11 setembro 2023 Gitanjali Shankar  - Jessica Hargreaves - Ed Jackson Energy and Infrastructure - Renewables

Grid connection challenges

Delays in grid connection are considered one of the biggest challenges to the UK achieving its ambitions for net zero power by 2035. As system operator, National Grid Electricity System Operator (“NGESO”) is seeking to address this issue through a number of short-term and longer-term measures. 

In the short term, NGESO is focusing on: (i) grid connection queue management to free up capacity as more generators seek to connect to the electricity transmission networks; and (ii) special measures needed for the deployment of battery energy storage systems (“BESS”). NGESO has also introduced a two-stage connection offer process in England and Wales. 

In the longer term, NGESO is consulting on wider connection reform and is expecting to publish further recommendations by November 2023. The UK Government also recently concluded its Offshore Transmission Network Review. Recommendations include the development of options for deployment of multi-purpose interconnectors and building on the significant shift to a more centralised and coordinated transmission network, as set out in the July 2022 Holistic Network Design. We consider each of these in further detail below.

Short term: 5 point plan and two stage offer process

Short term measures have been primarily aimed at achieving efficiencies through managing the queue to connect to the grid. To address this problem immediately, NGESO introduced a 5-Point Plan in February 2023, three of these measures relate to connection queue management and the other two measures relate to BESS.

Transmission Entry Capacity (“TEC”) amnesty to free up queue capacity 

The TEC amnesty closed in April 2023. The scheme allowed generation developers with connection agreements listed on the TEC register to confirm their willingness to reduce their TEC or terminate their agreement and leave the TEC queue at minimal or no cost. NGESO subsequently announced that 8.2GW of projects applied to terminate their contracts, and that it would communicate with each individual applicant whether it had accepted such termination or reduction of TEC by the end of July 2023.

Amendments to industry codes to better manage the connection queue

NGESO is proposing significant modifications to the Connection and Use of System Code (“CUSC”) through the introduction of a queue management system for upcoming projects. The CUSC connection agreement will include milestones and NGESO will have the right to terminate contracted projects which are not progressing against the agreed milestones. The ultimate intention of such reform is to manage the queue more efficiently and to allow projects that are progressing against milestones to connect to the transmission network earlier, and for those that are not, to leave the queue.

Changes to background modelling assumptions to free up queue capacity

NGESO has updated the modelling assumptions in the calculation of the project connection dates to determine new Construction Planning Assumptions (“CPAs”). The current CPAs assume that most projects in the queue are capable of delivery, whereas in reality only 30 – 40% of projects connect to the grid. By updating the CPAs, the NGESO believes it can free up capacity in the queue.

Interim offers for BESS

NGESO will enable an estimated 95GW of BESS in the pipeline to connect to the grid more quickly by removing the requirement for non-critical enabling works to be complete before such projects connect under a non-firm connection arrangement. As per a recent June 2023 policy paper, NGESO is progressing the required drafting, which may be proposed as a CUSC modification, and intends to share it with industry soon. It should be noted that NGESO has also stated that under specific network conditions which increase operational costs, BESS systems with this type of connection agreement may be required to reduce their output without being compensated, though it is continuing to review this arrangement.

Re-assessing the impact of storage

As with the intended changes to CPAs, NGESO is changing the modelling assumptions behind BESS projects to take into account the impact on the grid of their ability to store or release energy according to demand. Following this update, it is now working with the developers to review existing contracted connections.

Two-step offer process for connections

A new two-step offer process was introduced from 1 March 2023 in England and Wales (but not in Scotland) to apply the revised CPAs and storage modelling methodology under the 5 Point Plan and reduce uncertainty for investors. This process consists of:

  • an initial offer – which identifies a connection site/point reflecting the requested connection point in the application. It also provides a completion date based on the existing TEC queue and current GB Transmission Reinforcement Works (“TRW”); and 
  • a follow-up offer – to be issued a maximum of nine months after the initial offer has been accepted and once the TRW review (see below) has been completed. This will outline the detailed works, programme or indicative costs and charges and include a completed Construction Agreement and Bilateral Connection Agreement. In the interests of efficiency, NGESO intends to issue follow-up offers in groups by region.

The two-step offer process will run for 12 months in total as an interim solution for improving connection completion dates in lieu of the results of a wider review of TRW.

TRW review

In the medium-term the wider review of the TRW for all contracted offers with a connection date post 1 January 2026 is underway and will build on the results of the TEC amnesty and the updates to the modelling methodology for CPAs BESS. This review will rationalise the TRW required for the parties with connection offers. After the review has been completed some projects within the GB transmission system queue may have connection dates moved forward.

Long-term: holistic connections reform

In the long-term, proposed reforms have looked at increasing strategic investment in the transmission infrastructure and applying greater oversight to designing the grid more holistically, as well as continuing to redesign the grid connections process.

GB Connections Reform

  • NGESO recently consulted industry on connection reform and expects to publish its final recommendations and an implementation plan by November 2023. NGESO’s preferred option is to adopt a gated, two stage connections process that assesses connection applications in annual application batches. 
  • The first gate would involve an annual application window, open for a nominal period each year. NGESO will then review all applications submitted during this window. It believes that by batching applications it can better consider co-ordinated network design before providing applicants with a connection offer, each of which will include a backstop date for connection.
  • Once an applicant has received a connection offer, it will then move through the second gate when it submits planning consents or other agreed acceleration criteria and may be able to connect prior to the backstop date in its connection offer. This will allow NGESO to proactively manage the queue in the second stage by, for example, accelerating projects that meet certain conditions and submit planning consents ahead of other projects.
  • This proposal represents a radical departure from the current connections process and it remains to be seen how industry will respond, particularly considering the impact an uncertain connection date may have on investment. The reforms, once finalised, are not expected to go live until Q2 2025. 

Offshore Transmission Network Review 

In July 2023 the UK Government concluded its Offshore Transmission Network Review (“OTNR") with the publication of a response and summary of outputs to its September 2021 consultation, along with a statement of support. The OTNR was introduced to review the developer-led approach to offshore network transmission (which individually connected offshore wind projects to the grid) with a view to designing the more coordinated approach necessary for increased connection of offshore wind power to the grid. The OTNR sets out various recommendations and key outputs in respect of a Future Framework for offshore transmission:

  • UK Government has made progress on developing options for a strategic, holistic approach for the deployment of offshore wind, interconnectors and multi-purpose interconnectors (“MPIs"). Notably, on 2 June 2023, Ofgem and the Government published a joint consultation on market arrangements for MPIs and Ofgem published a consultation on proposals for the regulatory framework for MPIs and non-standard interconnectors, which closed on 15 July 2023. The Energy Bill 2022-2023 (the “Energy Bill”), when it comes into force later this year, will amend the Electricity Act 1989 by introducing the operation of an MPI as a licensable activity;
  • the Holistic Network Design (“HND"), as published by NGESO in July 2022, is a key output of the OTNR and an example of the desired coordinated approach; it focuses on moving offshore wind connections from a radial (point-to-point) approach for individual projects, to a more coordinated one which considers future projects and the sharing of infrastructure. The HND represents a centralised and strategic approach to network planning seeking to integrate connecting offshore wind projects to shore with the capability to transport electricity around Great Britain. It provides connection recommendations for 23 GW of offshore wind and the associated transmission network infrastructure; 
  • regulatory changes to enable coordination, including anticipatory investment, changes to codes and standards and review of the Generator Commissioning Clause framework have been identified by Government; and
  • there are plans to enable a consenting process focused on coordination and scale by amending the energy National Policy Statements, planning a future consultation on reforming the Consenting and Nationally Significant Infrastructure Projects and designing Celtic Sea leasing rounds in alignment with the grid.

Electricity Network Commissioner’s Report

In addition to the issue of delayed connections to the grid that many of the reforms noted above are hoping to address, the electricity transmission infrastructure requires significant development for the UK to meet its net zero targets. In August 2023 the UK Electricity Networks Commissioner published a full report with his recommendations to speed up the deployment of electricity transmission infrastructure with the aim of halving the target timeline for building strategic transmission from fourteen to seven years. We have discussed an overview of these recommendations in a separate article.

We continue to monitor developments closely concerning updates to grid infrastructure and connection and the impact on our clients and live projects. Please do get in touch if you have any questions or would like to find out more.