Ofgem to boost investment for local electricity networks: In a bid to support the uptake of small-scale renewables, storage and clean heating and electric vehicles,Ofgem has today revealed there plans to boost investment in local electricity grids.
Starting in April 2023, the energy market regulator has set out its working assumptions on the financial package that will be applied for the next round of price controls for local electricity networks (DNOs).
The new price control for the DNOs (Also known as RIIO-ED2) , are designed to boost green investment.
With this update it will help networks to create more local grids that can balance demand and supply by connecting more small-scale renewables and storage.
It will ensure customers pay a fair price with networks attracting the green investment they ned, as the new prices also aim to bring shareholder returns down.
On average a third lower than under the previous price control- investor returns will be lowered to 4.4% under Ofgem’s new plans.
“Our price control for local electricity networks paves the way for turning Britain’s streets green, unlocking the investment needed to support the UK, Scottish and Welsh Government climate change targets, particularly around the electrification of transport.” said Jonathan Brearley, Ofgem’s Chief Executive.
“We’re driving local electricity networks to help make sure that every watt of energy produced from plant to plug is better used, for example by ramping up their use of battery storage, saving bills and the planet.”
“At the same time, these financial arrangements will significantly cut investor returns to make sure consumers pay a fair price for energy whilst networks attract the investment they need to be safe and green.”
“The proposals outlined today will take time to review in detail.” commented Ross Easton, Director of External Affairs at Energy Networks Association.
“However, as Ofgem states, it is vital that the next regulatory period for the electricity distribution network companies allows the networks to attract the significant investment needed to deliver net zero.”
Ofgem to boost investment for local electricity networks