EVALUATION

AN INDEPENDENT EVALUATION OF THE LCNF
1.5 The DNOs and innovation
Ofgem has initiated its thinking on the roles that DNOs are expected to have in a future
energy system. This is articulated in the recent Ofgem position paper on flexibility 14 . This
document considers the process of DNOs transitioning into Distribution System
Operators. The document highlights a number of challenges the DNO will face during this
process, for example they will need to operate the system more flexibly, have a closer
relationship with the System Operator and have a greater involvement in local balancing.
In addition the flexibility position paper outlines a number of recommendations to facilitate
this transition. It is envisaged that as part of the DSO transition, there will need to be an
increasing focus on DSOs making use of innovative and flexible solutions – such as those
identified in the LCNF and Innovation Stimulus – to help operate the system in the most
cost effective manner.
1.6 The aim of this evaluation project
The overarching aim of this evaluation is to understand the extent to which the aims of the
LCNF have been met in supporting the future development of innovation in the industry.
A key part of this work has been to engage with those who have been involved in the
LCNF, and also with those who have thoughts and views which have helped in the
evaluation process. This has allowed us to develop and provide key insights for each of
the main stakeholder groups. For example:
• Ofgem – the output from this evaluation will inform the decision on the future
governance and funding of the NIC;
• LCNF participants – this evaluation has provided a vehicle for participants to ‘have a
say’ on their experience of the scheme;
• potential NIC participants – the evaluation provides more information for potential
future participants; and
• other industry regulators – other European regulators who may be looking at ways
to stimulate innovation in their own markets.
This evaluation follows on from the study of ‘LCNF learning’ commissioned by Ofgem 15 .
This project produced a summary of project learning and provides a view of the extent to
which the DNOs have been successful in integrating LCNF projects into normal business
practices. We have also drawn on some of the findings of a recent academic study on the
outcome of the LCNF projects 16 .
14
15
16
https://www.ofgem.gov.uk/sites/default/files/docs/2015/09/
flexibility_position_paper_final_0.pdf
Summary of the Low Carbon Networks Fund learning, EA Technology, April 2016
(https://www.ofgem.gov.uk/publications-and-updates/ea-technology-s-summary-low-carbonnetwork-fund-learning),
University of Strathclyde. ‘A Review and Synthesis of the Outcomes from Low Carbon
Networks Fund Projects’, September 2016 (http://www.ukerc.ac.uk/publications/a-reviewand-synthesis-of-the-outcomes-from-low-carbon-networks-fund-projects.html).
PÖYRY MANAGEMENT CONSULTING
October 2016
713_Poyry_Report_Evaluation_of_the_LCNF_FINAL_Oct_2016_v700.docx
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