Ofgem outlines transformational framework for local electricity networks to deliver clean power and support growth

Ofgem has laid out a blueprint for the landmark electricity distribution price control period starting in April 2028 (ED3"), covering a pivotal period in the pathway to a clean power system by 2030 and laying the foundations for the wider decarbonisation of the economy.

This critical five-year investment period to 2033 will help unlock unprecedented investment to expand access to clean and affordable power in towns, cities and communities across Great Britain.

The ED3 framework responds to the recent recommendations from the then National Infrastructure Commission"s (NIC) review of local electricity networks, the evolution to a far more planned system at the regional level and far-reaching reforms to the connections process.

Ofgem"s new regulatory model will help maximise the opportunities presented, driving critical new investment, speeding up connections, strengthening resilience, and ultimately delivering for consumers both now and in the future.

This refreshed framework will guide the investment and delivery of crucial network services, focussing on four key areas:

• Networks for net zero: A more proactive approach to investment will ensure the networks are ready for a net zero future.

  Companies will be funded and then held firmly to account for delivering the infrastructure needed for our growing demands for electricity.

• Responsible and sustainable businesses: As with previous price controls, we"ll drive network companies to minimise their environmental impact, and deliver excellent customer service, with a heightened focus on support for the more vulnerable customers.

  New measures will ensure that electric vehicle charging points, renewable generation as well as housing and industry can get connected to the local grids in a speedy and efficient way.

• Smarter networks: The digitalisation of the energy sector will be key to a more efficient and resilient system.

  In ED3, distribution network operators (DNOs) will need to enhance their data sharing and processing capabilities, and we will continue to use incentives and funding to drive innovation in how the network companies plan and operate their business.

• Resilient networks: As society becomes more dependent on electricity for its power, transport and heating needs, it is even more essential that DNOs are maintaining and replacing their assets to ensure sure their networks are reliable both for the present and future, and able to withstand future risks such as extreme weather events and cyber-attacks.

SThe scale of the opportunity is clear, and it is vital we take a new strategic regulatory approach, enabling more planned, proactive investment in network capacity whilst ensuring speedier and more efficient connections of new technologies.

We must also continue to consider the evolving roles and responsibilities of the DNOs in the net zero transition, particularly around the decarbonisation of heat and transport and improving energy efficiency.

He added: "Taken together with the wider RIIO-3 programme, these are our most consequential set of price controls that will see the biggest grid expansion in a generation, paving the way towards a clean energy system that supports the wider electrification of the economy." ED3 will see the fourteen electricity DNOs play a key role in delivering some of the biggest changes seen in a generation to Great Britain"s energy grid including:

• The switch to a clean power system by 2030 which will be more dependent on low carbon power sources including a growing number of renewables such as wind and solar, which will need to be plugged into the grid
• More EVs (electric vehicles) are anticipated to hit roads with the Government"s planned ban on the sale of new petrol and diesel cars from 2030
• The increasing electrification of heat with many more heat pumps expected to be installed in homes across the country
• Further anticipated growth of the electricity hungry AI and data centre sectors
• Increased flexible energy use with consumers increasingly using smart technology to time energy use with favourable tariffs
• A greater amount of regionalised planning via new Regional Energy Strategic Plans (RESPs)

Through the ED3 price review process Ofgem will work with DNOs to:

• Provide increased certainty in investment needs, helping reduce costs and supporting investment across supply chains while establishing a sustainable and skilled workforce for the long term.
• Develop innovative solutions and business technologies to improve the day-to-day delivery of network services while meeting the challenges of a clean power system.
• Increase the security and resilience of critical local infrastructure, ensuring high standards of asset stewardship are maintained while developing improved responses to the growing issues of climate related weather disruption and cyber threats.
• Ensure the sector remains financially robust, with stable and predictable regulation enabling the step change in new capital investment to be injected efficiently for the benefit of current and future consumers.