Regulations to streamline energy innovation

Online Editor

The transition to renewables is throwing up exciting innovations says Andy Normand from Encora Energy.

With electricity demand forecast to double by 2050, the energy industry is busy devising ways of how best to meet this. There are many ingenious and varied ways of making the most of the new regime through power generation, storage and demand flexibility. However, the biggest issues are currently with the bit in the middle – grid infrastructure and getting connected.

The problems

Over the last few years, submitting grid connection applications has become more common only for many  developers to find that the earliest connection date is in the mid-2030s, effectively killing any project. As a result, most applications don’t get the connection date they request. The queue for connection is now over 500GW, which is many times more than the existing installed capacity and is even significantly more than anticipated total connected capacity for 2050. There is a backlog of projects that have grid connections but are not being built and clearly a large proportion of these will never be built.

All this has arisen because developers have been able to apply for and get speculative grid connections with little consideration of project viability in terms of land availability, planning permission or economic feasibility. In addition, for new projects to be granted connection, they must show that they can be accommodated in the worst circumstances, i.e. all other projects are connected (both existing and yet to be built), clearly, this may not always be possible. So-called ‘zombie projects’ with little chance of being built, are effectively gumming up the whole system.

Future solutions

In recent months there have been several initiatives designed to release capacity. This includes a five-point plan from the grid operator, NGESO, including an amnesty on releasing agreed transmission connections without penalty, a new queue management policy and acceptance of types of battery connection that were previously penalised.

As part of the new queue management process, applicants must meet requirements and milestones. This will help reduce the significant number of projects that may never actually be built but are restricting the grid potential. Projects that don’t meet milestones will be ejected.

In November last year, Ofgem and the Department for Energy Security and Net Zero (DSNEZ) released its Connections Action Plan, which sets out ambitious actions to significantly reduce connection timescales and ensure a timely transition to net zero. It’s a call for network companies, the system operator and the sector as a whole to deliver a major step change in the pace of connections; strengthening incentives, obligations and requirements to do so.

These plans are likely to change the nature of the game for developers. They will require significant outlay to develop projects. Planning permission needs to be sought with significant impact studies on local environment, construction planning, visual and noise impact assessments. In addition, land leasehold terms must be agreed, and feasibility studies should highlight the tangible benefits of the project. Projects can become infeasible for any one of these reasons and knowing what is viable prior to committing the money and conducting studies is hard to determine. With higher risks to development, any new projects will need to be thoughtfully created and the long list of barely viable projects will dry up.

The solutions are out there and there are good signs that they are coming, but there will be some pain for developers who must give up on projects that are unlikely to be built as they take on the higher barriers to entry when developing new projects.

If we are to move forward, we must make it clear that some developers have wasted their money and allow truly viable, well-developed projects to come to fruition.