Energy Bill [HL]

Written evidence submitted by SSE for House of Commons Public Bill Committee on the Energy Bill (EB04)

SSE welcomes and supports the Energy Bill and the measures it includes which will help advance the delivery of net zero and support significant private investment from companies like SSE. Particular areas of positive policy progress which the Bill introduces include:

· Outlining of business models for Carbon Capture, Utilisation & Storage (CCUS) and hydrogen.

· An Offshore Wind Environmental Improvement Package to support the accelerated deployment of offshore wind. Most importantly the enabling of strategic compensatory measures for impacts on the marine environment.

· Establishment of an Independent System Operator, with roles and responsibilities which mirror those of the existing Electricity System Operator.

· The Bill amends the Electricity Act 1989 to, in effect, clarify that electricity storage is a distinct subset of electricity generation as it removes current ambiguities.

There are, however, some key areas where we think provisions in the Bill can be improved or where the Bill offers a timely legislative vehicle to make some critical changes to existing energy legislation.

Planning and Consenting policy in Scotland

 

· SSEN Transmission has a critical role to play in delivering nationally important grid projects by 2030 as the Transmission Owner in the North of Scotland. Processes for securing land rights and consents are a main contributor to delays in delivering grid extensions and upgrades.

· To deliver the grid reinforcements needed to support 2030 offshore wind targets, we will be seeking consent for projects in 2024. With this time timescale to deliver, there are limited opportunities to make changes to energy legislation.

· Planning and consenting is devolved to the Scottish Government, but legislation underpinning the existing regime for overhead lines, by way of the Electricity Act 1989, is UK legislation.

· To reduce the risk of delays to the delivery of transmission infrastructure in Scotland, we are seeking to amend the Electricity Act to remove the automatic triggering of Public Local Inquiries (PLI), which can add years to delivery timelines and need to be avoided to meet 2030 targets.

· Whilst this amendment will remove the automatic trigger, Scottish Ministers will still retain the power to raise a PLI if there are legitimate objections.

· At present PLIs can be triggered on any grounds (irrespective of the basis of objection). The last two PLI’s for transmission projects in our area were triggered by local authority planning committees going against the advice of their own planning officer’s recommendation.

· Given the tight timescales we are working towards for delivery of this critical infrastructure, we see the Energy Bill as the only legislative vehicle available that would deliver the necessary amendments in time to support the 2030 targets.

· We have drafted three proposed amendments which would reduce delays and expedite the consenting process for transmission infrastructure in Scotland, whilst maintaining the option for a PLI, but removing one happening as standard.

Introduction of competition in onshore electricity networks

· The Bill extends the competitive process in the Electricity Act 1989 to enable competitive tenders in onshore electricity transmission networks and offshore transmission operation.

· It is critical that proper safeguards are introduced to ensure roles and responsibilities are clearly defined and the very high standards and reliability of existing network operators is maintained.

· Lessons need to be learned from some of the failures of competition in the energy retail sector to avoid making similar mistakes with critical national infrastructure, the consequences of which would be far reaching.

Heat Networks

· SSE operates 19 Heat Networks across the UK. We welcome the Bill’s focus on regulation and zoning of heat networks, which if enacted correctly will unlock future heat networks development.

· Regulation of heat networks

o We welcome the role of Ofgem (in England, Scotland and Wales) and NIAUR (in Northern Ireland) as the future regulators for Heat Networks. Consideration must be given to how the costs and complexity of regulation are balanced, with regulators fully resourced.

o Providing Ofgem and NIAUR with statutory powers and licenses to conduct activities such as pipe laying, road closures and property access is welcomed, though government needs to clearly outline what this will mean in practice, and the model which it will adopt.

o With regards to an emission target, a fair transition for natural gas in Heat Networks is needed, in line with the recognition that all Heat Networks will be decarbonised by 2035.

· Heat Networks Zoning, the role of Zoning Coordinator, and Exemptions

o We are concerned about the designation of local authorities in the role of Zoning Coordinator. Industry requires clarity as to which level of local government will hold powers, the extent of the powers, how they will be resourced, and how they will work with developers.

o The Bill must not enable Local Government to dictate zoning, without the engagement of developers. We advocate for a partnership model between Local Government and Heat Network developers in the design, development and delivery of projects.

o Clarity is needed on how zoning will work. We would welcome mechanisms to facilitate public sector connections to networks developed and financed by private sector entities.

o We are concerned about government proposals for large buildings to seek exemptions once the design and planning of zoning has taken place, as proposed by DESNZ in proposals for secondary legislation. Exemptions for the large buildings which are designated as key to zoning should be defined at the start of the zoning process.

Statutory Net Zero duty for Ofgem

· SSE supports the amendment passed in the House of Lords giving Ofgem a net zero mandate.

· Ofgem, as the energy industry regulator, has a vital role to play in the transition to net zero.

· For Ofgem to effectively play this integral role it should have a strict requirement to carry out its activities, with explicit reference to net zero targets given the expectation of Ofgem’s role facilitating delivery of the Government’s ambitious policy objectives, e.g., on CCUS and hydrogen.

About the SSE Group

SSE plc is a FTSE-30 company headquartered in Perth, Scotland and with interests across the UK and Ireland, Europe, North America and Asia Pacific. We are a leading generator of renewable electricity, currently building more offshore wind than anyone in the world including what will be the world’s largest offshore wind farm at Dogger Bank. We also build and operate critical electricity network infrastructure in the north of Scotland and central southern England. And we are pioneering new flexible low carbon solutions like carbon capture and storage (CCS) and hydrogen in our Thermal business within the Humber and Scotland. We also provide energy to UK businesses and invest in, build, and connect heat networks and electric vehicle charging infrastructure. In 2021, SSE announced a £12.5bn capital investment plan - through to 2026, creating 1,000 jobs a year, and by 2030 we expect to have invested £24bn in low carbon infrastructure in Great Britain.

May 2023

 

Prepared 23rd May 2023