Dear Stakeholder

Please find below the June 2022 edition of the SP Energy Networks ICE monthly newsletter highlighting the important work we are doing to Prepare for Net Zero.

Connections- We are making some changes to the way we charge for connections quotations.

From Monday 1 August 2022 if a customer requests a connection offer from us which is above 250kVA for Demand and 50kVA for Generation, there will be a cost associated with the quotation. This charge is to cover the costs incurred by us for producing the quotation, which historically has been paid upon acceptance. These changes move the timing of this charge to the quotation stage, regardless if the quotation proceeds to acceptance.

Moving forward this cost, known as Connection Offer Expenses, will be payable to SP Energy Networks when applying for a new connection or a modification to an existing connection.

You will be informed at the application stage if a Connection Offer Expense is necessary for us to produce the connection offer.

If it is, then the charge is payable regardless of whether you go on to accept the connection offer.

If you decide that you no longer wish to pursue your application and you notify us in writing within five days of receiving our notification, there will be no charge.

If you decide to cancel after the five day ‘cooling off period’ has expired we may charge you for any costs that we have reasonably incurred up to the point of notification.

Click here for more information.

To attend our Connection Offer Expenses Webinar on Wednesday 20th July at 10:00am please click here.

The closing date for registration is Friday 15th July


Flexibility- CREATING NEW OPPORTUNITIES THROUGH uk’S FIRST FLEXIBILITY DEMAND SHIFT TRIAL

We have successfully led the UK's first trial to shift electricity demand to maximise local network capabilities and allow customers to capitalise on the opportunities from a transition to a smarter grid.

Working with Octopus Energy, customers were able to respond and shift when they used electricity to time slots when the supply of renewable energy was at its highest and help balance the demand of the network in their local community.

The Flexibility Demand Shift Trial builds on our role at the forefront of the flexibility market, which allows for more agile network management by encouraging customers to operate in ways that benefit the network. The increased uptake of low carbon technologies like electric vehicles and battery storage can result in network constraints during busy periods, as well as excess generation at other points. Flexibility provides a smarter way to help address these challenges.

This particular trial, which took place in Dumfries and Galloway and Ayrshire, represented flexibility in its simplest form, with the practical nature of the trial demonstrating fully what is possible with flexibility. The process involved us notifying Octopus Energy during time periods where high generation output was forecasted, who then informed participating customers directly the day before those specific requirements were needed on the network.

The trial demonstrated how simple it was for customers to participate in flexibility markets, which are often seen as overly complex, and how responsive participants were, with 98% of the trial participants* finding the experience beneficial and easy to do.

Almost half (46%) of customers said they would consider managing their energy use five days per week and one in five (22%) would do it three days per week. Every customer said they would be prepared to take action to control their energy at least once per week.

Scott Mathieson, our Network Planning and Regulation Director, said: “This is the first time that flexibility demand shift has been trialled at this scale anywhere in the UK and it’s great to see it’s been such a success. The benefit of managing flexibility in this way is that it allows maximum renewable energy generation to be absorbed locally and the network to be effectively managed at a local level, helping tailor the service to areas and driving communities forward towards net zero emissions targets through increased renewable generation.

“The trial gave us the opportunity to understand customer behaviour and how they responded to near-time signals and serves as an indicator of future potential as we transition to green technologies like heat pumps and EVs, which will increase domestic energy loads.

“Flexibility removes the need in some areas for costly and often-time consuming traditional network reinforcement and allows customers to capitalise on the opportunities arising from a transition to a smarter grid and low carbon future. Our thanks to everyone who took part for their input to helping shape our network management of the future.”

With energy generation managed at a local level in this way, the trial saw 20.2 MWh total demand shift with 1.68 MW average per demand shift event. The demand shift during these trial windows equates to roughly the output from an average commercial onshore wind farm.

Rebecca Dibb-Simkin, Chief Marketing and Product Officer at Octopus Energy Group, said: “We have this amazing power grid which spans across the entire country, connecting every household and every generator in the UK. By tweaking how we consume power, we can make the most of every green electron generated in the UK and bring down costs for all.

“This trial was just the first step proving that people are happy to make small adjustments to help the grid and save cash. With a much larger campaign we would be able to really move the needle towards the flexible energy system we need for a greener future.”

What happens next?

We are leading the way towards a low carbon future and the flexibility trial was an example of our proactive work, collaboratively with industry peers, to deliver innovative energy solutions.

We are one of the industry leaders in the flexibility market, having tendered extensively for flexibility services which has resulted in accepted bids to provide over 700MW - the equivalent of 100,000 electric vehicles charging on the network. We are also the first UK Distribution Network Operator to contract with a third party to provide a reactive power service at distribution level. The partnership with Conrad Energy helped utilise reactive power to solve network constraints in a trial last year, helping customers on the journey to net zero emissions targets.


EV- OUR NEW EV CHARGING SITE AT THE RHUG ESTATE IS OPEN FOR BUSINESS

We have completed work on one of Wales’ largest private electric vehicle (EV) charging sites.

Visitors to the Rhug Estate in Denbighshire can now power up their electric vehicles at rapid EV charging points at the organic farm shop in Corwen, made possible by our £60 million Green Recovery Investment project.

This means cleaner, easier journeys for the thousands of visitors the Rhug Estate welcomes every year. Visitors will now have access to eight rapid charging points for their onward journey through this scenic part of Wales.

The Rhug Estate is the first of many sites we are supporting as part of a wider £61.7 million investment in Wales, England and Scotland to accelerate the UK’s transition to net zero.

We are working in partnership with the Welsh Government to upgrade the country’s electricity network to facilitate the roll-out of EV charging points across Mid and North Wales. When our Green Recovery work is complete, 25 new EV charging sites will have been installed, paving the way for more low carbon journeys.

Liam O’Sullivan, our SP Manweb Licence Director, said: “It’s great to see our work result in such positive change at the Rhug Estate. Making sure visitors can support this valued business using cleaner travel is vital in continuing Lord Newborough’s exemplary record of sustainability.

“It’s essential that the electricity network is equipped to support more EV charging provision around the country if we’re to reach Wales’ goal to be net zero by 2050.

“We hope to see the Rhug Estate become a flagship example of this and look forward to working with the Welsh Government to support its ambitions for greener tourism and travel.”

Lee Waters, the Welsh Government’s Deputy Minister for Climate Change with responsibility for Transport, added: “I’m pleased that we’ve been able to work in partnership with SP Energy Networks to deliver these EV charging points at the Rhug Estate.

“The new facilities will make a real difference to drivers of electric vehicles, meeting the growing need for accessible charging points and giving non-electric vehicle drivers the confidence needed to make the switch.

“This is another important step towards our target of providing one public charge point for every 7 to 11 electric vehicles on the road in 2025.”

SP Energy Networks’ Green Recovery Investment Project will see £61.7 million invested across the UK to support a green recovery from Covid-19. In addition to EV charging, the project is also supporting development of low carbon heating and housing.



WE HAVE STARTED WORK ON A NEW £5.5M SUBSTATION IN DUNFERMLINE TO LOWER CARBON EMISSIONS IN SCOTLAND'S NEWEST CITY

We have started construction of a new £5.5 million substation in Dunfermline – Scotland’s newest city – which will support its new, all-electric Learning Campus as well as new housing developments.

The investment comes from Ofgem’s Green Recovery Fund, which supports green projects that are driving the nation towards Net Zero by enabling investments in major infrastructure to strengthen the network for an all-electric future.

The substation, located near Halbeath Retail Park, will be the first of this scale in Fife for more than 20 years and will support the new Dunfermline Learning Campus being developed by Fife Council and Fife College. The campus will provide state-of-the-art facilities for St Columba’s RC High School, Woodmill High School and Fife College.

The substation will also support major new housing developments in the north-east of Dunfermline.

The increased network capacity provided by the substation will make it easier for people to connect green energy solutions like heat pumps and electric vehicles. It will also help better manage demand on the existing network.

Ross Galbraith, our District General Manager for Fife (pictured above, left), said: “It’s really exciting to be launching a major network investment project like this in Scotland’s newest city, which will support more renewable energy coming on to the grid. Our new substation will make a real difference for residents, businesses and communities alike, supporting them to make the switch to EVs, all-electric heating and a clean energy future.

“Our project will ensure no community is left behind as we deliver a fair and just transition to Net Zero and I’m especially proud that it will power the future education of local people through the city’s new all-electric Learning Campus”.

Dr Hugh Hall, Principal at Fife College, said: “We're incredibly ambitious about what we want to achieve with the Dunfermline Learning Campus. Not only do we want the campus to provide world-class facilities for our students and our partners, we are keen that the building itself reflects the latest developments in low energy and Net Zero.

“Our positive engagement with SP Energy Networks around the new substation, as well as our participation in the Pathfinder Project to achieve the ‘Net Zero Public Buildings Standard’, are key to helping us realise our ambition of creating the first Net Zero tertiary education building in Scotland”.

Councillor Altany Craik, Fife Council’s spokesperson for Finance, Economy and Strategic Planning (pictured above), said: “We continue to work closely with SP Energy Networks and welcome their support and investment which facilitates planned new development in the area”.

Work on the substation is expected to be completed in December this year


OUR EMISSIONS REDUCTION TARGETS APPROVED BY SCIENCE BASED TARGETS INITIATIVE

We are ‘setting an example’ as we reaffirm our commitment to tackling climate change, following the approval of our emissions reduction target by the Science Based Targets initiative (SBTi).

This confirms our targets – which include reducing our own carbon emissions by 67% by 2035 – is in line with what the latest climate science shows is needed to limit global warming to 1.5°C.

This makes us the first of the major network operators in the region to have our target validated by the SBTi to reduce our Scope 1, 2 and 3 emissions in line with science.

We playa key role in supporting the UK’s Net Zero emissions targets by developing the critical infrastructure necessary to support more renewables energy coming on to the Grid, which will help decarbonise energy, heat and transport.

This includes investment in modernisation projects and innovative technologies to reduce carbon output and increase network resilience. Examples include plans to roll out an ambitious 100% electric vehicle transition programme by 2028, while also driving forward the adoption of SF6 free technologies.

We have also committed to reduce energy consumption throughout our substations, depots and operations, and will work across the supply chain to reduce indirect emissions associated with the development of our critical electrical infrastructure.

Guy Jefferson, Chief Operating Officer at SP Energy Networks, said: “It’s so important that we all take meaningful action now to reach the government’s ambitious net zero emissions targets.

“This isn’t just about investing in our network and continuing to lead the way to integrate more clean, reliable and renewable energy into our smart networks – it’s also about changing how we work on a day-to-day basis.

“We’re committed to progressing both, hand in hand, and welcome the SBTi’s approval of our science-based targets, which further underlines our passion and drive to reduce carbon emissions to support a cleaner, greener and better future, quicker, for us all.”

The SBTi is a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). It defines and promotes best practice in science-based target setting.

Luiz Amaral, Chief Executive Officer of the Science Based Targets initiative, said: “We welcome SP Energy Networks' science-based target consistent with limiting warming to 1.5°C.

“The ambition of SP Energy Networks' targets is aligned with the need for the global economy to rapidly cut emissions. This company is setting an example for the rest of its industry, and I urge others in its sector to set their own targets too.”

The transition to a zero-carbon economy is well underway globally and we are continuing to invest in our network and wider business to achieve transformation at the pace and scale required.



THERE’S NO NET ZERO WITHOUT NETWORKS: OUR PLAN TO DELIVER A GREEN FUTURE

Back in December, we submitted our final RIIO-ED2 Business Plan to the energy regulator, Ofgem, that sets out £3.3bn of investment in our electricity distribution network that’s needed to get the UK fit for a green future. Next week, Ofgem will release their Draft Determination which will set out their initial assessment of our plan.

Also this week, in our Transmission business, we're expecting the publication of National Grid ESO's Holistic Network Design (HND), that will set out the onshore and offshore transmission network infrastructure and investment needed to deliver a pathway to the UK and Scottish Governments' 2030 offshore wind targets of 50GW and 11GW respectively.

In this context - it's going to be a huge week for our business, and indeed, the country as we look to enable the path to Net Zero for all the customers and communities we serve. As a business that serves customers across Distribution and Transmission in Central and Southern Scotland, and our Distribution network in Cheshire, Merseyside, North Wales and North Shropshire - we stand ready to help make this future a reality.

Looking to the RIIO-ED2 Draft Determination

Electricity will be at the heart of a Net Zero future, through electric vehicles and heat pumps – with this being powered by more renewable generation and other new technologies that we’ll have to integrate into the distribution grid.

These changes mean that electricity networks are facing an unprecedented level of change as they look to help facilitate legislated Net Zero emissions targets. As the only Distribution Network Operator to serve all three devolved regions of GB, we also understand that Net Zero will not evolve at the same pace across every of the country and that’s why our plan is designed to enable the ambitions of each of the areas we serve.

Delivering efficiently for our customers and communities

We also recognise that this plan comes at a time when customers will be under pressure from rising energy costs, rising inflation and knock-on impacts from electricity supplier failures.

Despite delivering more than ever before in RIIO-ED2 – the average bill impact for our customers will remain broadly flat over the next five years and reduce in real terms over the next ten years. This cost for the average customer equates to just 30p per day.

Ofgem will release their Draft Determination on Wednesday 29 June. This will kick-off an eight week consultation window where you can have your say on network companies’ plans, and the determination from Ofgem.

We’d encourage you to have your say, and look forward to working constructively with Ofgem to deliver a plan that works for our customers and communities.


Community- INDEPENDENT REVIEW ON OUR RESPONSE TO STORM ARWEN PUBLISHED


After the difficulties suffered by the rural communities that we serve during Storm Arwen, our CEO Frank Mitchell asked the former UK Energy Minister, Rt Hon Charles Hendry CBE, to undertake an independent review of our response and make recommendations for improvement.

The report focuses on how the rural communities we serve were affected, and how our network and operations can become even more resilient for future events of this nature.

Storm Arwen was the worst storm we’ve experienced in decades. Although 96% of our customers were unaffected by the storm, around 189,000 properties were impacted and our teams had to work tirelessly to restore power to these customers, often in extremely challenging weather conditions.

We're proud to say that, thanks to incredible efforts of our employees, partners and support networks - 88% of our customers impacted by Storm Arwen were reconnected in the first 24 hours following the storm and 96% were reconnected within 48 hours. We also moved quickly to proactively recognise the extreme nature of events, the time of the year on the run up to Christmas and offered an extra payment to all customers who were off for longer than 48 hours (in addition to the statutory compensation already due). The first of the network companies impacted by this storm to do so.

Our proactive efforts have been recognised by Ofgem in their report into the industry response to Storm Arwen which was published on 9 June. The report stated:

“We assessed SPEN's response to the storm and considered that further redress was not required as they had already paid an additional £150 to all customers who were off supply for more than 48 hours, reconnected customers sooner and paid out compensation to affected customers more quickly than NPG, ENWL and SSEN.”

With that said, a number of rural customers and communities were without power for more than two days and we recognise the incredible impact this had on these customers. That’s why the findings and recommendations made in this report are so important to us.

We’re committed to learning from our customers’ experiences, and we will always strive to improve everything we do for the communities who rely on us.

Demonstrating this commitment, we were the only network operator to commission an independent report into Storm Arwen – focused on the communities we serve, scrutinising our service to customers impacted during the storm, our operational response, the effectiveness of our communication and the support we provided to rural communities.

As the independent Chair of the Rural Communities Review, Mr Hendry considered:

Our response and communications with rural communities during a major storm event, and what improvements could be made;
Our role in working with local authorities and Resilience Forums during a storm response, and how jointly this could be improved; and
Looking ahead to Net Zero, how network and electricity resilience in rural areas could be improved, to ensure that the balance of costs and resilience is met appropriately.
Mr Hendry’s review was supported by input from Local Resilience Forums & Partnerships and impacted Local Authorities. His work was also heavily influenced by MP/MSP engagement from those that were representing constituents in the worst affected communities.

We are already carefully considering and implementing every recommendation made in the report. Some of these actions will need the cooperation of others to complete. We would like to thank both Charles and all those who participated in the review – helping us to gain a deeper understanding of the issues we face.

It was important the voices of the rural communities we serve were heard in this review, and that we learn lessons from the experience of Storm Arwen in order to improve our response for the future. We are pleased to say that this comprehensive report shows our commitment to making this happen.




Kind regards,

Stakeholder & Community Engagement Team