EVALUATION

AN INDEPENDENT EVALUATION OF THE LCNF
2. APPROACH TO THE EVALUATION
In this section we present our approach to the evaluation of the LCNF. We have
undertaken both a qualitative assessment and a quantitative assessment and we
recognise that a robust process will be vital in satisfying Ofgem’s requirements for the
evaluation of the LCNF.
To ensure this robust approach we have sought to ensure that the evaluation is, where
possible, conducted in accordance with the requirements of the HM Treasury Green
Book 17 and Magenta Book 18 , along with Ofgem’s own Impact Assessment Guidance 19 .
2.1 Assessment criteria
Our assessment criteria are based on the aims and objectives of the LCNF – as defined
by Ofgem. These criteria were used by Ofgem to understand whether or not a project
proposed by a DNO was worthy of funding. We have taken these originally-stated aims
and objectives to form a good basis for assessing the extent to which the LCNF has been
successful. In addition to these criteria we have also been careful to take account of
Ofgem’s principal objective 20 and its statutory duties.
With this in mind we propose the evaluation of the LCNF is based on the following nine
criteria.
Tier 1 and Tier 2 projects:
1. accelerates the development of a low carbon energy sector and has the potential
to deliver net financial benefits to future and/or existing customers
2. generates knowledge that can be shared amongst all DNOs
Tier 1 projects only
3. has a direct impact on the operation of the distribution network
4. focuses on the network methods that are at the trialling stage
5. does not lead to unnecessary duplication
Tier 2 projects only:
6. provides value for money to distribution customers
7. is relevant and timely
8. evidence of involvement of other partners and external funding
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19
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https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220541/
green_book_complete.pdf
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220542/
magenta_book_combined.pdf
https://www.ofgem.gov.uk/publications-and-updates/impact-assessment-guidance
The Authority’s principal objective is to protect the interests of existing and future consumers
in relation to gas conveyed through pipes and electricity conveyed by distribution or
transmission systems. The interests of such consumers are their interests taken as a whole,
including their interests in the reduction of greenhouse gases in the security of the supply of
gas and electricity to them and in the fulfilment by the Authority, when carrying out its
functions as the designated regulatory authority for Great Britain, of the objectives set out in
Article 40 (a) to (h) of the Gas Directive [3] and Article 36 (a) to (h) of the Electricity Directive.
PÖYRY MANAGEMENT CONSULTING
October 2016
713_Poyry_Report_Evaluation_of_the_LCNF_FINAL_Oct_2016_v700.docx
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