Ofgem’s RIIO-3 plan sparks investment debate

July 19, 2024

1 minute read

SSE has responded to Ofgem’s Sector Specific Methodology Decision (SSMD) for the RIIO-3 regulatory price control process, which will govern electricity transmission between 2026 and 2031.

Ofgem has highlighted the necessity of unprecedented and accelerated investment in the UK’s electricity network to meet the climate and energy security targets set by the UK and Scottish Governments.

SSE emphasises the importance of the new framework reflecting the urgency and economic context of this required investment.

Initial assessments by SSE suggest that Ofgem must set a higher cost of equity to secure the investment needed for the future electricity network.

SSE also notes changes to the methodology for calculating the cost of debt, which will require detailed analysis alongside other financial measures yet to be finalised.

Barry O’Regan, Chief Financial Officer, SSE, said: “It is crucial that Ofgem set an appropriate cost of equity that recognises the high level of risk borne whilst attracting the unprecedented levels of investment required to decarbonise the economy and deliver net zero.

“Based on our initial assessment, further work is required on the specifics around investability that would enable the UK to compete for finance globally.”