In short
A DNO owns and runs the local electricity network in one area. An IDNO also owns and runs distribution networks, but builds or adopts them anywhere in Great Britain, usually for new developments. An ICP is an accredited contractor that builds new connections, which a DNO or IDNO then takes on. Customers can choose who builds parts of their connection, and that choice is what Ofgem means by competition in connections.
Distribution network operators (DNOs)
Great Britain is split into 14 distribution licence areas, each held by a DNO. The DNO owns and maintains the network from the grid supply points, where the transmission network hands over, down to the cut-out in each home or business. That covers 132kV in England and Wales (part of transmission in Scotland), 33kV, 11kV and the low-voltage network.
The 14 areas are held by six groups:
- UK Power Networks: London, the South East and the East of England.
- National Grid Electricity Distribution: the Midlands, the South West and South Wales.
- Northern Powergrid: the North East, Yorkshire and northern Lincolnshire.
- Electricity North West: the North West of England.
- SP Energy Networks: central and southern Scotland, plus Merseyside and North Wales.
- SSEN Distribution: the north of Scotland and central southern England.
DNOs are regulated monopolies. Ofgem sets how much they can earn and what they must deliver through the RIIO price controls, and they recover their costs through DUoS charges on everyone who uses the network. They also act as distribution system operators, managing power flows and buying flexibility. In Northern Ireland, NIE Networks owns the whole network.
Independent distribution network operators (IDNOs)
IDNOs hold a distribution licence with no fixed area. Most of their networks serve new housing estates, commercial sites, EV charging hubs and energy projects. An IDNO's network connects to the DNO's network, often at the edge of the development site, and the IDNO then owns and maintains everything downstream.
For a developer, an IDNO can offer an alternative to the DNO adopting the new network, and often pays an "asset value" for the right to own it, because the IDNO will earn charges from it for decades. For the people who live or work on the site, the difference is mostly invisible: they choose any supplier as normal, and the IDNO's charges are capped relative to the local DNO's.
Examples include ESP Electricity, Last Mile Electricity, Eclipse Power Networks, Independent Power Networks, Leep Electricity Networks, Harlaxton Energy Networks, Murphy Power Distribution and Energetics.
Independent connection providers (ICPs)
An ICP is a contractor accredited to design and build electricity connections. ICPs don't own networks. Once the work is finished and inspected, the assets are adopted by the DNO or an IDNO, which owns and runs them from then on.
To work as an ICP, a company needs accreditation under the National Electricity Registration Scheme (NERS), run by Lloyd's Register. NERS accreditation is given for specific scopes, such as cable laying, jointing, substation installation or design, and at specific voltages. Many ICPs are also linked to an IDNO, offering a single package of build and adoption.
Contestable and non-contestable work
A new connection is split into two kinds of work:
- Contestable work can be done by an ICP or by the DNO, as the customer chooses. It usually covers the new network on the customer's site and the cable back towards the existing network.
- Non-contestable work must be done by the DNO. It usually covers the final connection to the existing network and any reinforcement of it, along with some approvals and design checks.
Over time more work has moved into the contestable category. Accredited ICPs can, for example, choose the point of connection themselves on some jobs ("self-determination"), and carry out some of the final connection work. The rules are set out in each DNO's Competition in Connections Code of Practice, which Ofgem oversees.
Choosing a route
For a new connection, a customer can typically:
- ask the DNO to do all the work and adopt the network;
- use an ICP for the contestable work, with the DNO adopting the result;
- use an ICP for the contestable work, with an IDNO adopting it.
The right choice depends on price, timescales and how much risk the customer wants to manage. The DNO still does the non-contestable work, and the connection date is still limited by the capacity of the existing network and, for larger projects, by connections reform.
Sources
Based on information from Ofgem, Lloyd's Register (NERS) and the network companies. For the terms used here, see the glossary.
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Latest stories on ICP & IDNO Competition. For terms, see the glossary; for key dates, the policy timeline.