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Better incentives are needed for network operators to invest in a more resilient electricity grid, according to a report from researchers at the Grantham Institute at 911½ñÈÕºÚÁÏ.

Not enough is being done to make the electricity grid fit for the future, according to a new report from researchers at 911½ñÈÕºÚÁÏ, working independently through . In particular, better incentives are needed so that network operators invest in the grid’s resilience.

Britain’s electricity networks are entering a period in which resilience will become increasingly important, due to the increasing impact of extreme weather events, electrification and our rapidly ageing electricity network asset base. Dr Aidan Rhodes Grantham Institute

“Britain’s electricity networks are entering a period in which resilience will become increasingly important, due to the increasing impact of extreme weather events, electrification and our rapidly ageing electricity network asset base,” says of the Grantham Institute, the lead author of the report . 

The report identifies that regulations governing network operators, overseen by the Office of Gas and Electricity Markets (Ofgem), do not fully reward investment in long-term resilience. Instead, there is a focus on day-to day reliability, with incentives that favour short‑term, low‑cost fixes and largely exclude severe‑weather outages. This means there is little financial reason to invest for climate shocks.

The present regulatory framework, called RIIO-ED2, runs until March 2028, and Ofgem is currently consulting on rules for the following five-year period, called RIIO-ED3, hence the need to think now about how best to encourage future investment in resilience.

“ED3 is an opportunity to ensure the regulatory framework keeps pace with the changing risk profile,” says Dr Rhodes. “Our report finds that Ofgem has recognised the importance of long-term resilience, but that stronger incentives and clearer metrics will be needed to translate this ambition into investment from distribution network operators.”

These incentives should reward operators for anticipating and reducing problems, which can be realised by installing digital systems that monitor networks.

“Digital technologies can provide a lower-cost way to monitor assets, allowing distribution network operators to predict and prevent faults rather than relying on expensive physical replacements,” Dr Rhodes says. 

“Our research found conclusively that continuous line monitoring provides a major opportunity to improve network visibility, speed up fault detection and strengthen resilience in a cost-effective way, providing long-term value to consumers whilst enhancing the performance of the networks,” he concludes.

The report also suggests that Ofgem should scale back storm exemptions, introduce standardised climate resilience metrics and reward measurable outcomes including faster fault detection, shorter restoration times and avoided outages.

Storm-related outages are identified as a particular gap. Under the Interruptions Incentive Scheme, severe weather events can be excluded from performance calculations, weakening the incentive for operators to invest in resilience against storms expected to become more frequent as the climate changes.

The report was commissioned by Camlin Group, a company that provides advanced monitoring solutions that help enhance the performance, reliability and lifespan of electricity network assets.

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