Increased socialisation of connection costs in the distribution electricity network

1. 1. The level of charges for connection to the distribution network in Northern Ireland has been cited as a blocker to new renewable generation and of consumers taking up Low Carbon Technologies.  Stakeholders have also reported that those seeking a connection here face higher charges here than in Britain and Ireland. The following gives a brief outline of some of the benefits. Further analysis of benefits is included in Table 5.

Fairness

1. 2. The current distribution network connection charging policy imposes potentially significant costs on a small section of connecting customers in weak network areas, where their proposed connection triggers a requirement for network upgrades.  In contrast to this, where NIE Networks has recently conducted routine network reinforcement, the customer seeking a connection will not be required to pay for any network reinforcement asset costs.  It is seen as unfair for some customers to pay for network reinforcement assets while others benefit from existing socialised network strength.

Vulnerable Customers

1. 3. Customers who heat their homes with gas or electricity are protected by UR through codes of practice which prohibit such things as disconnection of vulnerable customers in winter.  By removing barriers to the uptake of low carbon electric heating we can extend these protections and the convenience of modern heating to more vulnerable people.

Climate Change and net zero

1. 4. A major part of our transition to a clean energy economy depends on adequate investment in renewable generation.  Stakeholders have told the Department and UR that our current distribution network connection charging policy is a disincentive to investment in renewable generation.  Where our two neighbouring jurisdictions have materially lower up-front charges for connecting renewable generation it makes us a less attractive and a less competitive place for developers to invest.  Socialising connection reinforcement costs for renewable generation, removing the investment cost disadvantage, will facilitate achieving the Climate Change Act renewable generation targets.
   5. Electrification of heating and transport are two of the major elements of our path to net zero.  Socialising connection reinforcement costs will help us achieve the targets in the Climate Change Act, and the Energy Strategy, and a just transition.

Regional Balance

1. 6. Investment in renewable generation will support sustainable growth in our economy.  Much of that inward investment and job creation will be in regional areas where the better quality wind resources are typically found.
   7. Socialising connection reinforcement costs introduces the potential for more investment in these regions. Promoting regional balance is one of the Minister’s four key economic priorities.