No more low-hanging fruit? – When RESPs are up and running, who will make the tough decisions?

Recent years have seen the development of a consensus around net zero and its implications for the energy system. As the transition progresses, we are facing more difficult choices—whether these are on market arrangements or the future role of natural gas in our homes.  

With the current administration’s focus on more rapid decarbonisation (Clean Power 2030), a well-informed commentator may wonder whether now has come the time for some tough decision-making and whether RESPs could be the answer to force those decisions.  

Recognising that Ofgem’s final decision on RESP policy framework has not yet been published, our expectation is that RESPs will (broadly) deliver four main functions: 

• Including views across a wider range of stakeholders and bringing them into a formal planning process in a way that has not been undertaken to date; 

• Institutionalising ‘local’ engagement to support the energy planning process and adding a degree of democratic legitimacy by involving upper-tier authorities [1]; 

• Ensuring the development of a holistic, cross-sector vision for energy infrastructure development within a geographically defined area;  

• Adding to the evidence base which informs investment decisions made by energy infrastructure operators (DNOs, GDNs, heat network operators, etc.). 

While these, arguably, are significant from an institutional point of view, this blog wouldn’t be half as interesting (we hope!) if we weren’t to set out those aspects where RESPs may fall short… 

From the consultation, it appears that RESPs will remain advisory – they are to ‘inform’ network company business plans and are ‘expected to inform the spatial and local energy plans and any cross-sector plans’.  So, if RESPs stretch to provide cross-sector blueprints for energy infrastructure network investments in their respective geographic areas (but without the decision-making powers to make these happen), they will provide yet another input into plans to be finalised (and delivered) by others. 

Throughout its development of the RESP framework, Ofgem has been clear that it will retain responsibility for approving investment plans put forward by regulated network companies. This effectively means the regulator can approve, amend, or reject what companies have put forward (irrespective of the level of representation via RESPs for specific investments). Should Ofgem elect to exercise its veto option, it would come with the risk of undermining the value of the RESP framework, potentially jeopardising the future role of RESPs and impacting the confidence and participation of its stakeholders. Given this risk, it could also mean that the tough decisions on energy policy needed in local areas will not be made through the RESP framework.  

There is a wide range of decisions that are likely to impact both households and businesses in the near term, for example:  

• Whether and where heat network should be built; 

• Whether and where new transmission powerlines should be built;  

• Whether a local street would be dug up to increase the capacity of the electricity cables; 

• And speaking of big calls - whether hydrogen will be used to help heat homes, or whether and when an area might come off the gas network entirely [2]. 

Currently, the decision for each item on this list is taken by different organisations.

While RESPs are unlikely to untangle this web of decision-making, there is significant potential to make decisions faster and more holistically by providing a common perspective and pathway to the future of energy infrastructure across a specific geographical area which all decision bodies draw on. 

This would allow for a big first step for joined-up thinking about the energy infrastructure we will all rely on in the future. 

[1] From Ofgem RESP Policy Framework consultation, 4.15:
For democratic representation, we propose upper-tier local authorities in England, and unitary councils in Scotland and Wales are represented on the Board. In England, upper-tier authorities include combined, county and unitary authorities. We would expect any authority (upper or lower tier) that is part of a combined authority to be represented by that combined authority.

[2] We note that in DESNZ’s Hydrogen Strategy December 2024 update, the Department falls short of recommitting to the previous Government’s 2026 decision on hydrogen in home heating and also does not set out a different timetable for this decision. (Hydrogen strategy update to the market: December 2024 - GOV.UK)