Northern Powergrid’s chief executive Phil Jones told the Energy and Climate Change Select Committee this week that the company would be calling on Ofgem to fund fewer technology projects and “more whole system projects that look at the effect of customer behaviour” in its response to an ongoing consultation by the regulator into the future of innovation funding.
Jones said that Ofgem is right to refuse funding to projects entered into the Network Innovation Competition (NIC) when clear benefits to distribution customers can not be identified, as this fulfills Ofgem’s statutory remit to protect customers, but this prevents projects that would be beneficial to the whole energy system being funded.
He added that Northern Powergrid’s Customer-Led Network Revolution project, which could lead to £26 billion in benefits by 2050, would not have won fudning from the NIC’s predecessor the Low Carbon Networks Fund if it had been put forward in the last three years of the scheme.
A second project put forward by the DNO was refused funding under the mechanism, but was approved for funding by Innovate UK, which Jones said “rated it as one of the best projects they have ever seen”.
“Our position is more relaxed on ,… we are trying to reinvent the industry. Some guidelines we would like to see relaxed,” Jones added.
Citizens Advice’s policy manager, strategic infrastructure, Simon Moore agreed that LCNF projects have “neglected” consumer impact, with some projects collecting “fairly superficial data” on vulnerable customers which is then difficult to compare with other data.
The UK Energy Research Centre’s director Keith Bell said that not all of the data has been collected in a “scientifically robust way” but added that the LCNF is “one of the rare occasions where people in the industry and outsiders would agree that Ofgem has done a good thing”.
Last week the Energy Technologies Institute (ETI) called for the funding competition for network innovation projects to be opened up to third parties, saying this would provide alternative routes to market for outputs.