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West Midlands Levelling Up Growth Prospectus

Local Area Energy Planning

The Challenge

The UK is facing unprecedented energy challenges. The government has sought to address this through various initiatives, however, due to its geography the West Midlands is unlikely to gain substantially from any of these.

In addition, the West Midlands is also at risk of losing its manufacturing and industrial base to areas with direct access to sustainable energy sources – a situation perpetuated through the recent UK Energy Security Strategy where benefits will primarily accrue to coastal regions. 

The Prize

The main benefit of enhanced energy security is the ability to build resilience against cost fluctuations, reduce fuel poverty, and reduce business vulnerability.

By having better informed and integrated investment and planning for new energy, we’ll realise savings in energy, more efficient infrastructure roll-out, increased economic resilience and business opportunities, and support the net zero and decarbonisation agenda.

The West Midlands is the UK’s leading region for comprehensive place-based energy planning and the development of a smarter, more effective and efficient energy market.

Progress So Far…

We’ve delivered on our commitments from the 2017 devolution deal — to explore and develop regional governance and policy mechanisms which complement national market regulation, while also accelerating local demand-led economic opportunities, supporting the commercialisation of energy systems, and unlocking clean energy investment opportunities. 

With initial investment of £150,000 from Government, Energy Capital, a unique public-private partnership, has brought a further £50 million of value to the West Midlands region, and demonstrated the savings and value to be accrued from smart, place-based, energy systems. 

One powerful example of the value of this evidence-based research is the PFER design project RESO (Regional Systems Energy Operator). This identified a net present value of approximately £720 million in savings over 30 years from taking a place-based approach to planning and operating the whole energy system. Additionally, there was a further £34 million of savings per year for its host locality, which in this case was the city of Coventry. 

We have also established a Net Zero Infrastructure Delivery Panel to give confidence to Ofgem and providers when powers over zone designation, regulation derogation and infrastructure implementation are devolved to the region.

Levelling Up Mission:

By 2030, pay, employment and productivity will have risen in every area of the UK, with each containing a globally competitive city, and the gap between the top performing and other areas closing.

Our Proposal

Building on our research and delivery experience, these proposals seek the devolution of powers and funds (£9.12 million over 5 years) to conduct Local Area Energy Plans. Through these plans, energy innovation zoning can be effectively trialled and implemented to meet the specific requirements, or levelling up opportunities, of an area. 

By exploring a range of potential technologies and scenarios, when combined with powerful stakeholder engagement, a Local Area Energy Plan will identify the most cost-effective pathway and plan for achieving the energy system’s net zero transition.

In order to unlock the power of local area energy planning we need:

  • A duty on the Combined Authority to coordinate and raise funds to deliver LocalArea Energy Plans and integrate their findings into strategic and spatial plans, alongside the opportunity to advise theFSO on its engagement with local partners;
  • The ability for the Mayor, with local authority agreement, to designate specific EIZs, including zero carbon industrial zones, housing retrofit and heat zones,with appropriate, relevant and impactful regulatory flexibilities;
  • Enhanced involvement in investment decision-making, including: 
  • targeting DNO infrastructure investment to greatest need;
  • Triggering net zero re-openers;
  • Supporting place-based representation to Ofgem Code reviews;
  • Empowering public-private investment models for EIZ delivery;
  • Allocation of OZEV funding to enable rapid charging on the key route network.

What We Hope to Achieve

The WM RESO project (West Midlands Regional Energy Systems Operator) has already demonstrated the scale of savings and financial return to be accrued from place-based energy infrastructure planning and a more effective energy market. It will also result in key outcomes including:

  • Reducing carbon emissions;
  • Increasing renewable energy opportunities;
  • Increasing economic activity and GVA in key sectors.