Electricity pylon

Government disputes £330bn price tag for net-zero infrastructure

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The government has disputed claims that as much as £330bn of investment – which will likely be footed by households – is needed by 2050 to ensure the UK’s electricity network will have the capacity to meet the projected increased electricity demand from low-carbon technologies.

A report published in March, commissioned by the trade association for energy infrastructure companies, BEAMA – found that without this level of investment “the prospect of electric vehicles not being changed, heat pumps not having sufficient power, or renewable generation not connecting are real possibilities”.

As part of the government’s net-zero drive, up to 30 million electric vehicle chargers and 20 million heat pumps or hybrid systems could be required by 2050. This could increase electricity demand by more than 70 per cent, according to the report, which was drawn up by the independent not-for-profit group Catapult Energy Systems.

To cater for this increased demand, Catapult Energy Systems said a rapid growth in local and distribution lines and cables is required. Without active mitigation, which could include improving household energy efficiency and introducing network flexibility, an additional 300,000km of distribution cable will be needed, along with 10 per cent to 30 per cent growth in substation numbers, it adds.

The energy regulator Ofgem is responsible for ensuring that the electricity network has the capacity to meet increased demand. In the summer it will set out its draft determinations on the investment plans for the five-year period to 2028 submitted by the local electricity distribution networks (DNOs).

An Ofgem spokesperson said since this will ultimately be paid for by customers “who are currently facing extraordinary pressure on their household bills, we are determined that we get the best deal possible for them”.

According to the BEAMA report, DNOs will need to invest as much as £7bn each year, averaged over the next 15 years, and as much as £15bn per year subsequently.

BEAMA said “substantial acceleration” in investment in the price control period 2028-2033 is necessary. “Planning for this period must start now; delivery affects the whole supply chain, from DNOs to component providers, and adequate scaling up of manufacturing and installation may take years,” it said.

The £330bn figure, estimated by BEAMA, will fund a tenfold increase in existing manufacturing volumes for electricity distribution infrastructure it said will be needed under a worst-case scenario.

To put this into context, the required investment for end-use domestic technologies including heat pumps, electric-vehicle charging and domestic solar power between 2020 and 2050 is estimated to total approximately £80bn. 

However, the ENA, which represents DNOs, said it “did not recognise” these figures. It said flexibility in the network could help reduce costs of the energy system by around £10bn a year. Despite this, it said it supported BEAMA’s calls to establish an electricity supply chain council.

The Department for Business, Energy and Industrial Strategy (BEIS) said BEAMA’s figures “overestimate the level of investment needed in electricity distribution infrastructure”, but that it “recognised the need to ensure that Great Britain has a secure, dynamic energy system for the future”.

It said it would this year jointly publish with Ofgem an Electricity Networks Strategic Framework this year, which will include estimates of the investment required in the onshore electricity network across Great Britain by 2050.

BEAMA said it stood by its figures.

John Parsons, digital and technology manager for the trade body, told E&T that the DNOs “perhaps, don’t want to dig too deeply given the current concerns over energy prices and the cost of net zero”. 

“Our intention in writing the report was to get BEIS and other stakeholders to recognise the size of the challenge facing the supply chain in meeting net-zero demands. Getting such large numbers was not an outcome we had intended or expected, but these figures are upper limits... we are keen to work with BEIS to involve our members in looking for ways to bring these costs down and develop our work to get a clearer investment roadmap for the energy supply chain, facilitating investment ahead of need.” 

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