and zero pathways, providing customers the capacity constraints. infrastructure necessary to maximise While connections forecasts are — We have assumed that customers use of low carbon energy, allowing fundamentally driven by projections will be flexible in their electricity contribution to whole system flexibility of economic activity in the region, usage in response to price signals and delivering short-term losses decarbonisation and net zero will have from suppliers and use of smart benefits, so the risk of stranded assets a material impact on both the volumes management systems, which help to is very low. The increase in network and types of connections we expect to smooth the demand profile saving reinforcement investment at the low be making in the period.
Northern Powergrid: our business plan for 2023-28 – 180 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Costs in Detail
A comprehensive investment programme
Investment in asset renewal, driven by our condition and asset risk management approach, will be £126.8m per annum.
The core objective of our asset investment spending providing a future replacement. Across all asset classes renewal programme is to maintain capacity benefit for decarbonisation. we considered the following options, the underlying condition of the asset which are discussed in more detail base over the long term and manage Our projections assume that we will across our suite of Engineering the risk associated with asset failure. encounter situations where an asset is a Justification Papers (EJPs): This activity is central to ensuring candidate for renewal investment, but we meet our Electricity Safety, there is uncertainty in future network — replace on failure – increasing risk Quality and Continuity Regulations capacity requirements and we are able profile impacting fault volumes and (ESQCR) obligations. to manage the risk through enhanced associated costs; inspections or monitoring combined — refurbishment – preserving In the decarbonisation context, we with asset life extension techniques. the asset to its original design target an additional benefit: to help In those situations we will defer asset performance by means of reduce the long-run cost of increased replacement. replacement of components electrification. To do that we will target on a like-for-like basis; asset replacement at the highest priority Throughout our programme our general — risk-based replacement – preventing asset risks, and where we are investing approach will be to look to release an increase in faults and associated we will assess the likelihood of that part network capacity by installing upsized rise in fault repair costs. In this case, of the network experiencing capacity assets where increased capacity can be assets are returned to the start of constraints along the decarbonisation provided at low incremental cost. the lifecycle and often replaced pathway out to 2050. with more capable, higher capacity We use extensive condition and equivalent assets; and This will deliver acceptable levels of performance monitoring to inform the — bespoke options specific to either asset resilience with typically half of the investment decisions to ensure timely the project or the asset in question.
Management of our overhead lines is our single largest asset renewal investment area and is driving a 59.7 per cent increase in cost.
At this point in our network’s lifecycle without intervention. — We will use innovative pole the age and health profile of our — We also have a large population condition assessments using Thor overhead line wood pole asset base is of steel poles supporting the LV hammer technology to extend the key driver of our asset renewal costs overhead network, which carry a asset lives, replacing individual and the dominant feature of the risk significantly more expensive unit poles where condition and risk are profile across all voltages. cost relative to wooden structures unacceptable. (three times more on average to — We will replace overhead line — A significant proportion of the replace). circuits in areas where low carbon wood pole population is more than technology (LCT) uptake is high. 50 years old. We are proposing to adopt a 15-year — Due to this profile, risk within this programme to manage the pole asset base is projected to continue population condition and begin to bring to increase by a further 29 per cent risk down over the longer term. by the end of the 2023-28 period
Low-performing legacy cable types mean that our underground cables require investment of £155.9m to maintain reliability.
Our low voltage underground networks also drives a relatively high adverse sections and use of enhanced partial are poorly performing in terms of fault fault rate performance. discharge monitoring. rates compared to other DNOs due to the proportion of some relatively Widespread low voltage monitoring We will manage the environmental unreliable legacy cable types: will enable more ‘surgical’ interventions impact of our fluid-filled cables by to address condition and performance increasing the use of perfluorocarbon — Our Northeast population of consac issues – enabling us to address tracer (PFT) tagging and self-healing cables makes up only 12 per cent of more circuits than under the current cable technology. the network but accounts for more approach. than 50 per cent of LV underground network faults. We are targeting maintaining existing — Yorkshire’s population of obsolete fault rates at HV-132kV through aluminium neutral waveform cables replacement of poorly performing cable
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Costs in Detail
Our approach to managing our substation plant expands our approach to asset life extension.
We will expand our approach and deliver capacity increases required by consideration of full substation implement innovative ways of achieving our net zero pathways. replacement undertaken on an life extension through the use of as-needed basis only. enhanced asset monitoring such as We will continue to target the online dissolved gas analysis (DGA) replacement of individual distribution saving £2.9m in the period. We will also substation components wherever prioritise replacement of assets that also practical and economic with
There is a change in our protection strategy as we start to replace early microprocessor relays.
Replacement of protection relays has The early microprocessor relays have a 2023-28 starts to see the replacement historically occurred at the same time as lower asset life expectancy compared of these relays on a risk basis at a the plant they are associated with due to their electrometrical counterparts cost of £29.8m. to the asset life of the relay technology and therefore cannot be replaced at the being used. One-off and standalone same time as their associated plant. replacement of relays was limited to poorly performing relays.
Our approach to building and civil assets continues to be to replace deteriorated assets that are beyond economic repair at a cost of £33.0m.
Substation civil elements will always deterioration annually, with a more live electrical equipment and also deteriorate with age and exposure to thorough dedicated civil inspection accelerate the corrosion of the plant. the weather. Failure to maintain the carried out on a five-year cycle. integrity of substation roofs, doors and These inspections drive our Similarly, the majority of substation walls could lead to unrestricted access, intervention programmes. doors and boundary fences are in good which in turn gives rise to an increase condition. These assets are often the in the risk of death or serious injury to a The vast majority of our civil assets are first line of defence in preventing third member of the public from contact with in good condition and are not showing party access to our equipment and must live electrical plant. obvious signs of deterioration. Often the be kept in good condition to maintain first sign of issues is water penetration compliance with our legal obligations. Substation civil assets are visually into the interior fabric of the substation; inspected for obvious signs of this can cause issues if the leak is onto
Investment in operational telecoms increases by £13.7m per annum compared to 2015-23 driven by our DSO Strategy enablers and resilience improvements.
Our investments will build on our We are also overlaying the baseline The need for more reliable local low large-scale operational telecoms requirement with the need to improve voltage networks will increase due to work carried out in the 2015-23 period the resilience of the network via the electrification of the transport and by concentrating on improving the additional communication links heat sectors. This means improvements resilience of the network to meet future providing increased capacity and through conventional and innovative and emerging requirements and support redundancy. technology are an important part of the DSO transition. our plan. We will use groundbreaking Our existing emergency voice pre-fault detection and data analytics As with all infrastructure asset communication is expected to be retired to target deployment of fault bases there is a baseline investment during the period so we will build a management devices and replacement requirement for the refurbishment and resilient private voice network across of poor-performing assets. replacement of equipment. Operational the network utilising digital mobile telecoms is no different and we must radio (DMR) technology. This is used maintain our existing towers, microwave in major power outage situations links, telecoms batteries and pilot wire or Black Start events where infrastructure. existing commercial mobile voice communications is not able to provide voice service for operational activities.
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Costs in Detail
Our flood defence investment is £4.6m per annum lower than the current period due to the level of resilience that we have already achieved.
We have invested significantly in flood at substations at risk of flooding based We will defend distribution substations defences in the current and previous on the consequence of failure. that have higher consequence of price control period in response to failure. The protection of distribution strong stakeholder feedback. Our By the end of the 2015-23 period substations falls outside the scope of strong delivery in this area means our network will be compliant with ETR 138; however, where a specific our investment in the next period can the defences prescribed by the requirement is identified for a particular reduce while continuing to increase the methodology (Engineering Technology substation (e.g. where a substation level of overall flood resilience. Report (ETR) 138). We plan to make has been previously affected by a incremental enhancements to flood event or a substation that feeds Flood defence investment decisions existing major substation defences to critical infrastructure) flood mitigation are determined following a risk-based maintain defences to revised flood risk measures will be deployed. Energy Networks Association (ENA) assessments and to increase defences methodology. It is prescriptive in terms to a higher level of resilience. of the level of protection to be applied
Quality of supply improvements will be delivered through technology deployment and targeted network improvements investing £8.9m more per annum compared to the current period.
We will install significantly higher The automation will be targeted at our The automation programme will involve volumes of remote switching and worst-performing circuits, thereby 8,600 automated switches at a total network automation on the high voltage simultaneously improving services for cost of £64.2m. This will be a mixture of networks to match the capabilities our customers that receive lower than ground- and pole-mounted automated of other DNOs so that our customers average service levels. switches, which we expect to split benefit from the same level of service. 70:30.
We are targeting £2.5m of investment towards improvements for our worst-served customers (WSC).
In order to tackle performance for our assets supplying our rural communities improve the level of service they receive population of WSC, we have designed and install automation to help restore and reduce the number of interruptions a £2.5m scheme that will upgrade supplies faster. This will significantly they experience by 50 per cent.
Environmental costs will increase by £46.0m to deliver against expanded obligations and support decarbonisation.
Compliance with polychlorinated reduce losses and improve the purpose. We will reline the biphenyls (PCBs) legislation is the network’s efficiency. This carries existing bunds with innovative largest increase in costs within this area. an incremental cost of £13.4m coating that will completely (included within the £41.2m) and reinstate the bunds’ integrity. — We have followed the ENA- is proven to be cost-effective developed statistical model over the life of the asset via Cost Visual amenity: to evaluate the likely volumes Benefit Analysis. of equipment we will have to — We will continue our successful replace and estimate that 7,9001 Oil pollution mitigation scheme: stakeholder-led programme to pole-mounted transformers will underground overhead lines in need to be removed from the — Latest environmental surveys have Areas of Outstanding Natural network at a cost of £41.2m. highlighted a significant number Beauty (AONB) at the same — This includes the replacement of existing transformer bunds that run-rate as 2015-23. of these units with amorphous have experienced a material loss core equivalents, which will of integrity and are no longer fit for
Delivering on our legal obligations and operating a network that is safe for operators and the public is a £4.6m per annum change compared to the current period.
An investment of £29.0m is required We will undertake further light We will continue our risk-based in 2023-28 to comply with our ESQCR detection and ranging (LiDAR)2 management strategy for asbestos obligations to maintain clearances to surveys to enhance our data availability management. Our interventions will overhead lines, which represents a and quality enabling us to efficiently continue to be focussed on the asbestos 370.5 per cent increase on 2015-23 identify clearance issues and target that poses the greatest risk to operators expenditure. their resolution. working with our substations.
These clearance infringements are The solutions we adopt to resolve Our approaches to fire prevention and identified through our inspection clearances will factor in the capacity mitigation, substation security and programmes. requirements for net zero and the need metal theft remain unchanged to the to de-loop services as required. current period.
1. Excludes synergy of 500 units delivered through our reinforcement programme. 2. LiDAR is a technology used to create high-resolution models of ground elevation. Northern Powergrid: our business plan for 2023-28 – 183 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Costs in Detail
Operating our network efficiently
In the current period, we expect to Our plans in this area include some remediate leaks in fluid filled cables spend £122.9m per annum on network exciting initiatives to keep downward as set out in our Environmental Action operating costs (NOCs), which pressure on costs and improve service Plan (annex 4.4). These approaches represents an efficient starting point levels. That includes making more use drive additional costs of £4.1m and for the forthcoming period. As we show of new technology that will improve £0.9m p.a. respectively but unlock net in annex 6.2, Cost Benchmarking, we our ability to respond to power cuts, efficiency savings of £34.7m and £6.5m are a leading operator on a totex basis, including the deployment of technology respectively over the period through which is the most robust way to evaluate that will enable early warning of faults reduced asset replacement. efficiency. The NOCs category is an and more precise fault location and example of where, taking those costs in the use of more SilentPower battery Vegetation management costs isolation, we benchmark at the 'middle generators. will increase to address the of the pack' on a disaggregated basis emerging risk associated with but that ‘penalises’ money we spend Inspections and maintenance ash tree dieback. in this category that saves money will rise by £4.2m p.a. to facilitate elsewhere to contribute to efficient additional domestic property Vegetation management costs in the aggregate total expenditure. safety inspections. 2023-28 period are £1.3m (14.1 per cent) p.a. higher than 2015-23 driven by the Over the course of the next period, We expect that our planned inspections need to do more work to address the we expect our NOCs to marginally expenditure will be £6.0m p.a., £1.1m impact of ash tree dieback (£0.6m p.a. increase by £3.1m (2.6 per cent) p.a. (23.4 per cent) higher than the average increase) and the incremental costs driven by increases in inspections and in the 2015-23 period. The two main to manage clearances to tower bases maintenance, and tree cutting costs. areas of increased cost pressure are: and substations (£0.5m increase). Our costs include the introduction of LiDAR Our plan is set to hold fault — The addition of new activity for surveys during the period allowing costs flat compared to the domestic cut out inspections, adding us to better target our vegetation 2015-23 period at the same £4.8m of new expenditure to our management works and drive efficiency time as targeting the significant plan (£1.0m p.a.); and in this area. The surveys will cost £1.6m service improvements. — Moving from a simple time-based to complete but drive savings of £2.6m assessment every 10 years to a in period related to ash tree dieback Faults expenditure is the largest condition and risk-based assessment costs and will enable lower cut volumes component of NOCs accounting for through more frequent inspections beyond 2028. about 70 per cent of the total. Our using innovative Thor hammer plan is set to hold fault costs flat in the technology. While this will add The smart meter roll-out has been 2023-28 period (marginal 0.1 per cent £0.2m to our inspection costs, extended beyond the original 2020 increase) while delivering significant we estimate that this change in deadline to June 2025. During the service improvements as set out in our approach will deliver net efficiency roll-out meter operators identify unsafe customer outcome commitments for savings of £42.8m in the period from situations at a customer’s premises Reliability and Availability. Our plan the deferral of asset replacement. that require DNO intervention. In the targets 12 per cent fewer and 25 per 2023-28 period we expect to spend cent shorter power cuts, a 50 per cent Our planned maintenance expenditure £6.5m in total and £2.2m p.a. resolving reduction in the number of customers for the 2023-28 period is expected to be unsafe sites to facilitate the smart meter experiencing 12-hour faults and a 15 £18.3m p.a., £2.9m (19.1 per cent) higher roll-out for the first three years to its per cent reduction in six-hour faults than the p.a. average in the 2015-23 completion (equivalent to an annual on our network. These major service period. This is due the increased use average cost of £1.3m over the whole improvements will be achieved by of PFT technology (perfluorocarbon period, some £2.7m p.a. lower than in driving efficiencies that allow us to hold tracers) and the use of innovative self- the current period). our fault costs at current levels. healing cable additives to identify and
Figure 8: network operating costs
Variance Cost 2023-28 2023-28 2015-23 £m total average average £ %
Faults 431.5 86.3 86.2 0.1 0.1%
Inspections and maintenance 121.5 24.3 20.1 4.2 20.7%
Tree cutting 54.5 10.9 9.6 1.3 14.1%
Smart meter interventions 6.5 1.3 4.0 (2.7) (67.5)
Other NOCs 16.0 3.2 3.0 0.2 7.4% Network operating costs 630.0 126.0 122.9 3.1 2.6%
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Costs in Detail
Supporting our business
Our indirect costs and non-operational we also envisage more support for the establishment of an active DSO is capex in 2023-28 will be £186.4m per vulnerable customers to promote a just a key enabler of customer flexibility annum, £32.7m higher compared to the transition to net zero and increased and has the potential to generate current period. Our core indirect costs costs in support of our communities. £169.2m savings of investment on are actually coming down slightly as we the grid (largely on the EHV system). find more efficient ways to provide a Decarbonisation-related indirects Consequently, the costs incurred better service to our customers. drive efficiencies across the whole here have the important purpose system on the path to net zero. of driving down the total costs of The overall increase is driven by those achieving net zero. areas where our outputs involve new or Our decarbonisation strategy is to a significant increase in activity levels, embrace and manage uncertainty to In addition, the scale of the increase in but the dominant driver is the need ensure all credible pathways to net our network investment programme to decarbonise, which accounts for zero remain open. Central to this is (£135m p.a., about 70 per cent) does £26.7m (82 per cent) of the increase. a flexibility-first approach, enabled mean that our indirect costs need to We will also spend more on activities through a blend of smart grid and increase to support that. As described where stakeholders have made it clear DSO initiatives, smart grid solutions, in our Decarbonisation section, our we should play a more prominent role in customer flexibility and targeted network and the country’s electricity the future, such as providing enhanced network reinforcement. This approach systems as a whole are transforming services for vulnerable customers requires an additional £26.7m of to meet an increasing uptake of LCTs and taking greater action in our indirect costs per year compared such as HPs and EVs. As the demands communities. with current levels. These costs fall placed on the system become larger broadly into four types: and more complex, it is critical that this This category of costs is one in which transformation proceeds efficiently, and our efficiency track record benchmarks — the costs necessary to establish and the increased indirect costs associated strongly. Taking these costs in operate DSO to enable customers to with network design, control centre, isolation, we benchmark as the leader make the right choices (£12.9m); stores and engineering support are vital in the industry a disaggregated basis, — the costs necessary to support enablers to achieve that objective. partly because some of the benefits the targeted investment in of expenditure we make elsewhere reinforcement (£13.1m); The key feature of these manifest themselves as savings in — costs incurred in remaining on decarbonisation-related indirect this area. As ever, we encourage our our own path to net zero as an expenditures is that they drive a regulator to focus on assessing an organisation (£1.1m); and wider efficiency benefit. DSO-related efficient aggregate totex. Annex 6.2: — costs in support of work within costs create the opportunity to save Cost Benchmarking provides more our communities (£0.4m). significant investment during details on the efficiency assessment. 2023-28 and beyond; while the Our continued transition to DSO indirect costs associated with the In figure 10 we show the detailed requires investment in non-operational enhanced investment programme breakdown of where we expect the IT systems and bringing additional are necessary to ensure that that £32.7m of increased expenditure to individuals into the business to ensure programme is efficiently planned and sit, and what the increased spend will we have the right skills and tools in the continuously optimised. support. As well as the increase in organisation to deliver the changes costs associated with decarbonisation, required. As our DSO Strategy shows,
Figure 9: indirect costs and non-operational investment
Variance Cost 2023-28 2023-28 2015-23 £m total average average £ %
Indirect costs associated with decarbonisation:
Closely associated costs 77.5 15.5 - 15.5 N/A
Business support costs 13.5 2.7 - 2.7 N/A
Non-operational investment 42.5 8.5 - 8.5 N/A Subtotal 133.5 26.7 - 26.7 N/A
Closely associated costs 496.9 99.4 84.2 15.1 18.0%
Business support costs 278.1 55.6 49.8 5.8 11.6%
Non-operational investment 157.0 31.4 19.6 11.8 60.0%
Total indirect and non-operational costs 932.0 186.4 153.7 32.7 21.3%
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Costs in Detail
Our stakeholders have been clear — formalise, enhance and increase the works in our communities; and that we must do more than just scale of the services we currently — retain our Consumer Engagement keep the lights on. provide to vulnerable customers, Group (CEG) on a permanent rolling out our programmes more basis so that our delivery against As part of supporting our reliability widely across our regions and our commitments will be properly improvement plans, we will invest introducing new measures to ensure scrutinised. This will cost around £16m in fault management and that no one is left behind as we £3.5m for the next five-year period. location devices to support service transition to net zero – spending improvements on our LV network. around £3.1m p.a. more than we do Having tested these plans with our now (nearly a five-fold increase); stakeholders, we believe that although More broadly, our stakeholders — be a force for good in our this represents a material increase in (including our regulator) have been communities, leveraging our expenditure, our programme matches explicit that in 2023-28 we must play position in our region to make their required ambition, targets the a fuller and more prominent role in a positive contribution to those areas they care most about, and delivers our region. We have developed an we serve. Our plan increases excellent value for money. ambitious set of propositions to deliver investment by more than double this, which are set out in the Openness in social initiatives, such as tree and Transparency, Communities, planting, support for local schools and Vulnerable Customers sections around STEM, employability skills, of our plan. Meeting this step-up in energy efficiency for households expectations means that we will invest and communities and support for more in these areas than we have done community energy groups, when previously. We will: we are completing major investment
Figure 10: indirect costs and non-operational investment – detailed breakdown
Variance Cost 2023-28 2023-28 2015-23 £m total average average £ %
Core indirect costs 750.0 150.0 151.8 (1.8) (1.2%)
The decarbonisation agenda for the business results in the following areas:
Indirect costs in support of the DSO 64.5 12.9 - 12.9 N/A
Indirect costs to support the roll-out of the additional investment in the network 65.5 13.1 - 13.1 N/A
Investment in EVs 5.0 1.0 - 1.0 N/A
Investment to reduce building and substation energy use 0.5 0.1 - 0.1 N/A
Costs in support of communities 2.0 0.4 - 0.4 N/A
Subtotal – costs driven by decarbonisation 133.5 26.7 - 26.7 N/A
Additional tools and instruments in support of low voltage automation 16.0 3.2 - 3.2 N/A
Costs in support of vulnerable customers 19.5 3.9 0.8 3.1 387.5%
Costs in support of communities 6.5 1.3 0.6 0.7 116.7%
Indirect costs for the Customer Engagement Group 3.5 0.7 0.5 0.2 40.0%
Costs for a training centre 3.0 0.6 - 0.6 N/A Base indirect costs and non-op capex 932.0 186.4 153.7 32.7 21.3%
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Costs in Detail
Non-activity based costs
Non-activity based costs tend Pass-through costs Other non-activity based costs to be non-discretionary and not directly driven by work on our — Licence fees – Ofgem determines The largest element of non-activity network. This cost category how much we pay for our based costs is our pension deficit includes items such as our pension distribution licence fee. We have payments: our treatment follows the deficit repair payments. assumed that the fee in the next requirements specified by Ofgem. period will be consistent with the Our pension deficit is calculated by an A full breakdown of these costs is shown current level. actuary every three years. The deficit in the annex Our costs in detail (annex — Business rates – the amount that we as of 31 March 2019 was agreed with 6.3). Overall, we expect there to be a 24 pay in rates is derived from complex the trustees in 2020 to be £146m, with a per cent reduction in our non-activity formulas. Since the last valuation this recovery plan of deficit repair payments costs in 2023-28 relative to 2015-23. has been broadly based on the value of £30m p.a. plus RPI continuing until This is mainly due to a reduction in costs of our assets and the allowed return March 2023, followed by two years of associated with pension deficit funding. on these assets. £15m p.a. plus RPI. The actual allowance — Exit charges – Ofgem determines for the 2023-28 period will be agreed how much we pay to connect our every three years with Ofgem, to align network to the National Grid. These with the triennial cycle for the pension charges generally remain stable scheme. The next triennial valuation will across the period. take place as of 31 March 2022. — Smart meter enablers – these costs include expenditure on additional IT assets and services that are specifically associated with the systems required to access, store, process and use smart meter-derived data.
Figure 11: non-activity based costs
Variance Cost area 2023-28 2023-28 2015-23 £m total average average £ %
Pass-through costs 430.3 86.1 80.8 5.3 6.6%
Other non-activity based costs 16.3 3.3 24.6 (21.3) (86.6%)
Total activity based costs 446.6 89.4 105.4 (16.0) (15.2%)
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Costs – Real Price Effects
Real price effects (RPEs) and ongoing efficiency
On average over time, many of Labour is our biggest input, and for a We have engaged economic the inputs we use will increase high proportion of our staff we need experts to review the evidence and in price faster than the Office to recruit from specialist pools of labour develop a balanced approach to for National Statistics’ (ONS) that have at times seen faster wage indexation design. CPIH measure of inflation that growth than average. We are also is embedded as standard in our exposed to fluctuations in the prices To ensure Ofgem’s policy is executed as revenue allowances.1 These input of materials such as copper or successfully as possible, and to achieve cost changes are called real price aluminium through the cables and a balanced outcome, we are proposing effects (RPEs). The flip side of this transformers that we need to buy indexation for RPEs that has been is that we continually look to get to improve our network. calibrated by independent experts, the better at what we do, helping to economic consultancy NERA, based on offset rising input prices. Over 2023-28, Ofgem has said that it the available evidence. will only make allowance for these costs One of the clearest examples of a RPE through indexation mechanisms. This RPEs are an economically complex comes from real terms pay growth, policy means that our customers will subject, which is why the involvement which reflects productivity growth bear the risk of fluctuation in prices, of economic experts is important. We across the economy and is why living while we will be exposed to the risk of commissioned this essential study standards tend to rise over time. For a mismatch between the price of inputs jointly with other Distribution Network example: we actually use and the indexation Operators (DNOs) for three reasons: mechanism. As a result, it is crucial that — From January 2000 to 2021, average the indices are well constructed. — The DNOs are undertaking earnings in the economy rose 23 per essentially the same activity and we cent in real terms, above CPIH, or Unlike RPEs, ongoing efficiency expect our regulator to apply the one per cent p.a. will be set as a fixed assumption by same approach to the entire sector. — This has happened over a period that our regulator. — Jointly tendering is more included the dot-com slowdown, cost-effective than each DNO global financial crisis, the austerity This section of our plan sets out commissioning a similar study. that followed and, most recently, the our proposals for RPEs and — Pooling each DNO’s data on input COVID-19 pandemic. ongoing efficiency. price changes, for example for — Even in a pandemic year (2020), the transformers and cable, allows Bank of England recently found that a better justified approach to the average pay settlement held up indexation to be developed. at 2.5 per cent,2 i.e. 1.7 percentage points above CPIH inflation.
Figure 12: breakdown of RPEs
Share of Cost area Justification sector costs Proposed index
General Across the economy there is indisputable 30% Indexed using: labour evidence that wages tend to grow faster than — ONS private sector weekly earnings CPIH inflation — ONS annual survey for hours and earnings median hourly earnings Specialist As with general labour, the evidence of labour 36% NERA index based on: labour RPEs is indisputable. In this category the — BCIS PAFI civil engineering benchmarks are tailored towards electrical and — BCIS PAFI electrical engineeringA civil engineering Materials Electricity distributors use specialist 18% NERA index based on: (capex) components that become part of their networks — BCIS PAFI pipes and accessories, aluminium like cable and transformers and wood poles. — BCIS PAFI pipes and accessories, copper Prices depend heavily on commodity prices, — BCIS structural steelwork materials which can be volatile — BCIS aluminium products — ONS wood, sawn and planed Materials Similar to capex materials, but with indices 3% NERA index based on: (opex) tailored towards a lower weight on major — BCIS RCI Infrastructure materials (FOCOS)B network components Plant and As well as components that become part of the 7% NERA index based on: equipment network (materials), DNOs use various items — ONS machinery and equipment output PPIC of plant, such as generators, tools and road — BCIS PAFI plant and road vehicles transport
A BCIS – the Building Cost Information Service (BCIS) of the Royal Institution of Chartered Surveyors (RICS); PAFI – the BCIS price adjustment formulae indices B RCI – the BCIS resource cost indices; FOCOS – the BCIS infrastructure resource cost indices C PPI – the ONS producer price inflation measure
1. CPIH: Consumer Prices Index including owner occupiers’ housing costs. 2. See Bank of England, February 2021, Monetary Policy Report, page 30.
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Costs – Real Price Effects
NERA has used data from the sector We have also engaged economic All four sources of evidence point to to benchmark the input price changes experts to review all the available lower values of ongoing efficiency the sector has actually seen against the evidence on ongoing efficiency. than have been assumed in Ofgem’s various candidate indices that could be recent regulatory decisions, and NERA used for an RPE mechanism. This has Although input prices such as labour concludes that the range 0.1 per cent to resulted in a data-led evaluation of the costs and specialist materials tend to 0.5 per cent “defines the widest range RPEs that the sector is most likely to rise faster than CPIH inflation, we will of assumptions that could reasonably be face going forwards. also get better at what we do over time. derived from the evidence”. This means we will not need to use as This allows us to propose many inputs to deliver the same outputs. For the purposes of this business plan, evidence-based indexation for we have adopted the most challenging our key input categories. Similar to RPEs, understanding the assumption within this reasonable scope for ongoing efficiency is an range, of 0.5 per cent. The table in figure 12 provides a economically complex subject. We have summary of the indexation we propose therefore also commissioned NERA based on the NERA report, along with a to review the evidence on behalf of all brief summary of the justification. electricity distributors.
The full NERA report can be accessed To ensure a balanced view, NERA has from the RPEs and ongoing efficiency triangulated evidence including: annex (6.4). — the standard dataset used in this area when evaluating comparator sectors, which is EU KLEMS; — analysis of actual DNO productivity over the past decade; — economy-wide productivity estimates; and — forecasts from economic commentators of productivity growth.
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Delivery Making it happen
We have set out a significant increase in activity levels and the development of Distribution System Operation (DSO) capabilities.
Our plan is to invest around a third We are building on a strong base and more every year than we have in the track record in the 2015-23 period. See current period in total (see Costs our Track Record section. section). This is overwhelmingly driven by the need to ensure that we open We are already well underway in up all credible pathways for our modernising our network through region to decarbonise. our smart grid enablers programme and investments in smart meter We’ve set out more on our delivery supporting systems. plans in our: — We have been actively testing the — Delivery Strategy annex 7.1 flexibility market, running flexibility — DSO plan section annex expressions of interest and rolling — Digitalisation Strategy and Action out around 440MW of flexible Plan, annex 5.3 connections across our active — Workforce Resilience annex 5.2 network management (ANM) areas. — We are now routinely collaborating We are expanding our capabilities with a variety of industry for DSO. stakeholders in developing Distribution Future Energy Scenarios In order to efficiently support (DFES) and engaging on our decarbonisation goals, we must forecasts through an open enable a smart, flexible energy system data platform. where we actively manage the more — We have focussed our innovation complex power flows on distribution portfolio on preparing for the grids such that we can optimise the future through projects such as value for the system. customer-led distribution system (CLDS) and trialling vehicle-to-grid In our plan we invest in information smart charging. technology systems, skills and data to enable optimal use of our assets Our strong track record of delivering and sharing of information to facilitate against our forecasts gives us the most cost-effective route to confidence that we can deliver our plan. decarbonisation. This is a significant Throughout 2015-23 our investment change for our business but we are has closely tracked in line with our plan. confident we can manage the risks that We are delivering our network health come with such a transition because targets and meeting or exceeding our of our track record and the strength of 53 business plan commitments for the our DSO, Data and Digitalisation, and current period. Workforce Resilience strategies.
NorthernNorthern Powergrid: Powergrid: our our business business plan plan for for 2023-28 2023-28 – – 190 190 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
Delivery
Gearing up to deliver
Our plan sets out a robust Our cross-cutting plans for Data and 2023-28 will also require a strategy detailing how we will Digitalisation and Workforce Resilience material increase in investment develop our DSO capabilities. both centre on the need to support the in the network. DSO transition. We will invest in systems and skills to When delivering DSO functions we deliver a significant upgrade in our Our DSO strategy describes the will monitor, manage and then, only if data capture and analytics capabilities use cases for the systems that will necessary, reinforce our network. The alongside deploying flexibility and be delivered through the data and scale of the change that is required to stimulating markets to optimise our digitalisation strategy. decarbonise means that even though system efficiently. Building on activities we have adopted this flexibility-first in the current price control period, some — Through our deliverability review approach, opening all the credible key elements of our strategy include: we have concluded that to deliver pathways to net zero will still require our ambitious outcomes, it will be a material increase in network — Investing £21m in rolling out LV necessary to employ a delivery reinforcement. Network investment monitoring such that 50 per cent model that utilises a mix of internal costs in total increase by over 70 per of our ground-mounted substation resources and external partners. cent in our ‘best view scenario’ – see our networks are covered by 2028, — Each of our initiatives is costed Costs section – which assumes that: a continuation of an ongoing using a model that includes planning programme we have already and design, the cost of the solution — about 941,000 electric vehicles been successfully implementing itself (covering hardware, software, (EVs) will be connected to our during the 2015-23 period. testing, project management network by 2028 compared to — Building on the successful and integration costs), solution about 31,000 today; and implementation of our AutoDesign implementation and business — over 309,000 heat pumps (HPs) will platform by delivering an easy to change to ensure that we not only be connected, an increase of over use customer portal for a range deploy technology, but we also tenfold compared to today – see our of existing and new data sets, embed it within the business. Scenarios and Investment section. expanding today’s tool to include — We have also modelled resources different voltage levels and across the five-year period to ensure Our current delivery strategy (annex 7.1) to include new and existing we have the internal capabilities to for much of the work that is required in customer connections. deliver the initiatives as envisaged. 2023-28 is to continue our outsourced — Continuing to explore using — We have sequenced the initiatives model with contractors across our flexibility, building on flexibility to as programmes of work, factoring region. This allows us the flexibility to optimise network assets, building on best practice insight from our scale resources to respond to the learnings from flexibility tenders we strategic technology partners in delivery challenge. By using strategic have been running since 2018. setting out the plans to deliver the framework agreements we are able to work required. award contracts for significant programmes of work that are designed To successfully deliver DSO functions, to be scalable in line with requirements. we must attract people with new skills and expertise to our business, Through tender processes we identify as well as upskilling our existing all of the appropriate contractors across We have a proven track workforce. To ensure we achieve this, our region that are able to deliver the record of delivering at our plan will see us: contracts, including those able to industry-leading levels of respond to changes in scale. We have a cost efficiency. Through — evolving our training programmes proven track record of delivering large engagement with our supply to upskill our industrial and programmes of work this way. We know chain, we know we can technical workforce; that providing we plan ahead properly, deliver our ambitious ED2 — increasing our training delivery our contractors will flex their resource plan and enable regional capabilities and capacity to capacity in anticipation of the demand. decarbonisation. accommodate the higher volumes Our engagement activity tells us that of people to be trained; we have a supply chain that is eager — bringing colleagues with specialist and able to support us in meeting our data management skills into the delivery challenges. business, through both recruitment Andy Bilclough and procurement; Director of field — improving the core data skills of our operations current colleagues; and — engaging our workforce on the transition to DSO to be clear on the impact it will have on their roles and how their skills will need to change.
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Delivery
Impact assessment
Activity Performance Plan area levels levels Headline changes vs. 2015-23 Key features of our delivery plan
— Over four times increase in network — Scale contractor resources through Scenarios and reinforcement strategic framework agreements Investment — Dynamic system planning and forecasting
— Open data platform — Increase number of people working to — Flexibility procurement fulfil DSO functions to c. 40 DSO Strategy — Installation of 10,000 low voltage — Scale existing LV monitoring (LV) monitors and their ongoing programme management — Data and Digitalisation initiatives below
Decarbonisation — 200 large-scale sites with voltage — Build on innovation outcomes Whole optimisation — Recruit and train further staff to install Systems — Roll-out of 30 innovative microgrids smart grid equipment
— C. 8,400 polychlorinated biphenyl — Scale existing supply chain through (PCB)-driven pole-mounted strategic framework agreements Environmental transformer changes — Leverage ‘hot glove’ resources for live- Action Plan — Four times increase in perfluorocarbon line working where possible tracer (PFT) for cable leakage Asset — Synergistic planning using latest — Deliver programmes through strategic Resilience decarbonisation forecasts framework agreements — 8,600 high voltage (HV) automated — Scale existing supply chain switches and enhanced LV technology — Multiskill operational teams Reliability and at 9,000 locations (c. double 2015-23 Availability run-rate) — Substantial increase in overhead programmes
— Expansion of safety management — Invest in new safety and driving Safety system to our contractor base training programmes and systems
— A further 48 flood defences — Adapt existing programmes and Climate — Vegetation programme for ash-tree supply chain for 2023-28 volumes Resilience dieback
— Enhanced physical security at all of — New OT cyber-specialist recruitment our Critical National Infrastructure- and training programme Physical and designated sites — New solutions to detect threats and Cyber Resilience — Replacement power-resilient telecoms respond to attacks solution Customer — Increase broad measure of customer — New technology to offer greater Service service (BMCS) score to 93.5% choice to customers — Reach >70% of eligible high-risk — Increase customer support vehicles customers with Priority Services — Establish new arrangements to provide Vulnerable Membership (PSM) recruitment additional on-site support Customers — Enhanced on-site welfare support for >6 hour power cuts
— Additional £1.0m on social — Establish community energy advisors Our programmes to improve the network — Upskill external partners on Communities and community decarbonisation — Multiskill operational teams
— 20% faster small works lead times — Build on existing systems — Expansion of AutoDesign self-service — Develop our digital platforms to enable Connections — Capacity to accommodate significant customers to self-serve and facilitate increase in low carbon technology mass LCT uptake (LCT) connections
— Sustainable procurement policy — Modify our procurement approach Openness and aligned to ISO20400 — Work with our supply chain to obtain Transparency — 98% of suppliers with ISO14001 accreditation environmental accreditation Enablers
— Flexibility product development — Continue our delivery model of internal Innovation — Harnessing flexibility at low voltage to resources working with new and resolve LV network constraints existing external partners
— C. 80% increase in investment (+£10m — Mix of internal resources and external Data and p.a.) to deliver data and flexibility strategic partners Digitalisation outcomes — Recruitment and training for data skills — Enhanced data governance
— Create >1,000 new job opportunities — Upskilling and recruiting our workforce Workforce — Build a more diverse workforce with data science, digital, commercial Resilience — Develop regional and national skills and technical engineering expertise
Key: Activity/performance levels vs. 2015-23 / Significant increase/decrease / Increase/decrease Broadly similar levels
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Delivery – Financing
Financing
Our stable and robust Our approach to financing the business We have also been engaging with financial position is reflects Berkshire Hathaway’s long-term stakeholders to show them the impact outlook and preference for sustainable on bills over the long term of both an supported by the long-term capital growth over dividends. The appropriate cost of equity – which outlook of our shareholder, financial flexibility offered by this can be no lower than the 5.8 per cent approach helps us maintain the highest at the bottom of Oxera’s range – and the Berkshire Hathaway credit rating of any of the standalone a regulatory depreciation period that network groups. establishes a fairer share of the costs Energy group, which across current and future generations of is ultimately owned by Our proposed financing package will customers. Our views on all these points provide the funding to deliver the are expanded on in annex 7.2 Financing. Berkshire Hathaway Inc. ambitions set out in this business plan. Nonetheless, Ofgem requires that this All stakeholders agree that the cost plan, and the various financial tests it of capital for 2023-28 will be lower includes, is set out based on Ofgem’s than our regulator’s assumption at the current working assumption, so that is last price control review. While there what we have set out below. is uncertainty over the exact cost of capital, and in particular, a reasonable The cost of raising new debt is at range for the cost of equity finance an all-time low and is expected to that the evidence supports, we believe stay low for some time. our regulator has – over the past few years – given way to pressure, failed The cost of new debt over the 2015-23 to take proper account of that period has also been very low, reducing evidence, and attempted to set the average cost of Distribution returns at too low a level. Network Operator (DNO) borrowings, and therefore, the costs that need to be This section takes as its starting point factored into network charges. the working assumption for the cost of capital and specific stress-tests that our Our plan adopts Ofgem’s working regulator has required. It also signals assumption of a 2.087 per cent (real, those areas where we think the evidence pre-tax) average allowance for debt justifies a different approach. costs for 2023-28. It is based on Ofgem indexing debt allowances to Ofgem’s assumptions for cost of a 17-year trailing average of the cost capital are too low, especially given of long-term utilities debt, including the pivotal nature of the sector in its initial estimate of the various the net zero transition. additional costs of borrowing that DNOs can expect to incur. Ofgem’s current working assumption for the cost of equity, of 4.65 per cent The working assumption will be plus the Office for National Statistics’ replaced by a final calibrated index Consumer Prices Index including owner- after Ofgem has seen company occupiers’ housing costs (CPIH), is too business plans and been able to better low. It is below the marginal cost of forecast expected debt costs. We equity and risks deterring investment in set out more details on this area the distribution network at a time when in annex 7.2 Financing. the need for investment is acute. The debt interest rates that are Ofgem’s approach does not match the eventually factored into our charges will methodology taken by the Competition ultimately depend on how debt market and Markets Authority (CMA) in its conditions evolve over the coming recent redeterminations of price years, not on the 2.087 per cent working controls for the water sector. And assumption, or on what people today the gas distribution and transmission think the debt index might do. network companies are challenging Ofgem’s approach as we put this plan together. In reaching our own view, we have worked with financial expert Oxera to review the evidence. It has concluded that the cost of equity for companies in our sector is between 5.8 per cent and 6.9 per cent.
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Delivery – Financing
Our dividend and tax policies are How costs are spread over time will more details on this issue in the section backed by a shareholder with a be critical to future generations. on Customer Bills. track record of reinvesting heavily in our business. The capitalisation rate is the proportion As with all our costs, we of our totex costs that are added to the have managed our pension Equity finance is essential to ensuring regulatory asset value (RAV) and then costs efficiently. the long-term financial sustainability spread over many years in our allowed of any business. And dividends are one revenue. Those cost allowances that Pensions are part of the benefits we common way that a return is paid on this aren’t added to RAV flow immediately offer to employees. In our case, they are type of finance. into our allowed revenue. a more significant cost to the company because our industry carries historical Our shareholder’s preference has Our plan uses a 71 per cent capitalisation pension commitments that were generally been to operate with slightly rate. This means that for every £1 of protected by law at privatisation. more equity in the financing structure totex allowances that we spend, 71p than the notional 35 per cent that will be added to the size of our financial We took action more quickly than other Ofgem currently assumes for investment (RAV additions), while companies to control our pension costs price-setting purposes, to allow the 29p will be charged immediately to by closing our final salary pension financial flexibility necessary to deal customers through our allowed revenue schemes to new joiners in stages with any uncertainties we may face in the same year. This assumption is set between 1995 and 1997. This was 10-15 over the 2023-28 period. Ofgem’s to maintain a consistent policy with the years before almost all other distribution working assumption for 2023-28 is current regulatory period. It also has network companies stopped offering 40 per cent equity finance. the benefit that it avoids compounding defined benefit pensions to their new an intergenerational fairness problem joiners as standard. As a result, we Our dividend policy is to only pay that Ofgem’s regulatory depreciation are much further along the path than dividends after having due regard policies have created in 2015-23, which many of our peers in seeing that cost to available distributable reserves, is set to become even worse if they do burden diminish. available liquid funds and the financial not change course. resources and facilities needed to But there are still some obligations to enable us to carry on our business Once costs have been added to the meet to those employees who were for at least the next year. The level RAV, they must be paid back over time. offered those benefits at that time. This of dividends paid is set to maintain The technical term for them being paid plan includes the cost of our final salary sufficient equity in the company so back is regulatory depreciation and, scheme in line with objective actuarial as not to jeopardise its investment until they are paid back, interest must calculations and the outcome of the grade issuer credit rating. be paid in the form of the cost of capital. most recent triennial review conducted with the trustees, along with the cost Over 2015-21, we have so far paid Ofgem’s current policy is that new of our defined benefit scheme (which £322m in dividends.1 Over the same investments will have a regulatory does not require actuarial calculations period £996m was reinvested into the depreciation period of 45 years. We because our contributions are fixed, business. These dividends are largely use this standard assumption for the and which is set in line with similar, retained within the UK group. In the first assessment of financial risk that Ofgem efficient, private sector organisations). six years of this regulatory period only has asked us to undertake. The final salary pension deficit repair £150m was paid to our shareholder. element of our cost allowances will be However, we also believe that this trued up by Ofgem to the actual values, Northern Powergrid and our ultimate long regulatory depreciation period which will depend on factors such as parent company, Berkshire Hathaway, disproportionately pushes the cost of changes to interest rates and investment have a responsible approach to tax. decarbonisation onto future generations performance. We are classified as having a ‘low’ risk because those costs will stay in our profile with HMRC and, while we do financial asset base for a long time, During 2023-28 we will efficiently not pay extra tax unnecessarily, we during which they will attract inflation manage the pension deficit and do not operate aggressive corporate and a return, which compounds over the avoid a stranded surplus accruing tax-planning schemes or artificial long term, to increase the amount that in the scheme. structures designed to reduce UK tax is ultimately charged to customers. In payments by exploiting complex tax and of itself, there is nothing wrong with loopholes. We manage our tax affairs this mechanism. It’s an appropriate part transparently and in a way that is of financing a long-term business. But Investment is essential to compatible with the requirements for it is essential to strike the right balance. support the transition to HMRC’s low-tax-risk classification. Under these circumstances, a shorter net zero. Our investor’s regulatory depreciation period would long-term outlook and prudent financial The tax costs included in this plan use enhance intergenerational fairness and policy gives us the financial stability to the methodology that Ofgem uses to make the sector more stable over the fund the ambitions set out in this plan. calculate appropriate allowances. long term. The longer the depreciation Louise Bennett period, the greater the cost burden that Treasurer falls on future generations. We set out
1. £138.8m Northeast; £183.4m Yorkshire.
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Delivery – Financing
We do not use excessive debt But this can be costly to reverse in the Taking Ofgem’s current working finance or risky financial future, for example because debt is assumptions for the relevant financial instruments, so our business is more expensive to buy back in the open parameters and our plan, our business robust to risks. market once it has been issued. would pass Ofgem’s credit tests in the 2023-28 period. We have an obligation to maintain We have assessed ourselves against a an investment-grade credit rating – threshold of BBB+ or Baa1 for the credit In annex 7.5 Credit metrics and annex which in our case means maintaining a tests set out in this business plan. This 7.2 Financing we provide a set of more BBB- or higher rating with Fitch Group allows a modest amount of clearance detailed financial projections, results and S&P and a Baa3 or higher rating compared to the very bottom of the based on our actual (as well as notional) with Moody’s. In practice we target a investment grade range, and helps debt costs and equity structure, give higher rating, of A- and A3, because avoid the risk of unexpected more detail on our underlying analysis, this provides the business with financial circumstances pushing metrics below and provide more background on the flexibility in unexpected circumstances, acceptable levels. The table below credit rating process (including the and also for potential major increases illustrates the results of this approach for qualitative factors that rating agencies in investment requirements, such as each of the key debt financial ratios, can also take into account). those associated with decarbonisation. on the basis of the ‘notional company’ Targeting a lower rating would mean that Ofgem uses to normalise issuing more debt finance (and paying differences across companies. the equity this replaces as dividends).
Figure 1: assessment of credit metrics (notional company basis)
Key: 2023-28 average credit ratings Northeast Yorkshire
A Opening gearing 60.00% 60.00% BBB Funds from operations (FFO) 3.92x 3.78x Strained interest cover (including accretions) FFO interest cover (cash interest) 4.45x 4.28x Adjusted interest cover ratio (AICR) or post maintenance interest cover 1.46x 1.45x ratio (PMICR) Nominal PMICR 2.08x 2.08x FFO/net debt 11.70% 11.00% Retained cash flow/net debt 9.80% 9.10%
Figure 2: financial stress test scenarios
In support of our overall assessment of our financial risk, we stress-tested the business against short- and long-term risks using scenarios that Ofgem specified. Scenario Stress tests Interest rate ±1% compared to forward implied rates As Ofgem’s cost of equity is too low, as per the base case in each year (for some of our underlying credit metrics risk-free rate (RFR), London interbank are likely to fall below the investment offer rate (Libor) and iBoxx inputs) grade threshold, especially in certain ±1% in each year stress test scenarios. However, under all CPIH the scenarios, taking Ofgem’s current Retail Price Index – CPIH divergence ±0.5% from assumed wedge, working assumptions for the relevant applied to either RPI or CPIH financial parameters and our plan, our Totex ±10% business would pass Ofgem’s credit test in the 2023-28 period. We set out Return on regulatory equity ±2% compared to base assumption the full results in our Credit metrics and Proportion of inflation linked debt ±5% financeability annex (7.1).
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Delivery – Customer Bills
Balancing ambition with affordability
Our stakeholders have been clear about the need for decarbonisation and investment, but they also expect us to focus on affordability – our plan strikes this balance.
Our plan proposes a 36 per cent Customers pay for some of today’s children and young adults from increase in investment to enable the costs of investing in and having to bear an even greater portion of decarbonisation for a modest five maintaining our distribution the burden of transitioning to net zero. per cent increase in customer bills. network immediately, but a large With a shorter regulatory depreciation This would take the average domestic portion will be paid for over a much period, customers would stop taking customer bill to around £94.40, an longer period. a payment holiday, and would finish increase of 10p per week. In this section paying for today’s investments sooner. we explain how the bill you pay is made Our plan for 2023-28 will see us spend This would avoid future generations up and the key choices that influence it. over £642m p.a. to open up all the funding as much growth in our financial credible pathways for decarbonisation, asset base. Most of our customers will never see improve the performance of the a bill from us. Instead they receive a network, and deliver an enhanced Our customer bill also includes a much larger bill from an electricity service everywhere else. This is about a range of other costs. supplier that charges for everything third more than we invest each year at – including distribution costs but also the moment. A customer bill also comprises: the generation of the electricity used by customers, transmission costs, Not all of our costs are paid immediately — corporation tax – where the rate is a range of environmental and social by customers. About 71 per cent of increasing from 19 per cent today to programmes and the costs of the what we spend relates to investment 25 per cent over 2023-28; electricity supplier itself. in equipment that will last for anything — a return for investors (those equity from several years right through to and debt investors who are funding For the average domestic customer our several decades. Because of that, the 70 per cent of cost that is not charges represent about £90 per year, those costs are recovered in your bills recovered immediately); or approximately 15 per cent of the total over a long period, called the — the impact of various regulatory electricity bill. regulatory depreciation period, mechanisms which will be currently 45 years. The other 29 per determined by Ofgem – we have As well as our 3.9m home and cent is paid immediately. assumed these will not have any businesses, we have many other effect on this plan; and types of customer, such as 250,000 The 45 years can be thought of like — various other costs that we have commercial businesses and 30,000 the life of the financial asset, or the to incur, for example our share of industrial customers. More details length of a mortgage. The longer this transmission charges, business on the bill impact for these other financial asset life is, the smaller each rates on our properties and network, types of customer are provided in year’s repayments will be, but the more and our share of the cost of annex 7.2 Financing. interest will be paid over time. running central smart metering data services. Ofgem is currently consulting on how The regulatory depreciation period has our charges should be structured and been increasing over 2015-23, from For further details, please see: who should pay the costs of connecting 20 years to 45 years, under Ofgem’s to our network. We have developed existing policies. This is similar to — Annex 7.1 Delivery strategy this plan based on the current charging allowing current customers to take — Annex 7.2 Financing framework. We will keep our plan a partial payment holiday on new — Annex 7.4 Decarbonisation under review, as the decision Ofgem investments – but, like a payment uncertainty & Ofgem uncertainty makes may mean that our plan needs to holiday on a loan, it stores up mechanisms change. costs for the future. This policy — Annex 7.5 Credit metrics disproportionately benefits the current generation of customers.
While our spend increases because We think this outcome is unfair. It would of decarbonisation, we know we amount to us all agreeing that there is need to keep bills affordable and a need to invest in the decarbonisation ensure fairness between generations. journey, but relying on the next We believe our proposed business generation to pay for most of it while plan strikes the right we take a payment holiday. We believe balance for our customers. Ofgem should shorten the regulatory depreciation period, back closer to the levels last seen around 2015, to support intergenerational fairness, and avoid Owen Sutherland Head of financial planning
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Delivery – Customer Bills
We heard your thoughts on week with our citizens panel and also including the cost of capital that we how our proposals would impact published on our Emerging Thinking think is too low to cover our costs, your bills. website to ensure your voice was and pushing a lot of the costs of represented in our planning. decarbonisation onto future generations We engaged extensively on the level by using 45-year asset lives. If Ofgem of ambition and customer outcomes in Our business plan acceptance testing sets this price control, our charges in our plan and the associated investment surveyed 1,272 customers, with 2023-24 would be about £5 lower than requirements to deliver them (see annex a minimum of 194 from fuel-poor in 2022-23, at £85. 3.1 Enhanced engagement process). In households, to test affordability. order to enable stakeholders to make We also surveyed 227 small and Figure 4 shows what the bill impact informed decisions, we explained the medium-sized enterprise (SME) would be under our proposed financial potential bill impact associated with the businesses and 39 stakeholders. parameters (namely, an appropriate cost various different options being explored of equity), with the issues surrounding from early in the process. The bill impact that results from every regulatory depreciation periods that aspect of our plan, including our load extra costs onto future generations As we moved through the different dialogue with our customers, addressed. This would see our charges stages of the engagement process, is set out in the charts below. increase by about £4.60 in 2023-24, to we continued to explain the potential £94.40. We think this still represents impact on your bills, investment Figure 3 shows what the bill impact extremely good value for everything we decisions and the period in which costs would be under Ofgem’s working are offering. are recovered. This was shared each assumption financial parameters,
Figure 3: Ofgem view – domestic customer bill impact (2020-21 prices)
100 Bill impact (£, 2020-21 prices) 0.64 6.63 0.49 (0.11) 89.80 90 (0.94) 1.82 0.07 85.49 (5.15) (6.25) 80 (1.50)
70
60
50 ED1 bill in ED1: money Revised Decarb. Asset Reliability Remaining Returns: Returns: Future Taxes Average 2022-23 from revenue Resilience and costs for debt equity customers and bill: previous profiling Availability other service pay more pensions 2023-28 years improvements
Figure 4: our view – domestic customer bill impact (2020-21 prices)
100 Bill impact (£, 2020-21 prices) 0.64 94.39 6.63 0.49 (0.11) 4.51 0.07 89.80 (0.94) 90 1.82 (3.37) (5.15) 80
70
60
50 ED1 bill in ED1: money Revised Decarb. Asset Reliability Remaining Returns: Returns: Future Taxes Average 2022-23 from revenue Resilience and costs for debt equity customers and bill: previous profiling Availability other service pay less pensions 2023-28 years improvements
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Delivery – Managing Uncertainty and Risk
Managing uncertainty and risk
As a business we manage a wide range of risks on a day-to-day basis, ranging from the immediate issues that could delay restoration of a power cut through to long-term risks to our asset base that could raise our costs if not mitigated. Part of the rationale of having a regulated, privatised network business is to allocate risks to the regulated company to manage, insulating bill payers and taxpayers from them.
This section of our plan: Our track record on accepting heat pumps being used in homes and and then managing risk is well electric vehicles on our roads that this — focusses on the regulatory established. plan would involve. mechanisms that can be used to mitigate some of these risks; Our track record is demonstrated by But even if uptake is slower than the — sets out our track record of two key pieces of evidence: government currently plans, our plan accepting and managing risk on would not result in wasted money. Even behalf of customers; and — This is the second price control on the slower-uptake scenarios, the — provides an introduction to in a row where we have proposed same assets will still be needed within decarbonisation uncertainty. no additional regulatory uncertainty less than 10 years. A substantial subset mechanisms as part of our of these assets are growing old and will We will manage risks on behalf of business plan. also need to be replaced before then for customers wherever we are best — We are continuing to effectively asset condition reasons since demand is placed to do so. manage the risks in the current growing it will still make sense to renew 2015-23 regulatory period so that them with larger assets. We are proposing no additional expenditure is broadly in line with regulatory uncertainty mechanisms our cost allowances. beyond those our regulator thinks offer good value to customers and should be The pace and pathway of the in place for our whole sector.1 net zero transition is the biggest uncertainty we know about. We will take on and manage all the risks that aren’t covered by these Decarbonising the economy will require mechanisms within the cost allowances significant changes, including to how set out in this business plan. transport is fuelled and buildings are heated. This will lead to electricity Ofgem’s consumer challenge distribution networks being used group gave clear feedback that much more, but we don’t know the companies ought to manage risks. exact end point or timing. For example, we don’t know: In the recent review of transmission and gas distribution business plans, — the rate of uptake of low carbon the consumer challenge group said: technologies such as electric “The weaker performers proposed a vehicles or heat pumps; wide range of additional uncertainty — the extent to which we can leverage mechanisms, in which risks that the DNO-contracted flexibility in our companies were better placed to area; and manage, were passed on to consumers.” — the extent to which peak demand will shift due to price driven This is consistent with our own customer flexibility. understanding of the views of stakeholders and how we can best The investments set out in this plan serve our customers – by accepting and will be needed very soon under any managing risks on their behalf. It is also realistic scenario. consistent with our view that, apart from in truly exceptional cases, uncertainty The costs in this plan are based on the mechanisms that are justified for one level of investment that we forecast will electricity distribution company would be necessary under the government’s be justified for the entire sector. 10-point plan, and on the number of
1. We include in annex 7.4 Uncertainty Mechanisms, a brief summary of the uncertainty mechanisms Ofgem currently proposes; and which Ofgem will keep under review until the end of the price control process.
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Delivery – Managing Uncertainty and Risk
Investing at the level implied by a well-enough designed to ensure the uncertainties, other than the low-uptake scenario would also build sector is not excessively exposed to decarbonisation pathway, that we a growing risk that if the country factors outside of its control, without currently expect to manage on behalf accelerates towards one of the higher distorting investment and operating of our customers. We will do so within scenarios it could become impossible decisions or accommodating poor the cost allowances set out in this plan, for our distribution network to keep network planning. and under the generic mechanisms up. Notwithstanding this, we set out that cover all risks, unless Ofgem more on how the cost forecasts in this Whatever the exact suite of develops additional mechanisms for plan relate to uncertainty over the pace mechanisms, we also expect that a the sector ahead of the price control and progress of decarbonisation in our backstop mechanism may well be being finalised. Potential sector- annex on managing uncertainty over necessary to avoid the risk of major wide mechanisms are being actively decarbonisation pathways, see annex under- or over-funding. This could considered by Ofgem in some of these 7.4 Decarbonisation uncertainty and easily be achieved by leaving in place areas, and if they are put in place they Ofgem uncertainty mechanisms. the existing reopener for significant will be applied to our plan. As well variances in load-related expenditure as the above risks, we also expect to Uncertainty mechanisms will compared to allowances, calibrated manage a broad range of unknown also be put in place to manage so that companies cannot win or uncertainties within the cost allowances unexpected eventualities. lose excessively from factors outside we set out, provided that none of these their control. risks become critical enough to trigger Our regulator has decided that there will Ofgem’s backstop mechanisms. While be uncertainty mechanism(s) in place We will take into account the design of we cannot know in advance where in this area to adjust cost allowances any finalised uncertainty mechanisms these risks will emerge, it could include as more information becomes available that our regulator sets out later this year, similar risks to those that materialised in during the 2023-28 regulatory period. in our final plan. the 2015-23 period, such as significant The design of the mechanism(s) is unanticipated investments that we made still being developed by our regulator We also expect to manage a in cyber defences, and our accelerated and will depend on how much of the broader range of uncertainties. and extended programme of flood decarbonisation pathway is funded defences to mitigate growing extreme through baseline cost allowances but The table below illustrates with weather risks, all of which we managed either way the mechanisms need to be examples the range of the known within our cost allowances.
Figure 1: examples of risks we expect to manage within the 2023-28 period
Risk Description Public and employee safety We have an extensive electricity network in close proximity to the public and that our employees also need to work on. The legal framework for managing these risks exposes us to potentially major fines if we fail to do so appropriately.
Employment law and+ image taxation and quoteChanges in employment law, or new legal judgements on unclear areas, can lead to Keith Noble-Nesbittsignificant changes in employment costs, as can changes in taxes such as employer national insurance contributions.
Type defects Specific assets can have defects, which make them more susceptible to failure. Where these emerge, we may need to accelerate replacement.
Diversion requirements The majority of our assets are sited on other people’s land, with specific rights of tenure. We deal with large volumes of requests to move assets which can expose us to varying levels of cost.
Contaminated assets Various historically installed assets carry known contamination risks, such as asbestos or lead paint, that we need to manage and remediate where appropriate.
Metal theft Our assets can be a target for theft, particularly when copper prices rise. This can result in costs to us from asset repair, poor scores on reliability incentives, and from investing more to reduce the risk.
Un-indexed unit cost variations Ofgem plans to implement indexation of certain costs, such as employment or materials costs, instead of its previous approach of providing baseline allowances for average increases. Although allowances for these variations is necessary, the available indices are imperfect and expose us to additional risks.
Refinancing requirements Ofgem sets its cost of debt index so that its expected allowance covers the expected costs of the sector but each company has a unique refinancing profile and is exposed to the risk that its cost of refinancing happens to be exceptionally high.
Northern Powergrid: our business plan for 2023-28 – 199 EXEC SUMMARY TRACK RECORD ENGAGEMENT OUTPUTS ENABLERS COSTS DELIVERY
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Northern Powergrid: our business plan for 2023-28 – 200