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DNO Green Recovery Scheme, Decision Document

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DNO Green Recovery Scheme, Decision Document RIIO-ED1 Green Recovery Scheme Publication 26 August 2021 Contact: RIIO-ED Team date: Team: Electricity Distribution Tel: 020 7901 7000 Email: [email protected] The current RIIO price control for electricity distribution (RIIO-ED1) runs from 1 April 2015 to 31 March 2023. In February 2021 we published an Open Letter on the Green Recovery Scheme. This Scheme is aimed at accelerating low regrets, shovel ready network investment under the remainder of the RIIO-ED1 period to stimulate economic recovery and support faster delivery of decarbonisation benefits for consumers, while supporting Government’s climate change ambitions. Following a call for evidence exercise and period of stakeholder engagement, each of the Distribution Network Operators (DNOs) brought forward investment proposals under the Scheme for our assessment and this document sets out our decisions on these. Decision – Decision on RIIO-ED1 Green Recovery Scheme © Crown copyright 2021 The text of this document may be reproduced (excluding logos) under and in accordance with the terms of the Open Government Licence. Without prejudice to the generality of the terms of the Open Government Licence the material that is reproduced must be acknowledged as Crown copyright and the document title of this document must be specified in that acknowledgement. Any enquiries related to the text of this publication should be sent to Ofgem at: 10 South Colonnade, Canary Wharf, London, E14 4PU. Alternatively, please call Ofgem on 0207 901 7000. This publication is available at www.ofgem.gov.uk. Any enquiries regarding the use and re-use of this information resource should be sent to: [email protected] Decision – Decision on RIIO-ED1 Green Recovery Scheme Contents Executive Summary ................................................................................... 4 1. Introduction .......................................................................................... 6 Overview .............................................................................................................. 6 Context ................................................................................................................ 6 DNO Option Selection Process ................................................................................. 8 Next steps ............................................................................................................ 9 Your feedback ....................................................................................................... 9 General feedback ............................................................................................... 9 2. Regulatory treatment of Green Recovery expenditure ......................... 10 Overview ............................................................................................................ 10 Stakeholder responses ......................................................................................... 11 Our assessment ................................................................................................... 12 3. Our approach to assessing the DNO proposals ..................................... 14 Summary............................................................................................................ 14 Approach to assessment ....................................................................................... 14 EV Charging at Motorway Service Areas (MSAs) ...................................................... 16 Appendices .............................................................................................. 17 Appendix 1: ENWL Investment Proposals ................................................ 18 Section summary ............................................................................................. 18 Summary of proposals .......................................................................................... 18 Decarbonisation enablers .................................................................................. 18 Infrastructure development enablers .................................................................. 19 Ofgem assessment ............................................................................................... 20 Appendix 2: NPg Investment Proposals ................................................... 21 Section summary ............................................................................................. 21 Summary of proposals .......................................................................................... 21 EV related proposals (MSAs and strategic road network) ....................................... 21 Ofgem assessment ............................................................................................... 24 Appendix 3: SPEN Investment Proposals ................................................. 25 Section summary ............................................................................................. 25 Summary of proposals .......................................................................................... 25 SP Distribution Proposals ................................................................................... 26 SP Manweb Proposals........................................................................................ 28 Decision – Decision on RIIO-ED1 Green Recovery Scheme Motorway Service Area (MSA) proposals (SP Manweb) .......................................... 30 Ofgem assessment ............................................................................................... 31 Appendix 4: SSEN Investment Proposals ................................................. 33 Section summary ............................................................................................. 33 Summary of proposals .......................................................................................... 33 SHEPD proposals .............................................................................................. 33 SEPD proposals ................................................................................................ 34 LV monitoring .................................................................................................. 35 Ofgem assessment ............................................................................................... 36 Appendix 5: UKPN Investment Proposals ................................................ 37 Section summary ............................................................................................. 37 Summary of proposals .......................................................................................... 37 EV charging at Motorway Service Areas (MSAs) .................................................... 37 Other low carbon technology enablers ................................................................. 38 Ofgem assessment ............................................................................................... 39 Appendix 6: WPD Investment Proposals .................................................. 41 Section summary ............................................................................................. 41 Summary of proposals .......................................................................................... 41 Individual Proposals .......................................................................................... 41 Grouped Proposals ............................................................................................ 44 MSA proposals ................................................................................................. 45 Ofgem assessment ............................................................................................... 47 Decision – Decision on RIIO-ED1 Green Recovery Scheme Executive Summary During 2020 Ofgem worked with the energy networks to develop a collaborative model to tackle the COVID-19 crisis. This approach ensured that the network operators were able to prioritise network reliability and security of supply and the provision of essential services to consumers, while ensuring all staff and consumers were kept safe. Once the initial crisis phase of the pandemic had passed, Ofgem worked together with the energy network operators across the electricity and gas sectors to build on the success of this model and look at measures that could help deliver faster decarbonisation benefits to consumers while supporting a green economic recovery across the country. This model invited the networks to work with their local customers and stakeholders to identify a range of shovel-ready Net Zero related projects that could be brought forward and delivered under the existing price control for the sector, which still has two years to run. In response Distribution Network Operators (DNOs) have collectively submitted over 200 proposals at a total investment value of over £366m. Following an assessment process, we have decided that £301.3m of these investments can progress for delivery under the existing RIIO-ED1 price control. Of this, £126.78m would come from existing network company allowances, with £174.52m being made available through new allowances. The full list of submitted and accepted investment values by DNO is summarised in the following table. Table 1: Green Recovery Proposals by DNO Distribution Number of Value of Value of Existing or new Network Operator proposals submitted proposals allowances (DNO) submitted proposals (£m) accepted (£m) (based
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