Reasons to be optimistic for the future of the UK Grid
As of February 2023, the National Grid had a connections queue of 257MW worth of projects waiting to connect against a 147GW of low carbon requirement to achieve net zero. Unfortunately, only 30-40% of the applications in the queue materialise into an actual project. This has meant that new connections are being given a date of between 12-15years before they can connect, which are dates that are not acceptable to investors.
One cause for optimism is that the core players with the power to transform our grid infrastructure have all issued definitive indicators that there is appetite for reforms which will enable a stronger, more resilient, more flexible grid.
In order to try and free up capacity and remove the “speculative projects”, as of March 2023 the National Grid published a 5-point plan to help.
1) Operating a Transmission Entry Capacity Amnesty until April 2023, allowing developers to terminate their connection contracts without incurring liabilities, freeing up capacity in the queue.
2) Updating modelling assumptions to reflect current connection rates and reducing the assumption that most projects in the queue will connect.
3) Changing the treatment of storage, including batteries, on the network to allow them to connect faster and free up capacity for other projects.
4) Developing new contractual terms for connection contracts to manage the queue more efficiently so that those projects that are progressing can connect and those that are not can leave the queue.
5) A ‘soon-to-be-made’ offer of an interim option for storage projects to connect to the network sooner, but with the caveat that they may be required to turn off more frequently when the system is under stress without initially being paid to do so.
Additionally, OFGEM issued an open letter on future reforms to the electricity connections process, which focuses on reforms to deliver benefits to current and future customers, accelerate progress to net zero, begin to deliver as soon as possible, coordinate across onshore and offshore networks on the transmission and distribution grids and ensure the reforms are resilient to wider reforms.
In April 2023, the The Energy Networks Association (ENA) published a three-step plan to speed up connections to the grid. If successful, this will result in mature projects which are closer to delivery gaining priority. Another core priority is changing how transmission and distribution networks co-ordinate connections, improving their interactivity. The final of the three points aims to bring greater flexibility for storage customers through new contractual options.
A combination of the work being undertaken by National Grid, OFGEM and the ENA, alongside the new investment in the Grid infrastructure should enable projects to connect earlier than their proposed date, but these could still be 2030 onwards.
This issue has become such a frustration to investors and customers that the former Prime Minister, Rishi Sunak detailed changes needed to be made in his new approach to net zero speech given on the 20th September 2023.