Blog by Andrew Stanger, Programme Director RIIO-T3
2024 is certainly going to be a busy year for us all at SP Energy Networks! My focus this year is leading SP Transmission's next price control review and delivery of our RIIO-T3 Business Plan. I’ll take a step back and explain what this means. If you don’t have time to read the full blog, you can click here to head straight to my 3 key points.
Setting the scene
The Scottish and UK Governments have set ambitious decarbonisation targets for Net Zero by 2045 and 2050 respectively. The next decade will be crucial in preparing the grid for the increase in electricity demand resulting from the decarbonisation of society and the economy.
The ESO’s 2023 Future Energy Scenarios highlight one key overall theme – we must act now to achieve a clean, secure and fair energy system for all. If we don’t, a once in a lifetime opportunity will pass us by.
Electricity demand in the UK is forecast to more than double by 2040. To meet that demand we need to plan investment in our network on a scale that has never previously be undertaken, to upgrade what is there already, and increase the capacity of our transmission network to deliver the demand forecast of the Future System Operator (FSO) - soon to be known as the National Energy System Operator (NESO).
Earlier this year we took a massive step forward in galvanising our transmission investment plans by launching contract opportunities worth £5.4 billion - the company’s biggest issued contract opportunity ever.
RIIO-T3 Business Plan
RIIO stands for 'Revenue = Incentives + Innovation + Outputs'. It's a framework used by the industry regulator (Ofgem) to ensure that individual energy network companies, like SP Energy Networks, deliver for consumers: a safe and reliable service; value for money; operate efficiently; innovate and ensure the resilience of their networks.
The ‘T’ in RIIO-T3 refers ‘Transmission’, and the number 3 refers to the regulatory period. Back in December 2019 we published our RIIO-T2 Business Plan which covers the five-year period 2021 to 2026. We’re now just over halfway through the RIIO-T2 period and we’ve started the journey of developing our RIIO-T3 Business Plan, due to be published in December this year.
Our RIIO-T3 Business Plan will set out proposed investment in our transmission network, for the 5 year period, between 2026 to 2031 which will be vital to delivering the UK and devolved governments’ ambition to shift away from fossil fuels to clean energy. It will increase the security of supply of energy, help to protect consumers from the dangers of climate change and will help generate green growth, jobs and investment.
The scale and impact of this plan will be unprecedented, and it will see historic levels of investment in our transmission network.
Stakeholder Engagement
Stakeholders are key to the development of our plan. We have already undertaken a number of internal and external engagement activities, including participating in the 2023 SP Transmission Connections Summit and presenting to our Independent Net Zero Advisory Council (INZAC).
The INZAC are a group of 15 external experts who will provide challenge and specialist input to both the distribution and the
transmission sides of SP Energy Networks. They will be supporting the development of the Business Plan, scrutinising both the technical plans as well as ensuring any emerging customer issues are fully considered.
I’d invite you to join us on this journey, and there are a couple of ways you can stay up to date. We’ve recently launched a new RIIO-T3 page on our website which we will update regularly with our progress and opportunities for engagement.
There will be a number of engagement opportunities coming up this year, giving you the chance to shape our proposals. Complete this online form to Register as a Stakeholder.
Next Steps
We have a team of over 100 staff from across our business and external experts working on our RIIO-T3 Business Plan. As an example of the wide-ranging activity in progress is the planning of activities including: climate resilience; environmental policy; cyber resilience; engineering justification papers; cost benefit analysis; data and digitalisation; innovation and financial resilience.
On 13 December 2023 Ofgem published a consultation on their proposed sector methodologies that they will use to apply their framework. The consultation closes on 6 March 2024. Shortly after this date, we will publish our response to the consultation.
If you have any enquiries about our RIIO-T3 Business Plan, please email us on riio-t3pmo@spenergynetworks.co.uk
My top 3 takeaways from this blog are:
- We are developing our RIIO-T3 Business Plan which will be published in December 2024.
- This outlines SPT’s proposed Transmission Network investment for the 2026 to 2031 period (RIIO-T3).
- Stakeholders are encouraged to register, stay tuned on our website and social media for engagement opportunities.