Next steps

What next

We will be developing and refining our detailed business plan in the second half of 2020 and first half of 2021, based on the feedback we receive from you and a comprehensive ‘Willingness to Pay’ exercise which will continue for the rest of this year. This consultation gives you the chance to have your say and to make a real difference to our future plans. We will be submitting a draft plan in July 2021 ahead of a final plan in December 2021.

ED2 timeline: Emerging Thinking 2020, Draft plan July 2021, Final plan December 2021

Whilst our engagement plans have had to be adapted due to the COVID-19 pandemic, there are a variety of online engagement activities planned where you can get involved – visit our events page here.

Alongside our 12 performance areas, we have identified four key cross-cutting enablers which underpin the successful delivery of our plan. You can read more about innovation, digitalisation, our people and collaboration below, and find out about the additional information we will be releasing to continue the conversation with you.

We know you will want reassurances around our plans to give you the confidence that we propose is robust and feasible. Below we have outlined seven areas we are developing our reassurances around, what we’re going to show you in our final plan and the outcome you will receive.


Enabling success in RIIO-ED2

We have identified four key cross-cutting enablers, which underpin the successful delivery of our plan.

Innovation

  • Our ambition is to use innovation to reduce costs and improve the services we deliver to you

  • Given that goal, we look for innovative solutions that develop and build on our current operations, that are realistic for us to implement and that will deliver greatest value for you

  • In the current regulatory period we have concentrated on building a smarter power grid, introducing web services, setting ourselves up to use smart meter data and addressing issues of affordability

  • Focus for RIIO-ED2:

  • We know that protecting the environment is high on everyone’s agenda and, in particular, we need to actively support the pathway to net zero. So these areas will play a significant part in our innovation activity in RIIO-ED2

  • A successful transition to low carbon energy will require a highly reliable electricity network and we will continue the push for ever higher performance in this area

  • Our innovation work is central to our effective transition to DSO, and we are using it to inform our thinking on what a DSO is, how it will benefit you and how to ensure the transition to net zero is socially-inclusivity

  • We also expect to see an increased focus on harnessing data to deliver cost savings and improve and broaden the services we deliver to you

We will publish our updated innovation strategy to engage with you on your areas of interest and where you think our activity should be focused in RIIO-ED2

Digitalisation

  • New technology is enabling us to digitalise our network and our business, making our services more flexible and accessible for our customers

  • We can use the increasing amount of useful information, brought about by digitalisation, to run the network differently. We will be able to identify future network needs before they would otherwise become apparent, fix things before they go wrong and target investments where they will deliver the greatest benefit

  • We can also share more and better information with you, enabling you to participate in new markets for flexibility and reducing what we need to spend even more - to keep bills low

  • Focus for RIIO-ED2:

  • The transition to a low-carbon economy will be driven by the development and deployment of new technologies

  • Once this technology is deployed at scale, it will mean we can see in real time what is happening on the network in a way that has not really been possible before. This will be integral to our journey to DSO

  • Technology will also enable us to provide more open access to data that we would not previously have been able to share

  • Intelligent automation will reduce the need for manual intervention in our business and on our network. This will empower you to be an active participant in our network and our workforce to deliver an even better service

Read our Roadmap to digitalisation for more information.

Our people

  • Our workforce of around 2,700 people is central to delivering our vision - to delight our customers with outstanding service

  • By the end of RIIO-ED1 we will have delivered on our commitment to create 1,000 new job opportunities in our region

  • Our successful Workforce Renewal programme has so far seen 323 new recruits join us to complete comprehensive industrial and technical training

  • We have expanded our trainee programme to include roles in Finance, IT, Procurement and Cyber Security, taking it beyond traditional technical and engineering roles

  • We have designed an overarching framework to support our colleagues in the way we recruit, communicate, provide training and remunerate – our goal is to develop a workforce that mirrors the diversity of the communities we serve

  • Like many organisations in the industry, Northern Powergrid is proud to grow and develop talented colleagues who often move from grass roots through to managerial positions

  • Focus for RIIO-ED2:

  • Diversity and inclusion within our workforce will be a key feature of our plans

  • We will also continue to collaborate with our industry and academic partners to promote STEM (Science, Technology, Engineering and Mathematics) subjects in schools, to help to attract more people to our sector

  • The increasing digitalisation and smarter nature of our business and the energy system more generally means that our more traditional engineering roles are adapting, and our roles are becoming more diverse and include a growing element of technology. Given this, our training programmes will need to evolve to provide our colleagues with the skills they need to manage the energy systems of the future

We will publish our people strategy to engage with you and gain input to our plans for RIIO-ED2

Collaboration

  • Collaboration has become increasingly central to the way we work as a business

  • This is because we are building a smart, local and cost-effective network around your needs, in collaboration with you, the wider industry, Ofgem and Government

  • We have always collaborated with the Transmission Owner (and also the Electricity System Operator) to ensure that the needs of both distribution and transmission systems are taken into account when we connect new generation, and also when we adopt new solutions in relation to demand management and customer flexibility

  • We also have experience in working with a wide range of industries: a good example of this is InTEGReL, a whole energy system demonstrator built as a collaboration between Northern Gas Networks, Northern Powergrid and Newcastle University. The goal of this project was to explore and test new energy technologies, strategies and processes and to join together views from transport, electricity and gas

  • Focus for RIIO-ED2:

  • Working towards net zero will be a huge undertaking for the energy industry and for society as a whole. It will require political, cultural, behavioural and technological changes. Collaboration will be key

  • Enabling whole systems thinking will continue to be a theme in RIIO-ED2, including in Local Area Energy Plans (LAEPs), where we are working with a range of local stakeholders to agree on the long-term energy solutions in our region

  • As we have already delivered substantial improvements in areas such as safety, reliability and customer service in RIIO-ED1, further improvements will become harder to achieve. Collaboration, and learning from other network companies and the wider industry, is essential to drive forward more change


Building reassurances around our plan

We know you will want reassurances around our plans to give you the confidence that what we propose is robust and feasible. We are developing reassurances in seven areas:

1. Reassurances
What we’re going to show you
Outcome

Prove we're the right people for the job

  • How we’re doing against our RIIO-ED1 targets

  • Service improvements we have delivered in RIIO-ED1

  • How we have tested and benchmarked our plans to ensure they are robust and ambitious

✓ You will clearly be able to see our track record

Develop this plan with you and continue to engage

  • Our programme of engagement with you

  • What we have heard from you and how it has influenced our plans

  • Ongoing work with our CEG and the challenge group

✓ You will see comprehensive, evidenced and robust engagement

Deliver for the regions & different customer groups we serve

  • How our plan reflects our geographic regions and network users

  • Outline our local goals, such as supporting the low carbon transition

✓ You will see how our plan reflects the regions we serve

Make sure this plan is deliverable

  • Show that we can deliver our plan and that we have sufficient resources both internally and in our supply chain

✓ You will know we can deliver our plan

Demonstrate our plan is financeable

  • Ensure financeability on both a notional and actual capital structure basis

✓ You will know we can finance our plan

Set out our costs and outputs clearly and prove they are efficient

  • Set out the associated costs of our plans and evidence of efficiency

  • Test costs for ambition and accuracy

✓ You will clearly see our costs and have confidence that they are efficient

Make sure this plan is resilient to uncertainty and risk

  • Outline our understanding of the key strategic uncertainties and risks facing our business

  • Outline our proposed uncertainty mechanisms

✓ You will feel comfortable that our plan is resilient to uncertainty and risk

Our current thinking on managing uncertainty and risk in our plan...

Right now, the biggest uncertainty we can see is the speed of uptake of new technologies like heat pumps or electric vehicles. We have proposed that our regulator should include a new mechanism that adjusts our cost allowances upwards (or downwards) based on a “£ per device” measure. This way our customers would never have to pay too far ahead of using the devices, different regions of the country would be able to progress their roll-outs at rates that suit them, and we would have a strong incentive to invest early where the investment case is strong. Beyond this, we think our regulator’s current mechanisms to handle uncertainty are broadly still the right set for 2023-28.

Saved