As part of the electricity distribution price control that ran until 31 March 2015, we established the Low Carbon Networks (LCN) Fund.
The LCN Fund allowed up to £500m to support projects sponsored by the Distribution Network Operators (DNOs) to try out new technology, operating and commercial arrangements. The aim of the projects is to help all DNOs understand how they can provide security of supply at value for money as Britain moves to a low carbon economy.
There are two tiers of funding under the LCN Fund. The First Tier allowed DNOs to recover a proportion of expenditure incurred on small scale projects. Under the Second Tier of the LCN Fund, we ran an annual competition for an allocation of up to £64 million to help fund a small number of flagship projects.
DNOs explore how networks can facilitate the take up of low carbon and energy saving initiatives such as electric vehicles, heat pumps, micro and local generation and demand side management. They also investigate the opportunities that smart meter roll-out provides to network companies. LCN Fund projects should provide valuable learning for the wider energy industry and other parties.
We will be monitoring the learning that emerges from these projects in order to understand its impact on the current regulatory framework.
The governance arrangements for the LCN Fund are set out in the LCN Fund Governance document.