Memorandum submitted by the Energy Networks
Association (ENA)
INTRODUCTION
1. ENA is the industry body of the licensed
electricity and gas transmission and distribution companies in
the UK. We welcome the opportunity to provide our views on this
inquiry.
2. It is our view that changes in the fuel
mix should not be contemplated without due consideration of the
impacts on the transmission and distribution networks.
3. One of ENA's core values is minimising
the environmental impact of networks, including environmental
change.
TECHNICAL AND
PRACTICAL CONSIDERATIONS
FOR NETWORKS
4. Renewable generation sources such as
wind will bring a range of changes to networks, including a need
to address stability, intermittency, security and plant margins
issues. At distribution level there will be an impact on how networks
have to be designed and operated, potentially transforming them
from largely "passively" managed to more "actively"
managed systems. The ENA recognises that this is technically possible
but the changes will require time to research, prove reliably
in the field and then to build into the networks. There will also
be a concomitant requirement for investment.
5. Development of nuclear power or new forms
of large-scale centralised generation (including gas and coal)
plant will have implications for the higher voltage transmission
networks through the location and design of new power stations.
There could be considerable demand for new or augmented network
infrastructure.
6. There are also increasing pressures on
the configuration of the transmission network arising from the
EU internal market and the effect this will have on interconnection
and cross-border requirements.
REGULATORY FRAMEWORK
7. The regulatory framework for the energy
network companies will need to be adapted to accommodate the technological
developments outlined above. The existing regime has been successful
in removing inefficiencies, resulting in network charges to customers
falling by 50% in real terms since 1990. Additional elements have
been added to the simple RPI-X model to incentivise reductions
in losses, improve quality of supply, and support for distributed
generation and network innovation. However, it will be necessary
to consider whether the current framework of incentives gives
sufficient weight to long-term considerations of the environment
and network development. If not, can it be adapted to accommodate
them or do we need a different, more strategic approach to deliver
the kind of networks which will be required in response to the
long term needs of customers? It will be important for such a
debate to begin now during the current transmission price review
and ahead of the forthcoming gas and electricity distribution
reviews.
FALLING ASSETS
AND SKILLS
BASE
8. The bulk of the existing electricity
transmission and distribution system was built in the 1960s to
meet the needs of a very different electricity generation paradigm.
Principal asset lives are typically 50 years.
9. A considerable deficit is developing
in engineering skills, which may constrain the ability to build
and operate the networks of the future.
SUMMARY
10. Successful deployment of generation
by whatever technology is tied inextricably to parallel developments
in networks. We are concerned that energy policy and how this
is reflected in the regulatory regime for networks does not adequately
deal with the need to synchronise developments in generation and
infrastructure.
28 September 2005
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