Ofgem Regional Energy Strategic Plan policy framework consultation: response from the Energy Demand Research Centre and Sussex Energy Group

Helen Poulter, Timothy J. Foxon, Michael Fell, Siobhán Stack-Maddox, Sarah Higginson

Energy Demand Research Centre and Sussex Energy Group researchers appreciate the opportunity to respond to this timely consultation on the Regional Energy Strategic Plan (RESP) policy framework. Considering the ability of demand reduction to reduce the amount of supply side investment needed, we very much welcome the introduction of regional level coordination and planning, but wish to highlight the following points before responding to the consultation questions individually.

We find that the consultation document is overly focussed on finding supply solutions to meet an expected increase in demand, using a technocratic whole systems approach. Within the consultation definition of ‘whole system’, gas and electricity are mentioned with heat, transport and industry as whole system vectors. However, demand reduction is referenced only briefly as:
– a solution applied after an issue has been raised (paragraph 3.21);
– an input from areas where reduction measures are already in place (paragraph 3.35 and Scotland’s LHEES); and
– an advisory role (paragraph 3.58).
We believe this is a missed opportunity to introduce demand reduction as a ‘whole system’ vector that should be considered before creating demand growth and accompanying supply side projections. Demand reduction measures can have positive impacts on meeting the UK’s net zero target, as evidenced in a recent paper in which a whole-system, bottom-up framework to estimate demand reduction at a country level is applied to the UK.⁵ This showed that a reduction in demand of 52% by 2050 compared to 2020 levels is possible, without compromising citizens’ quality of life. Modelling a regional energy demand reduction strategy to complement the supply and infrastructure solutions in the regional strategic plan is well within the remit of the RESP, and should be considered as a priority to reduce the costs of decarbonisation to the consumer.

The consultation document wording suggests that many of the inputs of the RESP are predicated on bottom-up inputs, particularly from local authorities. However, local authority inputs are not homogenous across Britain; the Scottish Government requires all councils to prepare Local Heat and Energy Efficiency Strategies, and the Welsh Government provides funding for Local Area Energy Planning, but there is no such mandate for England⁶. The consultation document states, ‘as part of Labour’s Local Power Plan, GB Energy will partner with energy companies, local authorities and communities to build cheaper, cleaner power in villages, towns and cities across the country, boosting national energy security’. However, while stating the type of funding and support available, the Great British Energy Bill does not formally indicate the type of application process to access this funding and support. Therefore, this does not address the current equity issues due to the lack of capacity within local authorities, particularly in England, to access future funding and support. There is a danger of the RESP becoming yet another method for outside investors to identify ‘desirable’ regions, thus increasing the current imbalance seen across Britain’s devolved governments and various local authority tiers. We would like to see more consideration of such equity issues in this policy framework going forward.

Much of the RESP framework appears to be repetitive of workstream 1B, product 2⁷ completed in the ENA Open Networks project to standardise processes and create the Distributed Future Energy Scenarios (DFES) and accompanying Network Development Plans,⁸ on which the distribution networks base their load related expenditure plans. It should be Ofgem’s duty to ensure that the processes put in place in the energy distribution business planning frameworks are followed correctly, removing the need to re-introduce these processes at a regional level. If this process has been followed correctly, this micro analysis and inclusion of local level inputs, such as local government data and some ‘other sources’ (Table 2, page 30) is more than is required for a regional plan. Most concerns have been aimed at the inclusion of local authority inputs in network planning – but these concerns are caused by the lack of delivery plans and capability within the local authorities, resulting from limited funding, rather than a problem with the processes themselves. Equally, many local plans include connections for generation, but the networks are not currently allowed to invest ahead of need for an increase in supply, only for an increase in demand. These challenges are due to issues beyond the control of either the networks or the National Energy System Operator (NESO), and would not be solved by moving these planning processes to the RESP. A recent UK Energy Research Centre report highlighted the need for a consistent and appropriately resourced framework for local energy planning across the UK, and for stronger links and feedbacks between these local whole system energy plans, the DFES and ESO Future Energy Scenarios and the new RESP.⁹ The purpose of the RESP should be to coordinate all single-vector plans, such as the Network Development Plans, the DFES, and the transport, water and telecommunications strategies. This would allow the RESP to highlight areas of challenge, such as technological uncertainty or areas of conflict between the different plans. We suggest that further work is needed to clarify what the RESP is coordinating and why.

We would be happy to discuss these points in further detail, so please do not hesitate to contact us.