Accelerating electricity grid connections in UK

Although dependent on location and required capacity, there are long lead times for obtaining a grid connection, whether connecting to a distribution or transmission network. As a result, grid connections have become the main determinant of timelines for the development of many generation, storage and large-scale demand projects (such as data centres).

Below we take a brief look at several recent announcements that set out the direction of travel in terms of reforming the distribution and transmission connection processes.

Distribution

Firstly, in April 2023 the Energy Networks Association (ENA) – which represents energy network operators – published its action plan to accelerate distribution network connections. This sets out actions in three priority areas, as described below.

1. Reforming the distribution network connections queue

The current connection process is based on a ‘first-come, first-served’ model and was designed for a time when there were a smaller number of projects with a higher degree of certainty regarding planning permission and funding. However, due to the current long lead times for connections, many connection applications are now submitted well before there is certainty regarding a project’s successful commissioning. This has resulted in a situation where projects that may never come to fruition are taking up places in the connections queue and potentially delaying shovel-ready projects.

In order to tackle this issue, the distribution network operators (DNOs) are proposing a partial shift to a ‘first-ready, first connected’ model. This means that connections which reach agreed milestones and are ready to start construction will be prioritised for connection where there is no detrimental impact on other projects ahead of them in the queue. In other words, the queue will be actively managed to maximise grid capacity.

Progression milestones were first introduced in 2017. However, connection applications that pre-date 2017 don’t have milestones. Starting this spring, such projects will either be assigned milestones or removed from the queue.

2. Changing how transmission and distribution networks coordinate connections

Large generation or demand project connections to the distribution network are often delayed due to required transmission network reinforcement. Distribution connections are often made contingent on such reinforcement being completed. Yet, according to ENA, many distribution customers have expressed a desire to be connected early, even if there is a period during which their project will be subject to curtailment while transmission reinforcement is completed.

The Electricity System Operation (ESO) and DNOs are also working together to create clearer, more consistent technical boundaries between transmission and distribution networks, in order to better manage the connections queue and to allow small, more agile projects to connect more quickly. This should enable connections to be more easily managed within agreed technical limits at each boundary point, and variation offers will be made to qualifying customers.

3. Greater flexibility for storage distribution customers

The demand for battery storage project connections is greatly exceeding forecasts. ENA notes that more than 56GW of battery storage connection capacity is now in the queue – representing more than 14 Drax power stations and 200%-500% more than the ESO forecasted would be needed by 2030.

However, ENA notes that battery storage projects tend to have low capacity utilisation, as they are bi-directional in nature (sometimes importing electricity, sometimes exporting electricity and at other times not importing or exporting).

Therefore, DNOs are planning to offer battery storage operators ‘non-firm’ connections that allow connections to be provided more quickly. ENA is also looking at regulatory reforms and changes to technical standards to allow the more effective management of storage capacity.

Transmission

ENA‘s action plan complements work currently being undertaken by the ESO and transmission network operators (TNOs) to speed up connections to the transmission network, such as the ESO‘s connections reform project and its five-point plan. The ESO‘s five-point plan to speed up transmission connections is as follows:

1. Operating a transmission entry capacity amnesty (which closed to new submissions on 30 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 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. Developing 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.

The ESO has also announced additional targeted reforms (building on its five-point plan) to speed connections, summarised as follows –

• If energy generators are not progressing their project, they will have to either move backwards in the queue or leave, making space for other projects ready to progress and connect.
• ESO will be supported by an engineering consultancy, in order to check whether milestones are being met or not. A law firm has also been retained to ensure any resulting connection offer contractual changes are rapidly executed.
• The ESO has published code modification which (if adopted) would allow developers to build their own connections into the transmission network.

Ofgem

In May 2023, Ofgem issued an open letter on future reform to the electricity connections process. This letter touches on many of the same themes, initiatives and proposals discussed above, as well as some longer-term and wider-reaching reforms to the connection arrangements (such as the possibility of introducing the concept of controlled access to the connection process – either through application windows or with the introduction of stricter qualification gates).