Electricity distribution network

Our approach will be informed by the terms of reference for the electricity distribution network study (see next tab).

The lower voltage distribution network connects the high voltage electricity transmission network to homes and businesses. Smaller sources of generation and flexibility, such as solar and batteries, also connect to the distribution network. The owners of each part of the distribution network are regulated by Ofgem, which sets the outcomes that must be delivered and the revenues that may be collected.
As the economy decarbonises over the next decade and beyond, electricity demand is expected to materially increase. This increase in demand will mean electricity networks at both transmission and distribution level will need to carry more energy. The availability of capacity on the network, in terms of the volume of electricity it can carry, will be important to maintaining service levels and ensure the system is resilient. Without available capacity new sources of supply or demand will not be able to connect. This could constrain the speed of decarbonisation if, for example, consumers cannot connect electric heating appliances or electric vehicles charge points, or industry cannot secure the level of connection it needs.
Investment to increase capacity is likely to be needed, but the amount could be reduced through further application of non-network solutions, such as the use of local flexibility markets, enhanced use of demand side response and improved use of data and digitalisation.
Government has recently published a Connections Action Plan (jointly with Ofgem), which sets out plans to accelerate connections to the electricity network, and the Transmission Acceleration Action Plan, which responds to the Electricity Networks Commissioner’s report on accelerating electricity transmission network build and seeks to halve the end-to-end build time of electricity transmission network infrastructure. The Commission will take these into account in this study and build on their recommendations.
In making its recommendations, the Commission will consider:

• the technologies and solutions that can make best use of existing network capacity, when and why capacity may need to be increased and how this could be achieved at lowest cost
• how policy, regulations and governance structures can support the delivery of these technologies and solutions in a timely manner to maintain service levels
• how the process of connecting new sources of demand and generation to the distribution network can be further improved, reflecting on existing work by government, Ofgem and industry in this area

The Commission will provide final recommendations to government within the next 12 months. The government has an obligation to respond to the recommendations made.

The lower voltage distribution network connects the high voltage transmission network to homes and businesses. Smaller sources of generation and flexibility, such as solar and batteries, also connect to the distribution network. The network in Great Britain is predominantly owned and run by fourteen regional monopoly Distribution Network Operators, owned by six companies. Independent Distribution Network Operators own and operate some smaller sections of network to newer developments and connect into the distribution network.

The distribution network is regulated by Ofgem, which sets the outcomes that distribution networks must deliver and the revenues that distribution network operators may collect. Ofgem regulates distribution networks through a price control process. The current price control period runs from 2023 to 2028.

Demand for electricity is set to increase as heating, transport and industry increasingly turn to electricity to provide cleaner, more stable and efficient energy. The Commission’s analysis for the second National Infrastructure Assessment sees demand for electricity increasing by 50 per cent by 2035 and doubling by 2050.

This increase in demand will require an expansion of electricity networks at both transmission and distribution level, and therefore additional investment. The government estimates that there is around 60 per cent spare capacity across the distribution network, but this will vary by area and the amount of available capacity by area is not well understood. There are also interactions at the interface between the transmission and distribution network that mean connections to distribution networks can be delayed if there is insufficient transmission capacity to support them.

Investment to create additional capacity on the network will be needed in any scenario but the amount of physical capacity needed could be significantly reduced through further application of non-network solutions, such as the use of local flexibility markets, enhanced use of demand side response and improved use of data and digitalisation.

Failure to ensure sufficient capacity on the distribution network, as well as a straightforward, consistent and timely process for connecting to the network, would constrain the ability of consumers to adopt electric vehicles and heat pumps. It would also constrain the ability of business and industry to decarbonise through electrification, as well as restricting the deployment of distribution-connected generation.

In making its recommendations, the government asks the Commission to consider:

• how use of the distribution network will change as new sources of demand, storage and generation are deployed
• whether the regulatory model, including already proposed future changes, is fit for purpose for identifying and enabling anticipatory investment in the distribution network at the scale required to facilitate the connection of new sources of supply and demand, and how it may need to evolve to deliver this investment at pace
• the role of network and non-network solutions in delivering the capacity needed at lowest cost, and the policy, regulatory and governance changes that could be needed to unlock these solutions
• the role of data and technology in managing the network efficiently
• the role of different parties, including Distribution Network Operators, the Future System Operator and Regional Energy Strategic Planners, in the process of connecting new sources of generation to the network, as well as new sources of demand, including low carbon technologies such as heat pumps and electric vehicle chargers. This includes the scope for standardisation across DNOs
• the interaction with available capacity on the transmission network and how this may be impacting connections to the distribution network, and how these interactions could be best managed
• whether any changes to the planning system in England could support faster delivery of needed distribution network infrastructure.

The Commission may recommend that the government works with Ofgem to take action on particular issues, but will not reopen the current distribution network price control as part of this study. The Commission will not provide an assessment on the overall level of investment required to upgrade the distribution network to meet the requirements of net zero.

The Commission is asked to take into account and build upon the government’s recent Connections Action Plan (joint with Ofgem) and Transmission Acceleration Action Plan.

The study should provide a final report in around 12 months. Any recommendations made must be in line with Commission objectives, including the fiscal and economic remits provided to the National Infrastructure Commission.

A call for evidence is the first step to building this evidence base and will be supported by broader analysis and stakeholder engagement over the course of the study. (Please note: this call for evidence is now closed)

Although the following section includes targeted questions, the Commission would also welcome general responses. It is not expected that respondents will answer all questions. Please answer only those questions where you have evidence that you think it is important for the Commission to consider as part of its assessment.

The call for evidence sought responses to the following 11 questions:

Call for evidence questions

Policy, regulation and governance

• Does the current RIIO-ED2 price control do enough to enable required investment in additional capacity? What changes should be considered for the next price control period (RIIO-ED3) to ensure that required investment is identified and enabled?
• Does current planning policy impede the deployment of distribution network upgrades? If so, what solutions could alleviate this? Please provide examples.
• To what extent can a move to more strategic planning of the network at transmission level be replicated for the distribution network? What would be the benefits and costs of doing so? In answering this question, please consider the interaction with forthcoming changes to strategic energy planning, such as the introduction of Regional Energy Strategic Planners.
• To what extent will making the distribution network fit for net zero also help ensure that it is adapted to a changing climate? Are there any potential conflicts between meeting additional demand and adaptation, or any additional steps required to ensure adaptation is effective?
• Are there any other ways in which policy, regulation and governance could be improved to deliver a resilient electricity distribution network fit for net zero?

Technologies and solutions

• What solutions could be used to provide additional capacity without new network investment? Does the current price control do enough to encourage non-network solutions? Please provide evidence of their real world or potential impact on avoided network investment.
• What role could digitalisation and data play in supporting efficient management of existing capacity and targeting of investment in new capacity? Are there examples of where the benefits have been realised through trials or examples used in other markets?

Conntecting to the distribution network

• What barriers or delays are currently being experienced in the process for managing connections to the distribution network? Why do these occur? To what extent are these issues likely to be addressed by the government and Ofgem’s Connections Action Plan? Please provide specific examples, differentiating between different users (e.g. domestic and non-domestic demand, distributed generation, etc.)
• How does transmission network capacity cause delays in connecting to the distribution network and what is the scale of the challenge? How far are these issues addressed by transmission network policy, particularly the government’s Transmission Acceleration Action Plan? Please provide examples, where possible.
• How could processes requiring contact with, or work from, the distribution network operators be improved? Is there a case for more standardisation of processes between network operators to improve the customer experience and, if so, where would standardisation be most beneficial?
• What best practice examples exist of network operators improving processes and information for customers looking to connect to the network (either for demand or generation purposes)?

How to respond

Please provide sources and references, examples, data and evidence to support your responses where possible. We encourage responses to be as succinct as possible and to be no longer than ten pages in total (not including supplementary supporting evidence).

Responses should be sent to electricitydistributionstudy@nic.gov.uk by 10 May 2024. (Note: this call for evidence is now closed).

Evidence received will be reviewed by the Commission. If further information or clarification of any evidence submitted is required, the Commission Secretariat will contact the evidence provider.

The Commission is not planning to accept responses to the call for evidence in hard copy. Please contact the Commission by the email address above if this poses a problem for your response. Representative groups responding to this call for evidence are asked to give a summary of the people and organisations they represent, and where relevant who else they have consulted in reaching their conclusions when they respond.

FoI and privacy statements

There may be occasions when the Commission will share the information you provide, including any personal data, with external analysts. This is for the purposes of call for evidence response analysis only. The Commission’s privacy policy can be found here. We may also publish any responses received to this call for evidence, excluding personal data. However, information provided in response to this call for evidence, including personal information, may be subject to publication or disclosure in accordance with the Freedom of Information Act 2000 (FOIA) or other relevant legislation. If you want information that you provide to be treated as confidential please be aware that, under the FOIA, there is a statutory code of practice with which public authorities must comply and which deals, amongst other things, with obligations of confidentiality.

In view of this, it would be helpful if you could explain to the Commission why you regard the information you have provided as confidential. If the Commission receives a request for disclosure of the information, it will take full account of your explanation, but cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on the Commission.

The Commission is subject to legal duties which may require the release of information under the Freedom of Information Act 2000 or any other applicable legislation or codes of practice governing access to information.