Our Business Plan: Placing customers and communities at the heart of Net Zero

Our Business Plan: Placing customers and communities at the heart of Net Zero

RIIO-ED2 is the next price control for Distribution Network Operators running from 2023-28. We’re putting customers first as we shape our plans for delivering outstanding service and facilitating Net Zero. We want you to join us on the journey and have your say to shape the future of energy.

A message from our CEO

I am delighted to present an overview of our 2023-2028 Business Plan for RIIO-ED2. Our plan aims to maintain UK Power Networks as the best performing network company in Great Britain against a backdrop of transformative change in the energy system and in our society as we decarbonise every aspect of our economy.

Decarbonisation is one of the greatest challenges facing our generation, and therefore engaging with our customers, wider communities and stakeholders on our role is vital in order to maintain public support for Net Zero. That’s why we have undertaken our most extensive customer research and stakeholder engagement to date, involving nearly 20,000 people right across our regions, to help design a Business Plan that delivers on their needs and priorities.

This engagement has informed a new vision for our organisation, providing clarity of purpose for our 6,200 employees and our supply chain partners. Our four imperatives are to be an employer of choice, a respected and trusted corporate citizen, sustainably cost efficient and help enable the Net Zero transition for all.

We will be pushing the frontier performance for our sector in the core areas of safety, customer service, reliability and resilience at the lowest possible cost for customers. Our plan aims to be ambitious, well justified and to deliver long-term value for money for customers.

Thank you to everyone who gave up their valuable time to help design this Business Plan, including the Customer Engagement Group and the Challenge Group for their constructive challenge, all of which has ultimately led to a better plan that will deliver on our customers’ and stakeholders’ needs both now and for this exciting Net Zero future.

Why are we producing a Business Plan now?

Ofgem is Great Britain’s independent energy regulator and it sets the funding for the companies that operate the gas and electricity networks. Price controls are a method of setting the amount of money (allowed revenue) that can be earned by the network companies over the length of a price control.

UK Power Networks is required to submit a well-justified business plan to Ofgem, setting out the amount of money it needs and what it will deliver for consumers with that money for the price control period that will run from 2023 to 2028. Ofgem then reviews this plan via a public consultation process and ultimately makes a decision on the business plan.

We are currently operating under the ‘RIIO-ED1’ price control period which runs from 2015-2023. We’re now building our plans for this next period – called ‘RIIO-ED2’ – which runs from 2023-2028. ‘RIIO’ stands for ‘Revenue = Innovation + Incentives + Outputs’ and ‘ED’ stands for Electricity Distribution.

Running from 2023–2028, RIIO-ED2 outlines what services we will deliver to our customers and how much those services will cost. Crucially, RIIO-ED2 will also underpin our approach to facilitating the UK’s Net Zero carbon emissions by 2050 target.

We’re currently operating under the RIIO-ED1 price control period and we have now built our plans for this next period (where the ‘ED2’ comes from). We and our fellow Distribution Network Operators from around the UK, submitted our plans to Ofgem on the 1st December 2021. The regulator will now make a decision based on our submissions.

Thank you for your support in developing our plan. We welcome your ongoing feedback to ensure we continue to unlock benefits for all in the future.

CEO's Message

Our future will be shaped by you

Hear from our Chief Executive Officer, Basil Scarsella, how we’re putting your feedback directly into our plans for the future. We’re determined to create benefits for all, from facilitating Net Zero to supporting customers in vulnerable circumstances and maximising our core performance metrics.

Our Seven Keys to Success

Our engagement highlighted several customer and stakeholder priorities. For us to deliver on these areas of importance we defined seven ‘Keys to Success’ to base our plan around, each backed-up with tangible commitments

Facilitating Net Zero carbon emissions

Our customers have told us that tackling the climate crisis is one of their highest priorities. As a result, facilitating the UK’s Net Zero carbon emissions by 2050 target is central to our business plan for RIIO-ED2. We are at the centre of the change by transitioning the energy system itself and actively helping other industries move away from fossil fuels. To fast track this process, we’re establishing an independent Distribution System Operator, building new capabilities to create a future-ready network. Learn more at our Smart Grid site.

Renewable energy

We’re building new capabilities and technologies to facilitate more and more renewable energy, such as wind and solar farms, to connect to our network. We have currently connected 7.2GW of renewable energy to our network. That is enough to power 3.4m homes.

Facilitating Electric Vehicles

Electric vehicles (EVs) are a key part of Net Zero, with transport accounting for around a third of total emissions. Every EV will charge through our network, and we’re seeing a significant growth, forecasting up to 3.6m by 2030 from 100,000 today. We’re working with every type of industry and organisation to make it easy for everyone to switch. Read our strategy.

Decarbonising heat

Heating accounts for another third of emissions, with the majority of properties currently supplied by natural gas. We’re forecasting a significant growth in electric heating and wholesale shifts in government policy around heating and energy efficiency. To meet the challenge, we launched our industry-first heat strategy this year and have started work on several innovation projects to test new approaches.

Meeting our customers’ evolving needs

Increased public passion on cutting carbon emissions and reaching Net Zero, along with new household technology and energy efficiency improvements mean our customers’ needs and behaviours are changing. We’re changing too through a raft of initiatives aimed at engaging with our customers directly.

Forecasting the Future

The Distribution Future Energy Scenarios are designed to illustrate energy futures with different levels of decentralisation, decarbonisation and digitalisation. They are constructed from a series of key drivers, which we believe have significant impacts on energy demand and supply.

The DFES are designed to provide us and our key stakeholders with an in-depth understanding of the way in which local electricity demand and generation will change in the future, so that we can plan efficient network capacity investment, whilst maintaining a secure supply of electricity to our customers, and facilitate continued electricity decarbonisation.

Read our Business plan

Read more

Find out how our plans will deliver benefits to our customers and our approach to tackling key issues such as facilitating Net Zero and supporting customers in vulnerable circumstances.

To read our Appendices which includes our strategies and supporting information click here.

Throughout the development of our Business Plan, our Customer Engagement Group has challenged us on how we engaged with our customers and stakeholders and how our plans will meet their needs, today and in the future. To read their report click here.