With all the changes happening in the energy industry at the moment, we can't tell exactly how the future will evolve and therefore what investments we’ll need to make. To help manage this uncertainty, we've made a number of assumptions about the future and, in particular, about the electricity needs of Great Britain and the types of power station that will open (and close) over the decades to come. In making these assumptions, we started with the Future Energy Scenarios, which are developed by the System Operator. The System Operator prepares a number of scenarios and shows what you would need to believe to meet these scenarios – for example, what you’d need to believe to meet climate change targets in 2050. As Transmission Owner, we've taken an initial view of these energy scenarios to start building our investment plan. To make sure our plans are as up-to-date as possible, we have updated the scenarios to take account of changes that have occurred since they were developed, such as reductions in the cost of offshore wind farms.
We recognise that our crystal ball is no better than anyone else’s at anticipating the future, so that's why we believe price controls continue to need mechanisms to automatically cater for the impacts of uncertainty; and why we have used cost benefit analysis to support investment decisions that feed into our plans. Cost benefit analysis allows us to examine different options, taking into account the cost of a solution and the benefit it provides. In some cases, the System Operator undertakes this type of analysis independently on behalf of all GB Transmission Owners. These techniques are useful for both customer-driven investments (such as network reinforcement projects), as well as for asset replacement, and help us make long-term decisions that are in consumers’ best interests.
For details of the methodology we use to calculate our impact on household bills, please click here.