The government has insisted its proposed £1.5 billion package of payments to communities hosting grid projects will have only a negligible impact on wider bills, while also admitting it offers only a slightly better than even chance of thwarting delays.
In its response to Nick Winser’s review of transmission planning,the government accepted the electricity networks commissioner’s recommendation that individuals and communities living close to new grid infrastructure should be compensated – a scheme that has been dubbed ‘pounds for pylons’.
Another document outlining the government’s response to a consultation on community benefits for electricity transmission network infrastructure, carried out earlier this year, outlines a mix of discounts for individual customers and wider packages that could be offered to affected localities. The compensation would be paid for by all customers through network charges.
The response proposes offering those living within 200m of new transmission infrastructure discounts of up to £10,000 on their electricity bills, spread over ten years.
Alongside these individual discounts, the response moots a package of benefits for community projects that would be worth £200,000 per km of overhead line, £40,000 per km of underground cable and £200,000 per substation.
It estimates that total discounts for households living in the 44,000-66,000 homes it estimates are located within 200m of the transmission lines planned over the next decade, would work out at around £1.1 billion. On top of that, according to the analysis, the wider community benefits add up to around £430 million.
Factoring in savings, such as reduced network constraints costs and an increase in cheaper renewable generation, about £1 to is added to the average customer’s annual bill over a ten-year period, it calculates.
However, the same analysis shows that this package is only likely to lead to a 59% chance of transmission projects being delayed by less than a year. It estimates that delays would have to be reduced by a minimum of three to five months in order for the proposed package to break even.
The response says benefits will also be on offer to those living near major upgrades of existing transmission infrastructure.
However, they will not be available for underground transmission lines or distribution projects.
Guidance on the discounts and community benefits, which will initially be voluntary but eventually mandatory, are due to be published in the New Year.
The response adds that the design of the community benefits scheme has yet to be finalised and the level of funding will need to be agreed with Ofgem.
Welcoming the government’s proposals, National Grid chief executive John Pettigrew, said: “The new community benefit proposals will ensure local people remain at the heart of the energy transition.”
The community benefits package is a key element of Winser’s broader recommendations, which are designed to halve the average time for delivering new transmission infrastructure from 14 to seven years.