Scotland's energy sector - unlocking investment: joint business plan

Annex: Enabling Infrastructure

Barriers and actions

Barrier #1: Electricity Transmission Networks Require Investment Ahead of Need to Connect Low Carbon Generation Out to 2030

Stakeholders: Scottish Government; UK Government; Ofgem;

• Ofgem to prioritise approval of the needs cases and reopeners for transmission investment to support Scottish Net Zero targets and timeline.
• SG to actively support network companies in building a strong needs case in the context of Scottish net zero targets.
• Clear direction / requirement to build new transmission infrastructure for example through the Networks Option Assessment (NOA) process run by NGESO and RIIO-T2 reopeners.
• Swift planning and consenting decisions by SG and LAs.

Barrier #2: Electricity Distribution Networks Require Investment Ahead of Need to Connect Heat Pumps and Electric Vehicles

Stakeholders: Scottish Government; Ofgem;

• Ofgem to have a statutory objective to support the delivery of net zero that recognises and supports the delivery of SG's net zero target, in particular explicitly considering Scottish decarbonisation targets and pathways for decarbonisation of heat and transport when considering ED2 business plans, Green Recovery funding and other opportunities for strategic investment.
• SG to support DNOs in building business plans and justifying proposals for network investment in the context of Scottish net zero pathway.
• DNOs to place increased emphasis on justifying investment against SG targets within the limits of Ofgem's RIIO-Price control framework.

Barrier #3: Market and regulatory frameworks need to develop to encourage and reward the flexibility needed for a secure and operable net zero electricity system

Stakeholders: UK Government; Ofgem;

• Ensure that market and regulatory frameworks continue to encourage and reward demand side response, energy storage and other forms of flexibility for reducing system costs such as balancing the electricity system or supporting efficient use of electricity systems.

Barrier #4: Gas Networks Across Scotland Require Investment Ahead of Need to Transport Green Gas Including Low Carbon Hydrogen

Stakeholders: Scottish Government; UK Government; Ofgem;

• UK Government to prioritise the development of the safety case, legislation and regulations are in place to allow blending of hydrogen, to 20% by volume, into the public gas networks.
• UK Government to provide clear policy lead and certainty on role of gas networks in supporting net zero.
• Scottish Gas Network Owners (SGN and NGG) to invest in activities to prepare the gas network for 100% hydrogen.

Results

• RIIO T2 business plans allow SSEN and SPEN to deliver £3.4 Bn of investment between 2021 and 2026.
• NOA 6 allows for investments of £3.2 Bn by SSEN and £2.3 bn by SPEN between now and the early 2030s.
• The ability to develop, connect and operate up to 11 GW of offshore wind and equivalent growth of onshore wind.
• Ofgem's Green Recovery Process agrees to additional investment in Scotland's distribution networks during 2021-23 in line with proposed 300M GB budget.
• The RIIO-ED2 process agree substantial investment (2023-2028).
• Ability to connect at least 800,000 Heat Pumps across Scotland by 2030.
• Ability to charge around 900,000 Electric Vehicles in Scotland by 2030.
• Gas blending could facilitate the delivery of up to 4 TWh of low carbon hydrogen to Scottish Consumers and the injection of up to 23 TWh of low carbon hydrogen into the gas transmission system at St. Fergus for use across Britain.

Example projects

• 2021 NOA gives 'proceed' decision to 4 x East Coast transmission interconnectors between Scotland and England with estimated investment value of £7.5 Bn.
• Delivery of interconnectors to Shetland, Orkney and Western Isles to increase connectivity and unlock remote island wind projects.
• Project PACE style optioneering studies to identify around 430 optimal public EV charger connection points. Optioneering would involving £5M of resource investment.
• Replacement of low-capacity customer connections and Low Voltage cabling across off-gas grid areas in Scotland.
• Aberdeen Vision project to initially inject 2% Low Carbon Hydrogen into the gas transmission network at St. Fergus (saving 320,000 tonnes of CO¬2 across GB) and working towards a 100% hydrogen gas network in Aberdeen saving more than 1.2 M tonnes of CO2.