EVALUATION

AN INDEPENDENT EVALUATION OF THE LCNF
Given the inherent difficulty of understanding what would have happened in the absence
of the LCNF we have sought to identify an appropriate counterfactual through a qualitative
process, supported by an assessment of the benefits identified by the DNOs in their
responses to our questionnaire. Our qualitative approach to the counterfactual sought to
identify a percentage of the financial benefits that may have occurred in the absence of
the LCNF scheme. To estimate what this percentage could be we returned to the
definition of innovations we described above in Section 2.3.
In discussion with key stakeholders, we assessed what the potential benefit of the LCNF
might be, if the starting point of innovation (e.g. prior to the LCNF) was Low, Medium or
High. For example, under an initial starting point of the high innovation scenario (where
DNOs are strongly committed to innovation), a relatively high proportion of the benefits
attributed to the LCNF would have happened anyway. Whereas under a low innovation
scenario (where DNOs are demonstrating much less innovation activity), a much lower
proportion would have occurred anyway.
Based on these discussions the view from the academic experts was that prior to the
LCNF, the DNOs were at a low level of innovation prior to the LCNF scheme; and as a
result only a small proportion of the reported benefits would have occurred anyway. The
results of these discussions are presented in Table 2.
Table 2 – Counterfactual scenarios
Starting point
Level of
innovation
Benefit without the LCNF
Low ~20%
Medium
Unspecified
High ~100%
To better understand the robustness of the ‘20%’ identified by the academics we used the
estimated financial benefit numbers provided by the DNOs (as part of the quantitative
assessment) in order to present a view of what this counterfactual position might look like
in practice. When described in terms of the benefits associated with the connection of
DG, a 20% counterfactual suggests that the majority of DG connections and, therefore, a
significant proportion of the reported current benefits, would have occurred anyway and
without support of the LCNF – mainly as a result of other policy aims and incentives put in
place by Government 24 .
Our view is that this does not seem unreasonable since although many of the DG
connections have benefitted from the innovative solutions identified in the LCNF projects,
it is highly likely that there would have been significant pressure placed on the DNOs to
enable DG to connect. This is also the view of DNOs, who believe that many DG
connections would have been made using ‘direct inter-trip’ arrangements for individual
24
A 20% counterfactual corresponds with approximately two-thirds of reported benefits
associated with the connection of DG – based on estimated project benefits.
PÖYRY MANAGEMENT CONSULTING
October 2016
713_Poyry_Report_Evaluation_of_the_LCNF_FINAL_Oct_2016_v700.docx
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