National Grid submits final RIIO-2 business plans
National Grid has today submitted its final business plans to Ofgem for its UK Electricity and Gas Transmission businesses, as well as the System Operator, for the 2021-2026 RIIO-2 period. These plans have been developed following extensive engagement with customers, industry stakeholders, non-domestic consumers and households across the country.
09 Dec 2019
Our Electricity Transmission plan has a baseline totex spend of £7.1bn over the five years. It assumes connection of 15.3GW of customer capacity, providing the UK with clean power and flexible storage, as well as continued investment to maintain reliability and resilience. Our Gas Transmission plan has a baseline totex spend of £2.8bn over the five year plan. It assumes an increase in asset health and cyber related investment, as well as a programme of work needed to test and prove hydrogen conversion options. The baseline spend, under our financial framework, would see consumer bills reduced slightly in real terms for both Electricity and Gas Transmission.
The plans include the financial framework that we believe will be necessary to incentivise the investment required to maintain and build the flexible grids of the future. We provide more evidence to demonstrate why we believe a 6.5% allowed cost of equity is the right level to deliver this in RIIO-2. With a growing societal focus on the speed of decarbonisation and the challenges in meeting the UK's 2050 net zero emissions target, the plans provide options for additional anticipatory investment to facilitate additional wind generation and develop a national EV rapid charging network.
This is an exciting time for the energy industry, and we remain committed to delivering and maintaining world class networks that provide the means to lower carbon emissions, and to meeting net zero targets, that will be to the benefit of all consumers. We look forward to engaging further with all our stakeholders as we explain and debate our plans, including through the open forums in March and April 2020, ahead of initial determinations from Ofgem in summer 2020, and final determinations in late 2020.
For additional information, please follow this link to the RIIO-2 section of our investor website.
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Notes for editors
Notes to Editors:
National Grid is pivotal to the energy systems in the UK and the north eastern United States. We aim to serve customers well and efficiently, supporting the communities in which we operate and making possible the energy systems of the future.
National Grid in the UK:
We own and operate the electricity transmission network in England and Wales, with day-to-day responsibility for balancing supply and demand. We also operate, but do not own, the Scottish networks. Our networks comprise approximately 7,200 kilometres (4,474 miles) of overhead line, 1,500 kilometres (932 miles) of underground cable and 342 substations.
We own and operate the gas National Transmission System in Great Britain, with day-to-day responsibility for balancing supply and demand. Our network comprises approximately 7,660 kilometres (4,760 miles) of high-pressure pipe and 618 above-ground installations.
As Great Britain's System Operator (SO) we make sure gas and electricity is transported safely and efficiently from where it is produced to where it is consumed. From April 2019, Electricity System Operator (ESO) is a new standalone business within National Grid, legally separate from all other parts of the National Grid Group. This will provide the right environment to deliver a balanced and impartial ESO that can realise real benefits for consumers as we transition to a more decentralised, decarbonised electricity system.
Other UK activities mainly relate to businesses operating in competitive markets outside of our core regulated businesses; including interconnectors, gas metering activities and a liquefied natural gas (LNG) importation terminal - all of which are now part of National Grid Ventures. National Grid Property is responsible for the management, clean-up and disposal of surplus sites in the UK. Most of these are former gas works.
National Grid undertakes no obligation to update any of the information contained in this release, which speaks only as at the date of this release, unless required by law or regulation.