The EIUG submitted in response to the Ofgem consultation on RIIO-3 Sector Specific Methodology for the Gas Distribution, Gas Transmission and Electricity Transmission Sectors.
It recognises that there needs to be a step-change in electricity transmission and distribution network investments across GB to build a more flexible and secure energy system that support the transition to Net Zero at pace. However, With such significant investment needed to increase connection to the networks and transmit and distribute electricity, the potential consumer benefit of avoiding expensive and inefficient network capacity will only become bigger. The EIUG therefore strongly recommends to (re-)introduce a financial incentive, like triads, that would capture this benefit.
Some gas and electricity distribution network operators will have an industrial cluster in their area. An industrial cluster will have unique requirements and circumstances, based on its local geography and needs. The EIUG would like to see this reflected in the price control settlement.
The consultation rightfully points out the number of distinct challenges that will impact on Ofgem’s approach to regulation through the RIIO-3 period and beyond for the gas sector. These challenges are pertinent to gas-intensive industries in the UK. Though the EIUG agrees with Ofgem’s anticipation that there will be no large-scale, systemic changes to the gas networks during the RIIO-3 price control period, the long asset life of manufacturing equipment makes it important to develop the flexibility with this period to manage the strategic uncertainties around the future of gas networks.
Hydrogen will have a role in decarbonising the UK economy and it can provide zero carbon energy for certain energy intensive industries, particularly in those industrial clusters which aim to decarbonise by deploying hydrogen infrastructure, but it will also be needed for dispersed sites.