Grid connection queues are arguably the single biggest issue facing the energy industry in Great Britain today. The lack of available grid connections is slowing down or even preventing developers from building renewables (and battery energy storage).
The issue has become unavoidable, making mainstream news. Publications like The Economist, The Telegraph, and the Financial Times have recently covered grid connections (as well as a broader need for more transmission infrastructure).
According to a recent open letter from Ofgem, “over 40% (120 GW) of all new generation capacity holding transmission connection agreements today have connection dates of 2030 or beyond”.
In February, National Grid ESO announced its five-point plan for tackling queues, which is “the biggest reform to the connection rules in 20 years.”
Most projects in the queue should see connection dates improve as a result (some by up to ten years!), alongside a reduction in transmission reinforcement work.
The “grid connection” challenge
A “grid connection” is a cable link between a new electricity project and the power grid. This connection allows the electricity generated by the project to be transported and distributed to homes, businesses, and other consumers.
To obtain a grid connection, potential developers need to follow specific steps. During this process, the network operator assesses grid capacity and what reinforcement work may be needed for the project to connect. Following this, the network operator provides a connection offer, specifying costs, technical requirements, and an estimated connection date, and the project joins the connection queue.
However, the capacity of projects in this queue is very quickly outstripping the rate at which network operators can progress them. This is the cause of many projects being given connection dates far into the future. And in many cases, projects ahead of them in the queue may never actually be built.
National Grid ESO’s five-point plan
1. Offering a “TEC amnesty” to contract-holders
The Transmission Entry Capacity (TEC) Register lists all transmission-connected assets with existing grid connections or grid connection agreements for future assets. Currently, connection dates on the TEC Register stretch as far as October 2038. This makes some projects un-fundable, because investors will not wait 15 years for an asset to be built.
National Grid ESO has offered a “TEC amnesty” - allowing developers to leave the queue or reduce the size of their connection without incurring penalties for doing so. The amnesty closed on 30th April, and received 8.2 GW of applications.
National Grid ESO is currently reviewing submissions. If you have applied, the ESO will be in touch to let you know the outcome for your project - most likely during July.
2. Updating assumptions around project feasibility
The ESO is reviewing and updating its Contract Planning Assumptions (CPAs). Essentially, the ESO currently assumes that most projects in the queue are capable of delivery - in reality, this is more like 30-40%.
3. Re-calculating the actual impact of storage on the grid
Current grid connection regulations treat storage as a generation asset. Essentially, the assumption is that storage assets are always exporting at maximum power.
In reality, this is not how storage assets behave. They also import energy from the grid and rarely export at full power. The ESO will now take this into account when batteries apply for grid connections. This reduces the need for network capacity upgrades for storage projects and frees this up for other generation.
This means that storage projects can be connected to the grid quicker. One way this will be achieved is through offering an interim “non-firm” connection agreement for storage projects. (More on this in Point 5 below.)
4. Removing grid connection contracts from unfeasible projects
Currently, there is no way to terminate agreements for projects that aren’t progressing. The ESO has proposed a modification to the Connection and Use of System Code (CUSC) which would allow them to do so. This will be measured against a series of milestones that need to be met in order for projects to progress through the connection queue. Ofgem has now received the proposal and is deciding whether to accept it.
5. Letting storage projects connect more quickly (good) - by offering non-firm grid connection agreements (less good)
On the face of it, allowing storage projects to connect more rapidly seems positive. But there are concerns about how non-firm connection agreements will work.
Currently, batteries generally have “firm” connection agreements. This means they are the sole users of their connection capacity - and can freely import and export at full power whenever they like.
Non-firm connection agreements will allow National Grid ESO to restrict battery output without compensation. In reality, this is likely to be a pretty rare occurrence, but it makes it very difficult for battery owners to build a business case based on current commercial assumptions.
Additionally, there are questions about how non-firm connections will affect an asset’s ability to provide grid services (such as frequency response). Ultimately, whether investors are comfortable with non-firm connection agreements is yet to be seen.
How does this affect planned co-located sites?
While batteries will be able to connect to the grid quicker by opting for non-firm connections, the process remains slower for generation. This is the case with co-located sites, too. Take, for example, a co-located solar and storage site. The storage element of the site can connect quicker, but the solar cannot.
What else is happening to fix the grid connection queue issues?
Energy Networks Association action plan
In April, the Energy Networks Association launched its three-step “immediate action plan” to accelerate connections. The proposed plan is very similar to National Grid ESO’s plan - focusing on distribution networks. This includes a move away from a ‘first come, first served’ approach to connections. Instead, ‘first ready, first connected’ will be the new approach - those projects progressing through milestones will be prioritized.
DESNZ/Ofgem joint action plan
The Department for Energy Security and Net-Zero (DESNZ) and Ofgem are teaming up to put together a joint action plan - expected in September. This will cover much more than just connections. It will also focus on increasing transmission capacity, and using existing network capacity more effectively.
Want to have your say?
National Grid ESO’s Connections Reform consultation is now live. You have until 28th July to share your feedback.