Local Electricity Network Coordination Group: terms of reference

Strategic context

The Scottish Government has targets to decarbonise heat in a million homes and achieve a 75% reduction in emissions by 2030. In order to achieve these targets, DNOs will need to develop their distribution networks to support the electrification of transport and heat, construction of new housing and industrial facilities. 

Due to the short timeframe available to carry out the distribution network development required to meet net-zero, it is imperative that both industry stakeholders and DNO/IDNOs work together to find solutions to potential network development barriers.

Electricity networks are regulated monopolies and Electricity Transmission and DNOs require business plans to be approved by the regulator Ofgem every five years under the framework known as RIIO (Revenue = Incentives + Innovation + Outputs)

The latest RIIO-ED2 price control began in April 2023 and covers local electricity distribution for a period of 5 years. Each DNO is provided with baseline allowances which are the minimum amount that can be recovered from customers in each DNO’s region. 

In addition to the baseline allowances, Ofgem has introduced a range of Uncertainty Mechanisms for RIIO-ED2 that will allow DNOs to access additional funding to dial investment up or down to reflect changing demands on the grid.

In addition to the RIIO-ED2 outcomes, some industry stakeholders are raising concerns with the connection process, including the time taken to secure connections and the costs involved in securing connections and network upgrades.

In this context, it is imperative that both industry stakeholders and DNO/IDNOs work together effectively to provide robust evidence on the need for investment and develop solutions to any potential barriers to net zero delivery.

In light of the above, the Scottish Government is establishing the Local Electricity Network Coordination Group (LENCG) to bring together Scotland’s electricity networks with representatives from the heat and transport industries to enable greater transparency for all parties and to discuss options for effective ways of working as we transition to net zero. 

Purpose

The purpose of the Local Electricity Network Coordination Group is to identify and address issues that can frustrate or prevent the connection Low Carbon Technologies (LCT’s) like heat pumps and EV chargers to local electricity networks.  

The group will promote transparency between industry stakeholders and DNOs by facilitating clear communication and data flows.

The group will also allow for the identification and progression of solutions to these barriers.

This will provide industry groups with a better understanding of the regulatory landscape that the network companies operate in, recent regulatory changes and how this landscape impacts connecting projects.

It will also support DNO awareness of the commercial challenges faced by their customers when deploying LCT’s in regions across Scotland.

The Scottish Government will create an issues log which will capture all  agreed risks and issues as well as actions being taken to handle these concerns and track implementation of solutions.

Roles and responsibilities

The LENCG will be chaired by Ragne Low, Scottish Government’s Deputy Director for Onshore Electricity. Where the chair is not available, a deputy will be nominated.

Membership will include representatives from across Scottish Government and Industry bodies:

Scottish Government	Transport Scotland	SSEN
SPEN	Independent Networks Association	Warmworks
Energy Saving Trust	Local Energy Scotland	Community Energy Scotland
Highlands and Islands Enterprise	Homes for Scotland	British Property Federation
COSLA	Scottish Futures Trust	MFG
Charge UK	Logistics UK	Network Rail

LENCG members will work constructively to ensure that local electricity networks are an enabler for our just transition to net zero.

Meetings will consist of a group of core stakeholders, with flexibility to include additional stakeholders depending on the subject matter being discussed.

The Scottish Government will provide the secretariat function for the group:

• An agenda will be circulated two weeks prior to each meeting.
• Meeting minutes will be issued two weeks after each meeting.
• An issues log will be maintained to track progress on agreed solutions. 

Scottish Ministers may be invited to attend group meetings to hear updates on progress.

Members must ensure appropriate staff and resources are made available as required, take ownership of their actions and provide progress updates.

Members will identify and agree the actions needed across parties to deliver net zero targets.

Decision making will be made jointly by the Scottish Government, in consultation with LENCG members.

Membership

The membership of the LENCG will consist of representatives from Scottish Government, the Scottish Distribution Network Owners (DNOs) and Renewable Energy Industry Stakeholders.

Key deliverables

Members will reach an agreement on the key issues that need to be addressed to enable electricity networks and industry stakeholders to deliver Scottish Government heat, transport and decarbonisation targets.

Members will discharge any actions assigned to them to address issues above.

Members will contribute to a progress update and a final report that will be shared with Scottish Ministers.

Timing and review

The group will meet every 6-8 weeks for an initial period of 18 months, after which point the requirement of the group will be reviewed.

Meetings will be between 2 and 3 hours in duration.

Accountability, governance and support

The Group is not established on a statutory basis. It is therefore not subject to the formal public appointments process and the requirements of the Code of Practice for Ministerial Appointments to Public Bodies in Scotland. 

Participation in the Group will not be remunerated.

Travel expenses will not be covered.

LENCG members are selected based on their knowledge and expertise of the sector, within meetings they are to act in the interests of the sector as a whole, regardless of individual commercial interests.

Where required, and upon approval by the secretariat, LENCG members may invite guest speakers to support discussions.

The first LENCG meeting will be held in person. To support modern working practises across multiple organisations, the Group may meet virtually via Microsoft Teams. If it is appropriate to facilitate in person/ hybrid meetings this will be discussed by LENCG members.

LENCG meetings will be held in private, however in general, meeting papers, including meeting notes will be made public upon finalisation. Exceptions to this may arise on occasion, with the agreement of the chairpersons. Regardless, the Scottish Government remains subject to Freedom of Information (Scotland) legislation which will apply to all information held about the work of the LENCG.

Members will agree to abide by the following Group norms:

• Attend the majority of meetings.
• Observe good time keeping.
• Take individual responsibility for engaging and completing tasks within their area of responsibility. 

Should a LENCG member be unable to attend a meeting a written update must be provided to the secretariat in good time ahead of the meeting. Members will not send substitutes or forward invites to non-group members without prior approval from the deputy co-chairs. 

The secretariat function will be provided by the Scottish Government for the overall lead group, with the agenda drafted by the secretariat in consultation with LENCG members and subject to the approval of the chairpersons. The Secretariat will endeavour to issue papers and agenda one week in advance of each meeting. 

Communication

The Group will agree any press releases and communication materials. Individual LENCG members must seek the permission of both of the chairpersons to represent LENCG in media releases.