IFIs and
Introduction
As part of the recent Distribution Price Control Review (DPCR) effective from 1 April 2005, Ofgem (the regulatory body for the energy industry) introduced two new incentives: the Innovation Funding Incentive (IFI) and Registered Power Zones (RPZ). The primary aim of these two incentives is to encourage the distribution network operators (DNOs) to apply innovation in the way they pursue the technical development of their networks. A Good Practice Guide (Engineering Recommendation G85) has been produced by the DNOs and is available free of charge from the Energy Networks Association’s website: www.energynetworks.org.
Innovation Funding Incentive (IFI)
The IFI is intended to provide funding for research and development (R&D) projects focused on the technical development of distribution networks to deliver value (i.e. financial, supply quality, environmental, safety) to end consumers. IFI projects can embrace any aspect of distribution system asset management from design through to construction, commissioning, operation, maintenance and decommissioning. A DNO is allowed to spend up to 0.5% of its Combined Distribution Network Revenue on eligible IFI projects.
Open reporting (i.e. available in the public domain) of IFI projects is required by Ofgem; this is intended to stimulate good management and promote sharing of innovation good practice.
Registered Power Zones (RPZs)
RPZs are focused specifically on the connection of generation to distribution systems. The estimates made by DNOs as part of the DPCR process indicated that some 10GW of generation could be connected in the next five years. This generation could connect at all distribution voltage levels bringing new system design and operating challenges.
RPZs are therefore intended to encourage DNOs to develop and demonstrate new, more cost effective ways of connecting and operating generation that will deliver specific benefits to new distributed generators (DG) and broader benefits to consumers generally. The RPZ incentive applies from April 2005 and, at present, excludes DG applications processed before then.
SSE (Scottish and Southern Energy) and its energy network subsidiary SSE Power Distribution welcomes this initiative as a positive measure to further improve customer service, enhance safety, address environmental issues and reduce costs.
IFI and RPZs annual report