Policy Submissions

S978 - Network costs


“Network Costs” - IET evidence to the House of Commons Committee on Energy and Climate Change.


The costs of electricity networks has reduced by 30% in real terms for transmission and 50% for distribution since privatisation in 1990 but further longer term cost reductions are dependent on significant innovative thinking and investment.   This approach is being incentivised under the RIIO ED1 price control framework now being rolled out by Ofgem. 

The transition to a low carbon economy has major implications for electricity networks. Under some scenarios the amount of transmission network capacity required could increase dramatically while other scenarios place a stronger emphasis on localised solutions and investment in the distribution network.  A transition to smart networks is required to allow the usage of the assets to be maximised. There is very little spare network capacity in many parts of the country and a planned programme of expansion needs serious consideration. The cost of networks should be addressed from a whole systems perspective that optimises costs across the whole value chain from generation, transmission, distribution, energy storage and efficiency of end use. It is important to ensure that innovation and efficient investment is fostered going forward, which will be challenging given shorter term pressures to reduce costs. The industry will require a significant increase in professional engineering and technician level skills, and needs to have sufficient consistency in its regulation to be able to make this investment in its future.

Submission Details Submitted on 26 April 2014 to House of Commons Committee on Energy and Climate Change

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Keywords and Search Terms Electricity networks, Transmission, Distribution, Ofgem, Regulation, RIIO, Smart grid, Smart Metering, Asset management, Innovation, Low Carbon Network Fund, LCNF, Electricity network losses, Embedded generation, Resilience