RIIO-3 Draft Determinations must turn Clean Power 2030 and Net Zero ambition into timely consumer value by using strong incentives that cut constraint costs, accelerate connections, and deliver new network capacity.

Key points:

• We recommend incentivising dynamic line rating (DLR) deployments under ODI-F rather than including them in baseline plans, because it ties the incentivise directly to the desired outcome. DLR only adds value when it changes operational decisions and reduces constraint costs. Incentivising based on outcome-delivery helps ensure solutions that best achieve that outcome are adopted.
• We recommend prioritising targeted, hardware-based DLR on highly constrained circuits over system-wide software rollouts. The highly constrained circuits which incur the highest constraint costs may not get as significant up-ratings as with a hardware-based approach, so the overall constraint cost saving may be lower, despite the ‘system-wide’ approach.
• We support a stepped Totex Incentive Mechanism (TIM) but recommend adopting asymmetric incentives and sector specific treatment. For Electricity Transmission, we agree with the rates for underspend, but recommend a 25% incentive rate on all overspend. For Gas Transmission and Distribution, we recommend 25% incentive rate on underspend up to 5% of totex, 5% beyond that, and 50% on overspend to deter unnecessary investment.
• We support Ofgem’s increased focus on enabling innovators to access Network Innovation Allowance (NIA) and Strategic Investment Fund (SIF) funding, and to help the navigate the energy networks innovation ecosystem. However, increased oversight of innovation projects must be done in a way that does not discourage risk-taking in the pursuit of transformative innovations.