Commiserations on your engagement! Challenges for network companies to operationalise RESP participation.

As part of its (now closed) consultation, Ofgem has set out a map of the RESP areas across GB. This suggests RESP boundaries are to be set up along transport authority boundaries – specifically, Ofgem are proposing that for England an adapted model is implemented which may blend sub-national transport bodies (STBs) and International Territorial Levels (ITL) 1 regional boundaries. 

If you are an energy geek and you’ve never heard about either of these designations, don’t fret – these represent a way to cut and slice the country in a manner that is as yet unfamiliar to the energy sector.  So, it won’t come as a surprise that these suggested RESP boundaries do not align well with current energy network boundaries.  

Ofgem’s preferred GD RESP settlement (from Ofgem consultation on Policy Framework for Regional Energy Strategic Plan) 

Given that network companies are expected to play a role in contributing to RESP development (for example, by feeding in local network data), setting RESP boundaries in this manner is likely to lead to peculiarities in terms of the complexity of engagement required by network companies with plan development across their relevant RESP areas. 

Arguably, the more complex challenge for network companies will be to make sense of the RESPs. Network companies must use these as inputs to their network investment plans (and ultimately their business plans put forward to Ofgem under the RIIO regime).  

The more RESP interfaces a network company has, the more complex the coordination activity for that company.  

Under the current proposals, this would play out as follows: Cadent would have the largest number of RESPs (8!) to contribute to and to draw insights from for its business planning; most DNOs would have 4 RESP interfaces, whereas NGN and NPg seem to benefit from a rather simpler engagement structure, with 2 RESPs each to manage. 

Based on those numbers, it is clear that engagement requirements will vary greatly across network companies (we suggest that the more RESPs a company has to engage with, the more complex its engagement activity will be). 

Challenge 1 

Network companies will need to develop processes and resource engagement for each RESP within the company’s footprint. The process for engagement will likely be very similar across RESPs (as RESP engagement is likely to be standardised by the NESO), but the time requirements to manage the engagement process is a function of the number of RESPs the network company will need to engage with. 

Challenge 2 

Network companies will also need to make sense of the RESPs as inputs into network business planning. Companies will need to develop ways to get RESP outputs to meaningfully feed into their network development plans. (We covered the challenges around timing of RESP outputs in a previous blog)  
 

Challenge 3  

Possibly the most complex challenge for network companies will be to develop a coherent view of investments across their licence areas when individual RESPs, driven by their respective geographies and data inputs, may call for investments across very different energy vectors (such as electricity, natural gas, heat, hydrogen, etc.) or reflect a significant divergence in decarbonisation priorities.  

It seems reasonable to assume that Ofgem will expect network companies to develop coherent and ‘smooth’ investment plans, potentially leaving network companies with the very complex task of managing conflicts and investment priorities across different RESPs within their network boundaries. While network companies may be well versed in accommodating wider stakeholder views, the complexity of RESPs are likely to further test network companies’ capabilities in this area.