Network investment is the key to successful decarbonisation

Decarbonisation targets are driving government policies worldwide, and the energy sector has a big part to play. Enabling the changes required to reduce CO2 emissions will mean both a significant expansion in low-carbon generation reflecting a shift from fossil fuel to renewable sources, and an increased demand for electricity based on a shift towards electrification for heat and transport. This in turn requires increased investment in the energy networks. How funding is provided and the areas in which it is focused varies, but a common theme is the need for investment to ensure the future reliability and resilience of energy networks.

In Great Britain, energy industry regulator Ofgem has put decarbonisation at the heart of its current revenue-setting process. This is reflected in a significant emphasis on investing in networks for the future, with an increase in allowed revenues from previous periods as well as mechanisms to allow for amendments to funding as investment requirements change.

In the US, recent federal packages have put a strong emphasis on network investment. Under the Infrastructure Investment and Jobs Act, around $13 billion has been made available over five years under a range of different programmes for projects to modernise and expand the US power grid. This includes a number of components specifically focused on enhancing reliability and resilience. This funding augments a range of grid modernisation programmes already under way across all US states, although the levels of activity and areas of focus vary significantly.

Whether it is central government funding, local initiatives, or decision making by independent energy regulators, the emphasis worldwide is the same. Leaders recognise the need to invest in network infrastructure to support decarbonisation goals. This should not be surprising, both the growth in renewables and the increased levels of electrification mean a growing reliance on those networks for our future energy security.

To be successful in meeting decarbonisation goals, the pace of change will likely need to accelerate. Networks need to be ready for that change if they are to provide the world class levels of reliability and resilience required to support the demands of users. This requires investment in the networks now, and is why an increase in initiatives such as those in Great Britain and the US are a welcome sight.