The programme unlocking green energy for the UK

Over the next five years, Britain aims to generate 95% of its energy from clean sources. Achieving this will require a modernised electricity grid that can handle more renewable energy and manage it smartly across the country. We spoke with Ofgem to learn about the programme enabling this. 

Ofgem, the energy regulator for Great Britain, has given the preliminary approval to an initial £24 billion investment programme to enhance energy security while enabling the transmission of more clean energy from renewable sources. The RIIO-3 (the third iteration of the price control mechanism introduced by Ofgem) investment is essential to meet this target, delivering long-term energy security that will stabilise prices and protect consumers from international market volatility for decades to come.  

Steve McMahon, Director for Network Price Controls for Ofgem, said: “We know that there will be a move away from natural gas over time but the scale and speed of that remains uncertain. In the meantime, we must invest in these networks to make sure they deliver safe and secure supplies of gas for as long as people need them.”

The investment in the grid, which will rise to around four times the current spending levels, will allow for 80 transmission projects and all associated works across the country to be completed within five years. New power lines, substations and cables, on land and at sea, will significantly increase the grid’s capacity to handle the flow of electricity from new, renewable sources. 

Managing large scale projects and programmes

Many considerations must go into work on a programme of this scale. Business plans are set and scrutinised, there are close consultations with industry, consumer groups and other key stakeholders, and designs and costs of projects are closely monitored. 

Steve explained that success depends on having world-class project management that navigates through the design, procurement, planning and construction phases, and that co-ordinates activities across multiple projects. 

He emphasised: “You cannot underestimate the challenge in delivering a programme of this scale within the timeframes required and to the budgets allocated.

“For RIIO-3, we have to take into account the centralised strategic planning priorities that enable government-set targets for net zero and clean power. These inform spatial plans to determine where transmission build is required to accommodate new renewables and reduce constraints on the network. Where those plans identify the need for a project, we’ll scrutinise the scope, design and cost of those projects.”

In this context, governance is not just a layer of project and programme management, but a foundation on which to build a successful project. Steve argued that for a project of this scale to be successful, the governance structures must lead to the right information and analysis being available to decision-makers. He emphasised some golden rules of governance:

• Never underestimate timeframes and budgets – Large scale projects are complicated; there are many hidden delays and unexpected costs that can lead to uncertainty. Optimism bias can be damaging to these projects; good governance keeps it in check.
• Coordination is key – RIIO-3 involves multiple stakeholders, government agencies and contractors. Miscommunication in a programme of the scale is inevitable without the strong and deliberate coordination that good governance can provide. Having clarity and avoiding overlap or gaps between role responsibilities is crucial.
• Information being available for decision-makers – For projects and programmes of this scale, the ability to make a timely and informed decision is vital. Good governance can ensure that the correct information and analysis is available to those who need it.
• Clear goals – Governance should focus on outcomes, not just the processes. There should be a clear end goal and benefits that define the project or programme delivery. For Ofgem, the potential impact on the customers is at the forefront of any decisions that are being made.