What does a place-based strategy look like?

The UK energy system is traditionally centralised and designed to incentivise big generation and national supply. However, the transition to clean power by 2030 shifts the focus towards decentralisation, with local businesses and consumers generating energy and supplying it directly to their communities while also helping balance supply and demand on the grid.

The decentralised model presents a range of opportunities to unlock a thriving local energy landscape. Research has shown that a localised, place-based approach to decarbonisation and net zero, taking into account the unique characteristics of towns, districts and neighbourhoods, can result in a more 3cost-effective and rapid transition, with significant wider benefits for local communities.

SP ENW has developed its distribution system operation strategy into one that works for people and places – combining a focus on decarbonisation, economic growth and affordable infrastructure delivery, with a range of measures designed to maximise societal benefits.

This evolution to a more ‘social’ DSO approach aims to maximise the benefits of decarbonisation for individuals, as well as address the specific needs of places through projects and initiatives conceived to bolster local economic resilience, prosperity and sustainable development.

“Our mandate and mission is to support the region's economic and social ambitions. The North West is very diverse, both geographically and socio-economically; it includes some of the wealthiest postcodes and some of the poorest postcodes in the UK.”

Paul Auckland, head of DSO, SP ENW

The next stage of this, looking at specific locations to make investment tailored and truly ‘place-based’ involves reaching out to locations where economic growth and economic diversity can help lift people out of poverty, or attract new jobs and investment. Local engagement should ensure the approach is both comprehensive and deeply connected to communities in the North West, helping drive meaningful, scalable social impacts, maximising outcomes.

Paul Auckland, head of DSO at SP ENW, explains: “Our mandate and mission is to support the region's economic and social ambitions. The North West is very diverse, both geographically and socio-economically; it includes some of the wealthiest postcodes and some of the poorest postcodes in the UK. We need to ensure that as we develop, invest in and expand the network, we do it in a way that aligns closely with local needs and the needs of local governments and stakeholders to support their ambitions around growth and economic development.”

Tailored approaches

DSO functions, says SP ENW, can and should be developed and delivered in consultation with customers and stakeholders, combining a focus on decarbonisation, economic growth and affordable infrastructure delivery with specific measures to maximise societal benefits.

The strategy puts a new lens on decision-making, ensuring that every investment delivers maximum value by stacking societal benefits alongside traditional efficiency and cost-effectiveness, including improved energy access, economic growth, job creation and carbon reduction. For further details on the social approach, including targets, timelines and ongoing reporting, you can read our first insight report published here.

The North West of England is a vibrant patchwork of different places with unique characteristics and needs, encompassing the Lake District, Lancashire, parts of the Yorkshire Pennines and Greater Manchester. It’s easy to think that Cumbria is purely focused on tourism, but it’s also home to some of the poorest postcodes in the UK, meanwhile, the ‘nuclear coast’ is a hotspot for heavy infrastructure development, while other areas are experiencing huge housing growth.

Applying a tailored, place-based approach to investment and development in the region is therefore likely to result in various efficiencies and cost savings and there is increasing recognition of the multifaceted benefits this can bring.

Place-based investing is now central to social impact investing in the UK and gaining strong pension fund support. The government encouraged place-based investment as part of its ‘levelling up’ policy agenda between 2019 and 2024.

Recent research by Innovate UK, a non-departmental public body providing money and support to organisations creating new products and services, found significantly improved outcomes when net zero delivery is tailored to the needs and opportunities of the area.

The study compared the social costs and benefits of adopting low carbon measures under a ‘place-agnostic’ approach, whereby measures are adopted uniformly across places, and ‘place-specific’ deployment, whereby each city-region targets the same carbon emissions reductions but is able to adopt the most socially cost-effective combination of measures.

It’s easy to think that Cumbria is purely focused on tourism, but it’s also home to some of the poorest postcodes in the UK, meanwhile, the ‘nuclear coast’ is a hotspot for heavy infrastructure development, while other areas are experiencing huge housing growth.

The place-agnostic approach required £195 billion of investment to meet targets set out in the Sixth Carbon Budget, which released £57 billion of energy savings for consumers. In contrast, the place-specific scenario required just £58 billion investment and released £108 billion of energy savings. Furthermore, the place-specific investment generated wider social benefits of £825 billion, almost double the £444 billion generated under the place-agnostic approach.

“Understanding place is key to us, which means understanding what our local stakeholders, our local councils, are looking to develop, and within that, their growth ambitions and their green energy ambitions,” explains Helen Norris, stakeholder engagement & responsible business manager at SP ENW. “It’s not acceptable to only support, for example economic growth and electric vehicle (EV) infrastructure for the wealthy, the electricity network needs to develop to ensure that people aren't left behind and can participate in the energy transition.”

The social DSO strategy is informing decision-making on investments related to worst-served customers and improving network resilience in those areas, in response to lessons learned from Storm Arwen.

“Understanding place is key to us, which means understanding what our local stakeholders, our local councils, are looking to develop, and within that, their growth ambitions and their green energy ambitions.”

Helen Norris, stakeholder engagement & responsible business manager, SP ENW

It is also influencing DSO plans for energy infrastructure needed to support regional growth aspirations. For example, the west coast of Lancashire is ramping up green energy generation, including at the Blackpool Airport Enterprise Zone, a 40-acre site north of Blackpool Airport where new high performance renewable-powered data centres are expected to create thousands of skilled jobs in the fields of artificial intelligence, telehealth, advanced manufacturing and gaming.

“The North West really is a hive for green infrastructure development, so we need to understand that place-based economic growth and sustainable growth ambitions and plan our capacity around it,” says Norris.

And it doesn’t just stop at improving outcomes in the North West. Sharing best practice wider is key to further embedding the approach up and down Britain. SP ENW is already collaborating with SP Energy Networks to consider learnings from both organisations to benefit their customers.

Nia Lowe, head of DSO at SP Energy Networks, says working with local stakeholders is vital to future delivery. “We are very excited to understand and learn from SP ENW’s ‘social’ DSO approach and share learnings from our own projects that adopt similar principles.”

A Utility Week Intelligence report, in association with SP Electricity North West