Planning for a plan – what constitutes a useful RESP and how is it developed?
In the future, Ofgem expects Regional Energy Strategic Plans (RESPs) to inform the investment plans put forward by energy network companies.
For RESPs to serve this purpose they will need to capture an appropriate level of detail and directly interface with mechanisms and tools used by energy infrastructure planners at the local level.
Understandably, at this early point in the process, Ofgem has not provided much detail on the contents of the RESPs. However, the regulator has indicated that it is looking to the National Energy Systems Operator (NESO), as part of its central RESP coordination role, to set out requirements for the RESPs. The NESO will be responsible for setting out a common methodology and will officiate over central data and tools which all regional spokes (i.e. each RESP area) will rely upon when developing their RESPs.
As a starter for ten, we think the structure and content of better-developed Local Area Energy Plans (LAEPs) will go a long way to form a baseline set of requirements for RESPs. The Energy System Catapult’s “Guidance on Creating a Local Area Energy Plan”[2] sets out in some detail how a LAEP should be developed, for example, by developing a series of scenarios that illustrate local pathways to net zero, and covering a range of areas relevant to understanding possible future developments of energy use and demand in the area, including buildings, heating, industrial clusters, transport, local generation, and networks.
It seems reasonable to expect that the requirements for RESPs will be developed in an iterative way. We expect the NESO will develop its own view of best practice, informed by insights from Local Area Energy Plans and from across the regional spokes. This will allow the NESO hub to draw on the collective experience and expertise across all RESP working groups, building true best-practice across all plans.
However, there are several risks associated with this approach:
As the ultimate decision-maker, will Ofgem have its own RESP requirements?
Given Ofgem is asserting its position as the ultimate decision-maker on (regulated) energy network investments, it is likely to have specific demands on the quality of the plans that feed into its decisions.
Should network companies define and own planning standards?
If network companies are to use the RESPs as a basis to inform their investment planning, there is an argument that they should be in the driving seat for defining RESP standards. In any case, the NESO must ensure the standards applied across all RESPs are the same.
Could the perfect be the enemy of the good?
It will be critical to establish the baseline standard relatively early that RESP contributors can work towards. Arguably, the RESPs’ first meaningful impact will be to inform the investment plans electricity distribution network companies will put forward for RIIO-ED3. Therefore, any excessive iteration of the RESP, or an ongoing iteration of plan requirements, could cause frustration across working groups and hamper the pace at which the first RESP is developed. Any delay incurred could, in turn, impact the usefulness of the first RESPs if they come in too late to meaningfully inform ED3 plans.
An important question is whether RESPs will be qualitative in nature or take the form of a regional cross-vector energy system model? Ofgem’s consultation suggests RESPs should be the latter - the regulator refers to ‘technical coordination activities’ such as demand modelling and whole systems optioneering, tasks which cannot be delivered meaningfully in a qualitative fashion.
We agree that modelling is needed if RESPs are to provide effective input to network company investment plans, but if RESPs are model-based, we believe there are a number of important questions that should be answered in the short term:
How will RESPs feed into network company planning processes?
What standards will RESPs need to adhere to, and how can network companies be sure all of their RESPs are consistent in the application of those standards?
What capabilities, if any, would the NESO employ to refine the RESP models?
Will all RESPs use the same model which they adapt for their local circumstances and, if so, who will be responsible for building, and maintaining, this model? If not, how will consistency of approach and assumptions be ensured?
The choice of modelling solutions will have far-reaching implications for the nation’s regional energy system planning for decades to come. It is critical that decisions on the way forward are made in a robust way, with an eye to the future.
[2] Energy System Catapult’s Guidance on Creating a Local Area Energy Plan
