Net-Zero Push In U.K. Is Held Back by Regulator, Utility Says

(Bloomberg) -- Britain’s vow to achieve net-zero greenhouse gas emissions by the middle of the century could be hampered by out-of-date regulation, according to the head of one of the nation’s largest utilities.

As more electric cars hit the road, the country will need to invest more on infrastructure to support the increase in power demand, Keith Anderson, chief executive officer of Iberdrola SA’s Scottish Power Ltd. said in an interview. Its plan to spend 42 million pounds ($54 million) to increase network capacity was turned down by U.K. energy regulator Ofgem last week on the grounds that the business case wasn’t proven.

“They’re either betting against net-zero, or they’re saying let’s wait,” Anderson said on the sidelines of the BloombergNEF summit in London. “We need to start that transition now, roll out these projects and show how it works.”

Ofgem denied Scottish Power’s plan because it didn’t provide sufficient evidence to justify the costs associated with their proposal, a spokeswoman for the regulator said in an emailed statement.

“We can only allow consumers to foot the bill for these requests for millions of pounds extra funding where it is properly evidenced,” the spokeswoman said. “If Scottish Power can adequately demonstrate the investment that is needed they may be able to reapply at a later date.”

Delivering net-zero is one of Ofgem’s core principles and it has made sure that networks have 3 billion pounds of funding to reinforce their local grids, including to accommodate low carbon demand for electric vehicles, the regulator said.

Electric vehicles are set to make up 57% of new passenger vehicle sales globally by 2040, according to BNEF. Spending now will allow the power producers to be ready to support new power demand from those vehicles in the coming years.

The inability to make that infrastructure investment may mean that charging stations can’t be built and that people who want to buy electric cars won’t be able to, Anderson said.

“When you look at the big cities, they need to start with the infrastructure for electric cars,” Anderson said. “The more you plan it, the more you invest up front, you’ll make it more effective.”

Home heating, another major source of emissions, could also be a growing source of demand for power in the coming years, Anderson said.

To contact the reporter on this story: William Mathis in London at wmathis2@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Andrew Reierson

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