SSE : A Network for Net Zero

SSE plc

A Network for Net Zero

Scottish and Southern Electricity Networks Transmission (SSEN Transmission), the wholly owned subsidiary of SSE plc, has published for consultation its first draft Business Plan for the transmission price control period between April 2021 and March 2026 (RIIO-T2) entitled 'A Network for Net Zero'.

'A Network for Net Zero' includes details of SSEN Transmission's 'Certain View' of the next price control period which sets out that a minimum total expenditure (Totex) of £2.2bn is required over the five years to maintain and grow the north of Scotland transmission network to meet the certain needs of current and future electricity generators and customers. This could see the regulatory asset value (RAV) of SSEN Transmission increase to over £5bn by the end of the RIIO-T2 price control period in 2026.

There is growing consensus of the need to fully decarbonise the economy to prevent the worst effects of global warming, with the UK Government committing to achieving net zero emissions by 2050 and the Scottish Government committing to achieving net zero emissions by 2045. 'A Network for Net Zero' reflects this and follows substantial consultation with national and local stakeholders as well as SSEN Transmission's independent expert RIIO-T2 User Group.

'A Network for Net Zero' aims to support both Governments' targets and meet the needs and expectations expressed by stakeholders through five clear, ambitious goals:

· Transport the renewable electricity that powers 10 million homes (circa 10 GW)

· 100% network reliability for homes and businesses

· Every connection delivered on time

· One third reduction in SSEN Transmission's greenhouse gas emissions

· £100m in efficiency savings from innovation

In addition to the 'Certain View' that could see the RAV of SSEN Transmission increase to over £5bn by 2026, it is anticipated that further investment may be required to deliver the transition to net zero, such as connecting the Scottish island groups, which have the potential for additional RAV growth which in turn supports future earnings.

To deliver its plans, SSEN Transmission estimates its average cost to the GB consumer over the RIIO-T2 period will be around £7 a year.

SSEN Transmission will now consult further with stakeholders ahead of submitting a final plan to Ofgem in December 2019 as part of its RIIO T2 price control process. As part of Ofgem's consideration of the final plan, the regulator will consult with stakeholders during 2020 before determining what level of investment should be taken forward from 2021 through to 2026.

Rob McDonald, Managing Director for SSEN Transmission, said:

'Our network already supports over 6GW of renewable generation and continued investment in the electricity transmission system is key to unlocking the further potential the North of Scotland can play in meeting Governments' targets for net zero greenhouse gas emissions.

'Our 'Network for Net Zero' proposal is a balanced package that makes a powerful case for the vital investment needed to deliver the clean energy transition, reflecting the ambition our stakeholders have told us they want to see, at an affordable cost to consumers, whilst also providing a fair return to investors.'

To view the Business Plan and all supporting documents, please visit www.ssen-transmission.co.uk/riio-t2-plan/

NOTES:

· SSEN Transmission, operating as Scottish Hydro Electric (SHE) Transmission plc, owns, operates and develops the high voltage electricity transmission system in the north of Scotland and remote islands.

· SSEN Transmission's strategic priority is to enable the transition to a low carbon economy through building the transmission infrastructure necessary to connect and transport renewable energy.

· In the six years since the start of the current price control period, RIIO-T1, in April 2013, SSEN Transmission has invested over £2.7bn of totex in the north of Scotland transmission system, supporting the growth of renewable energy across the region which has grown from 3.3GW to over 6GW as at 31 March 2019.

· As a regulated business, SSEN Transmission operates under a defined framework in which its investments, its performance targets and allowed revenue are subject to what is known as a 'Price Control' set by the energy regulator, Ofgem. The next price control for transmission, RIIO-T2, will begin in April 2021 and will run for a period of five years.

· SSENretains its concernswith Ofgem's proposed framework for RIIO2 and will continue to advocate constructively and robustly for a balanced regulatory framework that meets the needs of customers and encourages the investment required to deliver net-zero.

· SSEN Transmission will submit its final business plan to Ofgem in December 2019.

· SSEN Transmission provides detailed assumptions regarding its modelling in the Finance section of its draft business plan. Final figures will vary according to the final assumptions Ofgem uses in its determination of the final business plan.