EVALUATION

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AN INDEPENDENT <strong>EVALUATION</strong> OF THE LCNF challenges is balancing the costs of change with the cost of integration into the current system. The change in the culture at DNOs was mentioned in several responses. One respondent’s thoughts were that the LCNF has started progress towards a more innovative culture within DNOs but there was still a long way to go before the change is completed. Another respondent stated that there has definitely been a positive culture change, but that this culture has developed with a focus on innovation but not commercial viability due to the fund “safety net”, thus very few of the trials have come to fruition. Finally, one respondent believed that in some cases the DNOs use the fund because it is there, but this does not mean there was a change in their core views on innovation. B.1.1.4 Other points One respondent made the point that although the DNOs have undertaken innovative activities as a result of the LCNF, it is not clear if they are now undertaking innovation as funded by their stakeholders. The point of investing in innovation is to benefit your company and thus gain advantage over your competitors – they do not expect networks will share information publicly on any innovative activities they carry out as they will want to gain this advantage. B.1.2 LCNF Meeting its Objectives Regarding Low Carbon (Q1.2) Questions: Do you believe that the LCNF has met its objective of helping the DNOs move towards a low carbon business whilst maintaining security of supply and delivering value for money to customers? What justification do you have for your response? B.1.2.1 Summary of Responses Half of the respondents (ten) believe that the LCNF has met this objective, with two respondents not providing an answer. One respondent believed it has partially – though new technology has been developed it is in inconclusive whether the projects themselves have led to lower carbon. But they felt that this new technology has been used to assist low carbon operations by others – using storage to improve wind and solar connections was provided as an example of this. Another respondent made the point that some of the projects it is aware of, this is true and the objectives are met, but they are unsure on larger ones where the project design is more questionable. B.1.2.2 Connections to the Network Several respondents mentioned connections – with three respondents mentioning improved distributed generation connections, and one respondent stating that the LCNF has provided increased connections of low carbon generation, assumedly through distributed generation. One respondent commented on the number of connection that have gone ahead as a result of the LCNF but would not have otherwise. Another respondent discussed the use of ANM to deliver value for money for generation customers by providing fast and inexpensive network connections – once again relating to the improved distributed PÖYRY MANAGEMENT CONSULTING October 2016 713_Poyry_Report_Evaluation_of_the_LCNF_FINAL_Oct_2016_v700.docx 132
AN INDEPENDENT <strong>EVALUATION</strong> OF THE LCNF generation connections. Finally, a respondent stated that the LCNF has provided increased connections of low carbon generation. B.1.2.3 Barriers to Meeting the Objective One respondent stated their disappointment regarding ideas that have been trialled not then advanced to business as usual, as they had previously mentioned in their answer to the previous question. They make a point that the trials were rolled out at the wrong times, but concede that it is difficult to perfect the timing. They also feel that if the trials for the DCC and SMETS 2 meters had been rolled out at scale it would have increased the chance of the trials leading to business as usual products, in a cost-effective manner. Another major concern is that a lot of the knowledge gained from the LCNF will not be utilised within the DNO businesses. In conclusion, they felt the knowledge gained supports security of supply and value, thus the trials have been beneficial for GB PLC. Another respondent listed a range of issues regarding meeting the low carbon objectives. One being DNOs trying to adapt new technologies under restraints from regulatory authorities and their positive in the energy market, they gave the example of the CLNR project which involved using differential tariff structures – this does not suit Ofgem as they strive for simple and lean tariffs. The response went onto say this will lead to a slow transition. Another issue mentioned by the same respondent was the lack of knowledge share between DNO’s – as due to the competitive nature of the operators. Another response pointed out that this transition to low carbon is not just dependent on the DNOs – it relies on third parties – low carbon generation being a good example of this. Finally, one respondent stated that the drive for low carbon solutions waned as the LCNF went on. B.1.2.4 RIIO Regulatory Framework Two respondents mentioned RIIO. The first one suggested that the value of money aspect will need to be monitored over time when projects are rolled out to customers. They noted that this value for money is obviously linked to the efficiency and value gained from innovation as submitted in RIIO-ED1 business plans and it will now be interesting to find out the extent to which that value is actually delivered through ED1 and beyond. Secondly, a respondent felt that it was not the LCNF directly that led DNOs towards a low carbon business – it merely aided the move, it was the RIIO that actually achieved the objective. B.1.2.5 Other Points The response of the one respondent stated that there is definite potential as National Grid has looked into the probability of a number of solutions being implemented; finding that in some cases further work would be required before full implementation could occur. CLASS is one of the projects they evaluated the potential of that would require further technical work before implementation – but the outcomes of CLASS are informing part of the joint National Grid and UK Power Networks 2016 NIC project TDI 2.0, a project for the south of England where the transfer of solutions like those developed and proven under CLASS is a current focus. PÖYRY MANAGEMENT CONSULTING October 2016 713_Poyry_Report_Evaluation_of_the_LCNF_FINAL_Oct_2016_v700.docx 133
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EVALUATION

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