Decentralised Energy

December 2014: The House of Lords Science Science & Technology Committee have been conducting evidence sessions earlier this month for their current inquiry into the Resilience of electricity infrastructure.

Interesting to note that included in the written evidence provided to the Committee is a submission from the City of London Corporation (page 28 onwards). The Corporation’s main point is the “need for greater regulatory flexibility and more targeted investment and calls for better planning of the delivery of capacity in the system.”

The Corporation’s memorandum continues:

• It is clear that its [UKPN’s]  network in London does not have available spare capacity to cope with future demand. This poses risks to future development and refurbishment cycles because developers and property owners are unable to be sure of the availability of electricity capacity. Further uncertainty results from the fact that it can take up to 3 years for substations to be reinforced and installation works completed so as to have sufficient capacity to supply a new building.
• The Corporation suggests that: “Given Ofgem’s existing regime does not incentivise investment ahead of need, new connections generally occur on an ad hoc basis, responding to immediate demand. The difficulty of creating such new connections at the last minute is hampered by the physical characteristics of the City (such as utilities congestion under the highway.”
• The Corporation is also critical of Ofgem’s determination of UK Power Network’s (UKPN) submission to the next regulatory framework period for investment (RIIO-ED1) – as summarised by Ofgem in the following press release. The Corporation states “Ofgem[‘s]  proposed  12% reduction in the UKPN’s overall spending …would mean a loss of money available for investment in central London of around £200 million. This is highly likely to have a significant impact on UKPN’s ability to undertake a suitable level of network asset replacement work in the period 2015-2023. Cuts in investment are likely to lead to more widespread and frequent network outages due to the age of network assets.” Ofgem has in fact put pressure on all distribution network operator’s (DNOs)  business plan submissions, and this drive down in UKPN’s cost proposals would not necessarily mean a direct reduction in investment in central London: it would depend on where UKPN apply savings to.
• The submission continues to highlight what it believes are further critical investment proposals within its territory to electricity infrastructure investment, calling on Ofgem to “reinstate this funding element in its final determination [to UKPN] in December 2014.”

The memorandum references research undertaken by the British Council for Offices which outlines that the forthcoming closure of the UK’s legacy generation plant and lack of available new sources of generation has increased the likelihood of blackouts from 1 in 3,307 years in 2012 to 1 in 12 years in 2015.

The submission makes a number of interesting points including “…the starting point for the verification of any case for investment ahead of need will be a clear overview of available DNO substation capacity in areas of high  development growth. Regrettably this data is currently unavailable Ofgem and the Government should ensure that DNOs make this information publically available. It would be important to consider this data alongside information from developers, market details and Local Authority information.”

The Corporation of London’s evidence have been advised through research they have commissioned including – Delivering Power:The Future of Electricity Regulation in London’s Central Business District – and the Future of London’s Power supply. The Mayor has also written to the Secretary of State raising similar concerns over London’s electricity infrastructure.