As utilities begin to move to a low-carbon economy, the issue for network companies is to how cope with decentralised and renewable generation and intelligent metering without disrupting customer service and supply – and potentially their own reputations.
Ofgem has created a regulatory framework (known as RIIO – Revenue=Incentives+ Innovation+Outputs) that rewards companies that successfully handle this transition. This incentivises the investment and innovation needed to make a low-carbon economy possible and deliver better services for network customers. It will also encourage distribution network operators to engage with key stakeholders and reduce the risk of any potential reputational fallout.
As one of the four winning bidders to year one of the LCNF, Western Power Distribution agrees there could be potential benefits, although it is still early days. “It is unclear at this stage whether there will be a reputational benefit, but as one of only four projects, it is obviously rewarding to be recognised for our innovative work to facilitate future low-carbon networks,” says Phil West, WPD’s policy manager.
This article was written by Nicholas Chrysanthou, energy consultant analyst at Alva and released in full on Utility Week.
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