We ensure that new large onshore electricity transmission projects are delivered efficiently.
We do this through:
- regulating the delivery of these projects by incumbent Transmission Owners (TOs), via our RIIO price control framework, or
- introducing competition into the delivery of these projects.
Large Onshore Transmission Investment
As part of the RIIO-T2 price control we put in place a Large Onshore Transmission Investment (LOTI) mechanism to allow TOs to bring forward large investment projects where funding had not been awarded as part of the price control settlement.
This mechanism allows us to consider the need and funding for these projects during the price control period, and to support timely delivery of the proposed work. The LOTI mechanism is very similar to the Strategic Wider Works mechanism we put in place for large investment during the RIIO-T1 price control.
We published the LOTI Re-opener Guidance on 21 March 2021.
The TOs have identified a number of projects that they consider are suitable for future consideration under the LOTI arrangements. Other projects which meet the eligibility criteria set as part of the price control may also be brought forward.
See current and proposed onshore transmission projects for information on the status of projects we will assess during RIIO-2.
To see historical publications specific to projects before RIIO-2 please go to previous onshore transmission projects.
As part of our Integrated Transmission Planning and Regulation project we decided that new, separable and high-value onshore electricity transmission assets should be competitively tendered. This ensures value for consumers, with the potential for reduced costs and increased innovation.
To develop this approach, we intend to build on our offshore transmission regime which grants licences on the basis of competitive tendering. The offshore transmission regime has led to considerable savings for consumers since its implementation in 2009.
We first proposed an approach for a Competitively Appointed Transmission Owner (CATO) regime in 2016and have developed the regime in some detail. We are currently awaiting greater clarity on the timing of enabling legislation.
For a list of potential projects to be considered for competition, please refer to the GB System Operator’s Network Options Assessment report or the Large Onshore Transmission Investment information below.
Electricity Transmission network planning
In June 2021, Ofgem launched a review of electricity transmission (ET) network planning processes, with the aim of ensuring that the ET network can efficiently support the delivery of Net Zero at lowest cost to consumers. We published a consultation on the initial findings of this review in November 2021, setting out the following objectives for efficient ET network planning:
- Proactive identification and progression of low regret 'strategic investments' (SI) in the ET network that are key to delivering the Net Zero target and the government’s plans to decarbonise the UK power system by 2035.
- Facilitating strategic planning of the energy system such that ET networks and the energy system more generally, are planned alongside each other to maximise efficient utilisation of electricity networks.
- Ensuring that the onshore and offshore ET networks, including interconnection, are planned holistically, together.
- Providing viable routes for fair and transparent assessment and delivery of innovative and/or non-network solutions developed by third parties competing against other options.
We’ve proposed that the current network planning processes, which include the Network Options Assessment (NOA), be transformed into a Centralised Strategic Network Plan (CSNP) and be led by a single, independent, expert body – a ‘central network planner’. The CSNP will model future supply and demand robustly and transparently, identify system needs including Strategic Investments, facilitate strategic energy system planning and utilise an economic assessment which includes a cost benefit analysis that strikes a balance between cost and environmental and community impact.
Associated RIIO areas
There are other areas of RIIO-2 which are closely associated to the LOTI and Competition workstreams set out above. On this page we may also publish updates in relation to the following areas:
- LOTI Pre-Construction Funding – In addition to the £500m+ of allowances set during RIIO-2 for TOs to develop LOTI projects, we also established the Pre-Construction Funding Re-opener, which will allow TOs to seek additional funding during RIIO-2, if required.
- Large Project Delivery (LPD) – Our RIIO-2 Final Determinations established a framework for incentivising the timely delivery of these large transmission projects, and minimising consumer detriment if they are delivered late.
- Network Planning Review – We are currently working with industry to conduct a strategic review of electricity transmission network investment planning, to ensure that it can efficiently support the delivery of Net Zero at lowest cost to consumers.
This page sets out information on the policy and processes around delivery of large onshore electricity transmission projects.
If you can’t find the information you’re looking for please contact: RIIOElectricityTransmission@ofgem.gov.uk