A vision for Scotland’s electricity and gas networks DETAIL 2019 - 2030 A vision for scotland’s electricity and gas networks 2 CONTENTS CHAPTER 1: SUPPORTING OUR ENERGY SYSTEM 03 The policy context 04 Supporting wider Scottish Government policies 07 The gas and electricity networks today 09 CHAPTER 2: DEVELOPING THE NETWORK INFRASTRUCTURE 13 Electricity 17 Gas 24 CHAPTER 3: COORDINATING THE TRANSITION 32 Regulation and governance 34 Whole system planning 36 Network funding 38 CHAPTER 4: SCOTLAND LEADING THE WAY – INNOVATION AND SKILLS 39 A vision for scotland’s electricity and gas networks 3 CHAPTER 1: SUPPORTING OUR ENERGY SYSTEM A vision for scotland’s electricity and gas networks 4 SUPPORTING OUR ENERGY SYSTEM Our Vision: By 2030… Scotland’s energy system will have changed dramatically in order to deliver Scotland’s Energy Strategy targets for renewable energy and energy productivity. We will be close to delivering the targets we have set for 2032 for energy efficiency, low carbon heat and transport. Our electricity and gas networks will be fundamental to this progress across Scotland and there will be new ways of designing, operating and regulating them to ensure that they are used efficiently. The policy context The energy transition must also be inclusive – all parts of society should be able to benefit. The Scotland’s Energy Strategy sets out a vision options we identify must make sense no matter for the energy system in Scotland until 2050 – what pathways to decarbonisation might targeting a sustainable and low carbon energy emerge as the best. Improving the efficiency of system that works for all consumers. our building stock is one example of these “low Our electricity and gas networks form the regret” actions, and is something that we have backbone of Scotland’s energy system. They made a national priority. provide us all, from individual households to We also need to identify the quite distinct energy intensive industries, with an essential challenges in different areas of the country, service – the means to receive the reliable and and the different ways of solving them. For affordable energy which is a prerequisite for instance, developing the electricity networks any modern society and economy. in remote areas and connecting our island The Energy Strategy is built on three principles. groups will need different thinking and These are designed to ensure that the energy approaches to the coordination of electricity system in Scotland supports our ambitions to and gas in densely populated urban areas. decarbonise our economy while delivering Finally, the Scottish Government has been economic growth and ensuring that everyone supporting community and local energy for is able to benefit: over a decade and will continue to do so. • a whole system view Balancing supply and demand locally can ensure that networks are used efficiently, and • an inclusive transition can provide important benefits for everyone in a community. Our targets to ensure that there • smarter local energy models. are 1 GW of community owned renewables by These principles will guide energy policy in 2020, and 2 GW by 2030 reflect our desire to Scotland over the coming years, shaping our support smarter local energy systems. decisions across the whole energy system – However, the way the gas and electricity in areas such as heat and energy efficiency networks are regulated and funded today provision, and decarbonising transport. means that it is difficult for communities to The “whole system” principle is reflected in our benefit from the value that they can provide to target to meet 50% of energy demand across the wider system. This is a barrier that we want heat, transport and electricity from renewable to see removed, providing opportunities for sources in 2030. It will allow us to respond innovation and local benefit to emerge across flexibly to new evidence about the best ways the country. to decarbonise the energy system. A vision for scotland’s electricity and gas networks 5 Living up to these principles will depend Above everything, the interests and needs upon several significant changes to the ways of all consumers must be at the heart of any in which electricity and gas networks are possible developments and changes. Our planned, operated and regulated. This is a networks must embody and enable a system challenge facing the UK as a whole, and that consumers want, and which allows them indeed all modern economies. to engage and make informed choices about when and how much energy they use. Many of the policy levers in these areas are reserved – meaning that our historical and Table 1 highlights the principles and priorities close collaboration with the UK Government that we laid out in the Energy Strategy in 2017, and Ofgem, the independent regulator, on and summarised the importance of the gas future options and changes will remain vitally and electricity networks in supporting each. important. Our aim is for Scotland to continue to play a pivotal role in supporting, influencing and enabling decarbonisation across the UK. But our distinct circumstances, geography and priorities mean that there will be uniquely Scottish solutions and approaches, with these likely to vary across Scotland. This means that our networks will need an approach which is flexible and able to recognise and adapt to those variations. A vision for scotland’s electricity and gas networks 6 Table 1: Gas and Electricity networks’ role in delivering the Principles and Priorities of the Scottish Energy Strategy. Electricity and gas networks should support an efficient and effective process of A whole decarbonisation across the whole energy system and should support broad societal system view and economic ambitions. Long term investments must take account of local and regional aspirations for the whole energy system – including transport, heat, energy efficiency and support to the local economy. An inclusive Access to affordable and reliable energy underpins our society and economy. The energy networks are instrumental in providing that access. Decarbonisation will create new transition opportunities, and new relationships between consumers and networks. PRINCIPLES A smarter local energy The networks already support GB-wide national markets for energy. We want to see model the structures and regulations develop to support innovative local energy models, Innovative and to help those models develop and reward communities for managing their energy in ways that support efficient networks and reduce costs. local energy systems Consumer Consumers must be at the heart of decisions made about networks; we need to engagement find new and effective ways to bring consumers and their representatives into what are challenging and technical conversations. This has to extend to those who have and perhaps been traditionally considered unable or unwilling to think about or benefit protection from the changes that are going to take place. The networks have an important role to play in delivering Scotland’s energy Energy efficiency ambitions. They have long term relationships with consumers, and continue to serve the same properties throughout their lives. Energy efficiency can efficiency also lead to direct savings to network companies where reduced demand reduces the need to increase capacity. Our electricity and gas networks link together a diverse range of energy sources, and System security this will continue to be one of the most important roles that they play – especially and flexibility as we move still further towards a decentralised energy system, and the greater demand for sources of flexibility that we expect that to create. Renewable Electricity networks, especially at the distribution level, will need to continue to and low connect renewable generation, with regulation and investment decisions designed to enable this. We will also need changes to enable the gas networks to transport carbon more low carbon alternatives. These changes will be vital to decarbonising heat solutions and transport in particular. PRIORITIES We will need the gas networks to continue to support the most appropriate use of Oil and gas our remaining gas resources during the coming decades. The oil and gas sector’s industry innovation and engineering expertise can help us understand how the existing strengths network infrastructure can support decarbonisation – for example, its role in transporting hydrogen and carbon. A vision for scotland’s electricity and gas networks 7 Supporting wider Scottish Government There are some vital areas of the Scottish policies Government policy which need to be carefully considered by network companies and the The Scottish Climate Change Plan, published regulator over the in February 2018, influences policies across next decade: government. The need to decarbonise, and • Energy Efficient Scotland. We published our ambition to do so in a way that supports our Route Map in May 2018. It aims to the whole of Scotland that shaped our Energy ensure that, by 2040, our buildings are Strategy, shapes this networks vision. warmer, more energy efficient, and use less Our Climate Change Bill, introduced to the carbon. It will also be essential to meeting Scottish Parliament in May 2018, proposes a our fuel poverty targets. Energy efficiency 90% reduction in all greenhouse gas emissions measures can reduce the peak demand by 2050. This will mean achieving net-zero on our electricity and gas networks, emissions of carbon dioxide by the same date. and the number of network upgrades In other words, Scotland will be carbon-neutral. and investments that might otherwise The Bill also requires that the earliest credible be needed – factors that the network date for a net-zero target for all greenhouse companies and Ofgem should consider gases is kept under review. As soon as a target as they discuss the price controls for these date can be credibly and responsibly put in networks. legislation, that will be done. • Local Heat & Energy Efficiency Strategies We expect the network companies to continue (LHEES).