Ofgem launches policy review on reforming the electricity connections system
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Industry sector
- Distribution Network
- Transmission Network
Ofgem has launched a policy review to speed up low-carbon energy schemes connecting to the electricity transmission grid.
In an open letter to the energy sector we set out potential options on short-, medium- and long-term reforms to make the connections regime fit for net zero transition.
The review sets out the challenges with increasing application volumes constrained by the existing ‘first-come, first-served’ ‘queuing system’ to connect, managed by National Grid Electricity System Operator (ESO). This sees new connection requests joining the end of the line, even if projects in front have stalled or are not progressing.
- Around 20% of generation capacity in the transmission queue will have to wait a further 10 years before reaching their connection dates
- More than 40% (120GW) offered dates of 2030 or beyond
- Applications rising by 80% in the last 12 months – leaving 280GW of projects now holding connection agreements
The open letter sets out plans to deliver new connections at scale to meet long-term energy demand with offshore wind, solar, new nuclear and other generation – alongside Ofgem’s work building strategic network investment and efficient, flexible network management.
Ofgem backs short-term initiatives by NGESO and the Energy Networks Association to speed up connection dates for generation and demand customers.
NGESO’s five-point plan is expected to improve connection dates for the majority of 280GW of contracted grid capacity by between two and 10 years, with new offers by March 2024 and reduced transmission reinforcement works.
But Ofgem sets out the direction of travel for longer-term reforms to prioritise the schemes that are ready to go and ahead of those making poor progress. This will ensure the pace of grid connections delivers the transition to the net zero energy system.
By 2025, Ofgem expects to see a revised connections process, with coordinated improvements and data transparency to all connecting parties. Beyond 2025 we need the connections regime to be in line with major reforms, including any reforms to market arrangements, the introduction of the Future System Operator, regional system planners, and Centralised Strategic Network Plans.
This could see more controlled access to the grid, moving away from the current linear queue-based process – either through application windows or stricter qualification gates.
The open letter states this system will be based on:
- transparent, consistent data giving applicants advance, granular insight into expected grid capacity and level of network investment needed
- more robust connection applications, enabling well-progressed projects to proceed
- delivering improvements swiftly, enabling shorter average connection offer dates to be offered to customers
- greater coordination and consistency across system boundaries, supporting more consistent outcomes and efficient and coordinated approaches
Akshay Kaul, Interim Director of Infrastructure and Security of Supply said:
“Great Britain is at a pivotal moment in its journey towards net zero.
“There is a pressing need to ensure our energy system is equipped to enable this substantial increase in generation capacity and growing demand. Ensuring these assets can connect when and where they are needed will be crucial, as well as in delivering affordability for consumers and maintaining security of supply.
“Many of the building blocks to address this are already coming into place. But more action will be needed. There must be a fit for the future connections regime which offers shorter average connection dates which better meet customers’ needs and enable a timely transition.
“We will consider whether substantial changes to the current connections queue methodology are required and how changes are applied to both new applicants and those parties with connection approvals, while ensuring progress can be made quickly.
“We will take a central role in driving progress. We will monitor the progress of industry initiatives to ensure these are translating into benefits for consumers, in terms of the scale, queue management and earlier connection dates”.
The review will build towards a joint-action plan with government due in summer 2023, as pledged in the Powering Up Britain strategy published in March.
We are seeking views on our proposals and will hold a webinar early in June. We invite stakeholders to submit feedback by 16 June 2023. Read the open letter.