Scottish Energy Networks Strategic Leadership Group minutes: June 2020

Attendees and apologies

Attending (full attendance):

• Paul Wheelhouse, Minister for Energy, Connectivity and the Islands
• Prof. Keith Bell, University of Strathclyde
• Angus MacIntosh, SGN, Director of Energy Futures 
• Roisin Quinn, NGESO, Head of National Control and Chief Engineer
• Francis Warburton, Ofgem, Director of Energy System Transition 
• Phil Sheppard, National Grid Gas, Director of Transmission Owner 
• Rob McDonald, SSEN, Managing Director of Transmission 
• Scott Mathieson, SPEN, Director of Planning and Regulation 
• Trisha McAuley, Independent Consumer Expert

Scottish Government (SG) officials:

• Neal Rafferty
• Simon Gill
• Anastasia Charalampidou
• Jill Rosie
• Stephen Mckellar

Items and actions

Actions:

• Scottish Government to arrange the third meeting to take place in during August 2020 - SG - due by 8th July
• Scottish Government to prepare and share with members a short paper on skills transition from a networks / energy sector perspective prior to the next meeting - SG - due by 10th August
• Scottish Government to share with members a paper representing a more detailed exploration of the idea of an evidence base for local / devolved government policy - SG - due by 10th August
• SG and NGESO to follow up and explore the potential for using data for Scotland in the ‘Future Energy Scenarios’ as part of proposed work to develop Scottish Whole System Scenarios or to expand the scope of the FES to include regional breakdowns of scenarios - SG - due by 10th August
• set up  a working group to a) develop and agree principles governing regulation and energy network investment in a devolved environment, and b) which will be used to inform a more detailed proposal for energy scenarios SG, with support from members - due by July

Decisions/agreement: 

• members accepted the minutes/actions of previous meeting (January 2020)
• members accepted the ToR, noting minor drafting changes which SG agreed to implement and finalise

Agenda

Ministerial introduction to the session

The Minister welcomed the members to the meeting, and highlighted the importance of this Group on advising SEAB on the key opportunities and challenges facing the networks as we move to net zero. 

He also highlighted the need to ensure that we identify, understand and address the right policy, regulatory, innovation, investment, technical and consumer issues, across both gas and electricity networks.

The Minister reflected on the Covid-19 related challenges, welcoming the actions and commitment of the networks and regulator throughout the past weeks, and noting the importance of moving towards a green recovery and just transition. 

Scottish Government policy update 

Neal Rafferty briefly updated members with a summary of the key relevant SG policy processes and policy initiatives, as well as a short update on wider SEAB and SLG activity. SG officials have agreed to pull together and circulate a short note for members summarising this information and wider activity across the Energy and Climate Change Directorate. This will be provided ahead of the next meeting.     

Initial contributions from participants  

Rob McDonald (SSEN) discussed SSEN’s response to Covid. As a provider of critical national infrastructure, SSEN has prioritised and continued with work which supports a secure energy supply. Rob shared his impression that the crisis has made consumers more keen that we deal with the climate crisis.

Trisha McAuley (Independent) highlighted the importance of putting consumers, especially vulnerable consumer issues and costs, at the front of everything we do during this health emergency.  She commented on the recent, urgent industry code modifications where the industry and the regulator had worked well to alleviate the immediate impacts of Covid.  However, it would be important to consider the longer-term consumer impacts of changes being made at the moment.   

Frances Warburton (Ofgem) focused on the importance of consumers’ and workers’ protection and safety during this crisis, noting too the major operational challenges and the need for collaboration as we continue to work towards achieving carbon budgets. Ofgem knows it needs to consider how regional, devolved and local targets fit together and the need for regulation to respond to these.    

Angus MacIntosh (Scottish Gas) focused on the ways in which energy networks have stepped up to the challenge with no disruption to energy consumers.  He also highlighted the internal processes of reshuffling and refinancing the continuing work within SGN while in the middle of RIIO 2 determinations/arrangements. 

Phil Sheppard (National Grid Gas Transmission) noted that NG Gas Transmission was able to continue all critical activities, thanks to SG’s coordination and guidelines. As a result, these activities remain on track ahead of this winter. He highlighted that clarity is needed on policy and regulation in order to deliver benefits to consumers quickly and effectively.  

Roisin Quinn (National Grid ESO) discussed the importance of efficiently balancing a low carbon system while remaining sensitive to consumer costs. Regulatory, system and policy changes must meet the real challenge of combining effectiveness with ensuring that consumers are part of the process.  She highlighted the new relationships between NGESO and distributed generators, commenting that stakeholders need to remain able to face up the difficulties involved in rapid changes. 

Scott Mathieson (SPEN) noted that summer outages are now being deferred to winter, and need to be managed efficiently. He also commented on the valuable reports by SSE, SP and National Grid’s report on the “net-zero workforce” which address the challenges / opportunities of a green recovery, which were always apparent but have been magnified by the current crisis. He focused on the importance of this Group and other SL Groups, to create a coherent and coordinated policy approach in order to tackle what is ahead.

Discussion of areas of interest 

Devolved Government and regulation 

Ofgem’s Decarbonisation Action Plan drew out some of the issues and initial questions related to devolved government targets and the role of the Regulator that need to be answered. 

Cost drivers and recovery for DNOs differ on a regional level. Ofgem, building on the work around price controls, is considering how to achieve higher degree of cost reflectivity within regions. 

Mr Wheelhouse welcomed Ofgem’s engagement with SG on these issues, while noting challenges involved in giving Ofgem the flexibility that it might require to accommodate different targets.

Important to commit towards meeting Scottish targets at the lowest possible cost, and to share those costs in the fairest possible way.

Keith asked whether the aggregate of local energy plans add up to something that is credible at a Scottish or GB scale. Rob noted that, along  with the other network licensees, they had done considerable work consulting with their own stakeholders to establish what was credible for their areas.

Frances suggested that a key question is: “what does a good local plan look like?” 

It was also suggested that guidelines for local planners might be developed that would include the need for consistency with emissions reduction targets set at successive levels of government.

Keith noted the importance of locational issues. Do local plans give proper consideration to where energy supplies are likely to come from? The correct locational signals need to be given to ensure the right mix of local resources and access to remote resources to ensure low carbon energy supplies with sufficient resilience.

Agreeing the strategic framework and principles that should underpin its work remains a key task for this Group, and will influence a wide range of related discussions and work streams. SG suggested convening a working group, with input from members, to discuss, establish and agree key principles. 

Network charges discussion 

Network transmission charging as a barrier for developers and- given Scotland’s renewable resource potential, Rob expressed concerns about whether the new charging framework would lead to lower or higher charges for renewable generation, particularly wind farms, in Scotland.  

Ofgem believes that, to deliver decarbonisation at lowest cost for all consumers, renewable generation should face the appropriate system costs (there has also been some engagement with BEIS over CfDs and system charging issues). 

Scott commented that there are more issues in play than system costs when it comes to driving location and investment. These include resource, planning, and political antipathy towards certain renewables technologies in parts of the country. 

Simon widened the debate to include connection of EV charge points and heat pumps, noting that SG is considering the system and network costs faced by householders and business to connect these. 

The issue of funding and coordination of gas and electricity networks was raised, as was the way in which gas network costs should be covered as we progress through the transition. 

Scottish whole system energy scenarios

Members were keen to support the effort to create coherent Scottish scenarios and a related “whole system” planning resource for Scotland. 

Trisha McAuley emphasised the need for energy scenarios to be informed by consumer insight.

Mr Wheelhouse encouraged engagement between the Consumer and Networks SLGs as we develop scenarios, to share info and views on costs and benefits. 

There was a good discussion on how and whether new scenarios can usefully build on the range of rich and authoritative information available at the moment – e.g. could we include Scottish specifics within existing FES, and/or start building directly on recently produced DFES? 

Ro agreed to consider the FES, and whether it can be broken down further, in more detail.

There was some discussion around DFES addressing the gas system. DFES should represent a fully integrated consideration of both gas and electricity systems. 

Several members of the group agreed that they would help resource this work, either through financial contributions or the devotion of organisational resources and time. 

This should be careful as ever to capture the importance of the whole consumer journey.

AOB

Professor Bell made closing comments covering the key points of the discussion. He noted that, as well as the main actions, the group might return in due course to consider the value and routes to collaboration on energy system operability issues, and supplier innovation in relation to flexible demand and what that means for the need for network capacity. 

Mr Wheelhouse thanked the members and provided his own short summary of the discussion.