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I want you to facilitate the whole energy system of the future – innovating to meet the challenges ahead

In this section, we look to the future and the need for all parts of the energy system to work together more effectively. We talk about our role in making this happen, the work we’ve already started, and the importance of innovation.

I want you to facilitate the whole energy system of the future – innovating to meet the challenges ahead 

We are uniquely placed to drive decarbonisation and digitisation of the gas industry.

We'll play a key role in delivering a sustainable whole energy system for the future.

Our definition of the whole energy system includes the interactions and solutions between gas, electricity, transmission and distribution, whilst also taking account of the impacts of the heat and transport sectors.

What have you told us?

You've said that you want us to take a leading role in driving and enabling the energy transition.

However, we feel there are only certain aspects, where we feel best placed, to do this.

For other aspects we should be collaborating and facilitating. You also want us to be innovative about how we meet the challenges involved, in particular the ones around decarbonising heat.

What will we deliver?
  • We'll lead on determining what the options are for Gas Transmission for the future decarbonisation pathways.
  • We'll lead the development of the Gas Markets Plan the development of changes to market codes and frameworks, enabling new fuels and participants to operate and enabling the decarbonisation of heat.
  • We'll lead innovation across the industry, working with other networks and industry partners to explore solutions in whole energy assets and markets to deliver consumer benefits.
  • We'll facilitate industry conversations to understand the most efficient options for the future whole gas system networks, market and frameworks.
  • We'll collaborate with the gas distribution networks on the options regarding the transportation of Hydrogen.
  • We'll invest in skilled people so we can respond effectively to lead regulatory change and also anticipate future regulatory developments and how these might affect you and our network.
  • We'll continue to invest in our IT systems, making sure they are fit for the future and enabling you and gas consumers to benefit from digitisation.
  • We'll replace our current balancing and capacity system ‘Gemini’, making sure it is adaptable for change.
What will it cost?

We're committed to investing 0.75% of revenue (~£6m p.a.) in business-as-usual (BAU) innovation.

We also believe that delivery of innovation on decarbonisation and digitisation should be funded through an innovation incentive allowance.

We believe in a regulatory framework that enables and incentivises networks to collaborate and work together and make changes easily when policy decisions are made.

These plans may have to be adapted as there is still uncertainty about how to decarbonise the energy landscape and about the future direction for the gas industry.

Overall, to deliver on our proposals in this chapter, we plan to spend on average £26.8m each year with a total spend during RIIO-2 of ~£133.9m.

Of this ~£30.9m, we're proposing will be through an innovation incentive allowance and is part of our non-controllable pass-through costs.

This is an overall increase from our RIIO-1 annualised spend which was on average £17.7m. The change is mainly due to a forecast increase in expenditure on our capex costs relating to the Xoserve-Gemini replacement.

This chapter’s expenditure accounts for 3% of the overall RIIO-2 expenditure.

Your feedback matters

Your feedback on our draft business plan is important to us. We want to make sure we take account of a broad range of views as we develop our plan.
 

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