Transmission Connections Reform – have your say
This consultation will remain open until Friday, 28 July.
The consultation, can be found at here.
After the consultation closes, National Grid ESO will review the responses and refine its proposals in order to confirm its final recommendations.
A detailed design and implementation plan will then be developed, including consideration of transitional arrangements from the live connections process to the reformed process. National Grid ESO expect to publish its final recommendations and an implementation plan by November 2023.
Please contact Andreas Gunst and Sophie Linnell if would like our support in replying to this consultation or for further information on its proposals.
The existing connections process was established with a focus on connecting a small number of fossil fuel facilities each year, and as such it has not kept up with fast-paced changes to the energy sector which requires the ongoing adoption and incentivisation of renewable generation.
The proposals seek to address current issues with the grid connection process, whereby despite the increasing number of grid applications, only 30% – 40% of grid applications successfully achieve grid connection. During 2022/23, the annual volume of new connection applications that were submitted is five times greater than those recorded in 2019/2020. This in turn reflects the fact that, as National Grid ESO reports, more than 280 GW worth of generation projects are seeking grid connection to the transmission system and an increasing number of such projects have connection dates into the mid to late 2030s.
Amongst the increased volume of grid applications, few projects actually reach construction. National Grid have seen a decline in the percentage of offers being signed for all application types, despite growing application rates - this indicates that there is increasing volume but also increasing wasted effort. As a consequence, it appears that the process is saturated with multiple applications for projects that will not reach their generation phase. National Grid ESO comments, “We’ve seen huge increases in the numbers and capacities of projects seeking to connect, yet our data shows up to 70% of those projects may never be built. Those projects are holding capacity that is significantly delaying the connection of other projects”.
Five-Point Plan to Change the Connections Process
In February 2023, National Grid ESO launched a number of tactical initiatives to address its short term priorities in an effort to reduce the queue size to achieving grid connection and the timescales within the connection dates provided in grid offers, such as:
- TEC Amnesty – this was announced in September 2022 as a process run by National Grid ESO in partnership with TOs, which invites parties registered on the TEC register (i.e., generation developers with connection agreements) to terminate their connection agreements at minimal or no cost. National Grid ESO has received a total of 8.1GW of applications and they are currently working with Ofgem to implement this;
- Construction Planning Assumption (CPA) Review – the CPAs are baseline assumptions that are made around the expectations for different assets which will connect to the transmission system. Currently, the assumption is that most projects in the queue will connect to the transmission system, whereas (as mentioned above), only 30%-40% will succeed. National Grid ESO therefore aim to review and update the CPAs in order to reduce the length of the queue;
- Treatment of Storage – National Grid ESO is reviewing the way in which energy storage projects are modelled. Currently, energy storage is reviewed in the context of assumed behaviours, instead of how such assets may respond to market needs. National Grid ESO is therefore proposing that by modelling a broader range of potential behaviours in respect of storage, this may enable faster connection of storage projects in order to reduce the queue for other projects seeking grid connection;
- Two-Step Offers – as implemented on 1 March 2023 for applicants in England and Wales, this element looks to implement the revised CPAs review and amendments to storage modelling, as well as addressing the growing volume of grid connection applications, by including that applicants will now receive two offers. The first offer is provided within the Connection and Use of System Code (CUSC) timeframes, and sets out standard terms identifying a connection site/point and the expected completion date based on the existing TEC queue and Transmission Reinforcement Works, alongside additional provisions to acknowledge that this is an initial offer and will require updating if accepted. However, this first offer will not include detailed works, programme or indicative costs as would be expected under the previous offer regime; and
- Queue Management – National Grid ESO is proposing to update industry codes to allow it to actively manage the queue of projects, as there is currently no mechanism in the CUSC to allow the termination of projects that are not progressing against their contracted milestones and agreed timescales. A code modification has been approved which would provide National Grid ESO with this right and DNOs are also considering a similar process for distribution connections.
Reforming the Connection Process
The consultation considers a range of foundational designs to the application process and variations to such designs, however it seems that National Grid ESO prefers the Gated Process as a foundational design, with Application Windows as the variation.
The purpose of the gate(s) is to identify projects that are more realistic or well-defined by implementing a criteria that customers must demonstrate they satisfy in order to progress beyond the gate(s), and such projects could obtain earlier connection dates compared with projects that did not proceed beyond the gate(s). This approach could then alleviate the issues arising under the current system in respect of the queue and capacity allocation.
The number of gates has not yet been defined by National Grid ESO, however they believe there are sufficient benefits to pursuing this approach.
Application windows would allow for grid connection applications to be processed on a “batched basis” as opposed to the open-ended process that is currently available. National Grid ESO has identified likely benefits (i.e., updating CPAs between each application window) in respect of this batched approach as opposed to enabling developers to submit applications at any time. The consultation sets out that application windows would therefore allow a greater degree of coordination of the design of the network as may be required by the applications.
However, National Grid ESO also recognises that this could cause industry stakeholders some issues arising from the reduced flexibility in submitting grid connection applications and awaiting longer timetable to receiving a connection offer.
First Ready, First Served
All connection offers made in respect of a particular batch would be granted the same backstop connection date, there would be no order of priority. As such, “First come, first served” would not apply within the window as whilst capacity would be allocated at the end of the window (i.e. at Gate 1) a queue position for the projects covered by the window would only be provided at Gate 2 when a project submits planning consents, or the point at which a project is designated as a “priority project”. This represents a move to “First Ready, First Served” at Gate 2.
At Gate 2 there would be potential for connection date advancement relative to other projects in the window due to the approach to batched assessment. At a minimum, projects would maintain their backstop connection date at Gate 2 and would have the potential to secure an advanced connection date if they reached Gate 2 more quickly than other projects in that window.