Westminster Energy, Environment & Transport Forum

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Next steps for UK gas networks - the RIIO-2 price control framework, decarbonising assets, and preparing infrastructure for hydrogen and low-carbon heating

Morning, Tuesday, 15th December 2020


***Full-scale policy conference taking place online***

This conference will assess the next steps for developing gas networks in the UK.


The discussion is bringing together stakeholders with key policy officials due to attend from BEIS; the Foreign, Commonwealth and Development Office; the Crown Commercial Service; DIT; the HSE; the Department for the Economy NI; The Scottish Government and the Welsh Government, as well as delegates from both Houses of Parliament.


The discussion at a glance:

  • the RIIO-2 price control regime and its implications for operators, their partners and consumers
  • priorities for modernising infrastructure assets for decarbonisation
  • latest thinking on developing the hydrogen and low-carbon heating economy

The background and key developments:

  • Ofgem’s Draft Determinations for its proposed price control framework RIIO 2 - for years 2021 to 2026, with core features including:
    • decarbonisation - a commitment to invest £25bn in upfront funding for greening the energy system, through enhanced maintenance, operation and modernisation
    • innovation - a minimum of £630m in support, including for low-carbon alternatives to natural gas
    • rate of return - significant changes to the base rate on equity for network operators, effectively halving the permitted rate of return, while reducing energy bills for consumers
  • government policy and direction at a particularly busy time, including:
    • the PM’s Ten Point Plan for a Green Industrial Revolution - including new investment in hydrogen production, trials with using hydrogen for heating and cooking in homes, and energy efficiency in homes and public buildings - and government due to publish its Hydrogen Strategy in 2021 and consult on business models
    • Green Gas Levy - announced in Budget 2020 aimed at helping fund low carbon fuels but with energy suppliers responding negatively to Government consultation, citing the regressive nature of plans for a fixed charge levy
    • BEIS Energy Innovation Programme - at least a doubling of funding also announced in the Budget
    • heavy industry decarbonisation - including funding for scaling up hydrogen production, as well as the Low Carbon Hydrogen Supply Competition
    • the Energy White Paper - expected this Autumn, which is due to provide a development and decarbonisation roadmap for gas and other forms of energy up to 2050
    • the recently announced review into offshore oil and gas licensing regimes, as part of attempts to reach net-zero targets
  • the Future support for low carbon heat consultation - on policy and technological support mechanisms for decarbonising heat in the UK
  • the Heat in Buildings strategy - expected later this year
  • UK embraces hydrogen-fuelled future as transport hub and train announced - trial of hydrogen-powered train and the Hydrogen for Transport Programme

The discussion in detail:

The RIIO 2 price control framework

  • potential implications - for gas network operations, the financial sustainability of network operators, the shape of the market, and for supporting and accelerating the low-carbon transition
  • a reformed and lower equity allowance - what is means in practice and how stakeholders might adjust to the new framework:
    • assessing best practice for improving the efficiency of grid operations
    • taking advantage of innovative technologies and potentially lower operating costs
  • Ofgem’s proposed upfront funding for network modernisation - realising opportunities including:
    • enhancements to infrastructure reliability and safety
    • upgrading of aging assets
    • increasing project collaboration between the regulator and other sector stakeholders
  • consumers - delivering reduced energy costs as part of RIIO 2, providing greater value in services, and encouraging households switching tariffs and to cleaner forms of gas supply

Preparing for decarbonisation and scaling up low-carbon gas alternatives

  • the wider policy landscape for developing gas networks - installation and operation of new infrastructure to support development of new business models and the low-carbon transition
  • readying the system - what needs to be put in place for new forms of low-carbon energy going ahead, looking at:
    • UK gas transmission and distribution networks - developing resilience, shared use of infrastructure assets, and helping integration and transportation of clean gas across the grid
    • cross-sector collaboration - strategies for maximising the connection of decarbonised forms of energy, and providing new business services to consumers and large energy users
    • scaling up blue hydrogen production and grid connection - partnering with heavy industry users, establishing bilateral hydrogen supply arrangements, and enhancing whole-system gas flexibility and decarbonisation
  • preparing the gas system to help support heat decarbonisation - enhanced grid connection, generation and injection of alternative gases, and coordinating upgrades on a local and regional level
  • how gas networks and supply can help in reducing heat loss - following the consultation on low carbon heat and ahead of the Government’s Heat in Buildings strategy, looking at:
    • steps for working collaboratively - with stakeholders across the agriculture, transport, and clean fuels sectors to develop injection capacity for biomethane and other low-carbon fuels
    • opportunities for setting innovative tariffs - with energy suppliers, local authorities and other partners to help encourage the use of greener fuels and compatibility with households
    • approaches to supporting home energy efficiency - including the government’s new Find an EPC assessor digital service helping homeowners improve their energy performance

The agenda:

  • Developing the gas transmission network - resilience, efficiency and decarbonisation
  • Preparing the grid for net-zero - cross-sector commitment and opportunities for greening as part of RIIO 2
  • The next RIIO 2 regulatory period - implications for network operations and the road to low-carbon gas supply
    • RIIO GD2 and the path to net zero
    • Ensuring benefits to consumers - reducing energy bills, designing new services, and increasing the supply of cleaner gas to households
    • Priorities for a safe transition to hydrogen
  • Next steps for innovating the network business model, industry collaboration, and readying the grid for low-carbon energy sources
  • Scaling up hydrogen production and gas network decarbonisation - connecting heavy industry users and reducing commercial barriers
  • Preparing the gas and heating systems for low-carbon heat and the decarbonisation of households
  • Policy for gas network innovation, decarbonisation, and a pathway for contributing to net-zero

Policy officials attending:

Our forums are known for attracting strong interest from policymakers and stakeholders. Places have been reserved by parliamentary pass-holders from both Houses of Parliament, and officials from BEIS; the Foreign, Commonwealth and Development Office; British Consulate General; the Crown Commercial Service; the Department for International Trade; the Department for Transport; the Health and Safety Executive; the Department for the Economy NI; The Scottish Government and the Welsh Government.

Overall, we expect further speakers and other delegates to be an informed group including Members of both Houses of Parliament, senior government officials involved in this area of public policy, together with regulators and gas network operators, infrastructure and construction firms, energy and heat suppliers, industry and R&D centres, local authorities, environmental organisations, consumer groups, think tanks, and reporters from the national and trade media.


This is a full-scale conference taking place online***

  • full, four-hour programme including comfort breaks - you’ll also get a full recording to refer back to
  • information-rich discussion involving key policymakers and stakeholders
  • conference materials provided in advance, including speaker biographies
  • speakers presenting via webcam, accompanied by slides if they wish, using the Cisco WebEx professional online conference platform (easy for delegates - we’ll provide full details)
  • opportunities for live delegate questions and comments with all speakers
  • a recording of the addresses, all slides cleared by speakers, and further materials, is made available to all delegates afterwards as a permanent record of the proceedings
  • delegates are able to add their own written comments and articles following the conference, to be distributed to all attendees and more widely
  • networking too - there will be opportunities for delegates to e-meet and interact - we’ll tell you how!

Full information and guidance on how to take part will be sent to delegates before the conference



Keynote Speakers

Antony Green

Project Director - Hydrogen, Gas Transmission, National Grid

Maxine Frerk

Associate, Sustainability First

Corin Taylor

Principal Consultant, Energy Transition Team, DNV GL and Manager, Decarbonised Gas Alliance

Senior speaker confirmed from Cadent Gas

Emrah Durusut

Managing Director, Xynteo

Dr Tanja Groth

Head of Urban Energy, SWECO

Dr Mark Taylor

Deputy Director, Energy Innovation, BEIS

David Tennant

Partner, Oil and Gas Team, Dentons

Chairs

Lord Lucas

Officer, All-Party Parliamentary Group on Hydrogen

Lord Whitty

Co-Chair, All-Party Parliamentary Group on Energy Costs

Speakers

Dr Stuart Hawksworth

Head of Centre for Energy and Major Hazards at the Health and Safety Laboratory, Health and Safety Executive

Sarah Deasley

Director, Frontier Economics

Ian Phillips

Development Director, Pale Blue Dot Energy

Stew Horne

Head of Energy Networks and Systems, Citizens Advice

Michael Wagner

Deputy Director, Gas Sector, Systems and Networks, Ofgem