Since being established in October last year, the National Energy System Operator (NESO) has put forward its proposed changes to the grid connection system to help speed the pace of connecting new renewable capacity to the grid.
As reported by our sister site Current±, research from energy industry consultancy Cornwall Insight has found that only around a fifth of energy projects submitted for planning between 2018 and 2023 are expected to actually come to fruition. The grid connections queue is currently being clogged up by so-called “phantom” or “zombie” projects with little hope of ever being developed.
However, these proposed reforms are not entirely understood by the industry stakeholders they are supposed to support, as evidenced by a talk given by Paul Manning of NovoGrid at last week’s Solar Finance and Investment Europe conference in London on the subject. Manning’s explanation of NESO’s grid reforms was one of the best attended presentations there, suggesting that the nature of these proposed reforms has not always been well communicated by NESO.
The proposals that have been well communicated have been met with some scepticism. Speaking to Solar Power Portal Fred Stirling from German solar construction company Belectric put it simply: “To be honest, the connections delays don’t fill me with confidence”.
What are the proposals, and what are the concerns?
NESO’s proposed connections reforms suggest projects must meet minimum standards of readiness and strategic alignment based on region. Under the current system, projects are connected based on the time at which they entered the queue, with little to no barrier to entry into the connection queue
The readiness element of NESO’s proposals remains relatively uncontroversial. Current standards mean that energy projects can be proposed regardless of the ability to deliver them – up to and including proposing projects on land to which developers have no right to use without even the need to alert landowners that projects are being considered for development on their land.
The new readiness requirement will mean that developers of proposed projects must demonstrate that they have agreements to use the land on which they wish to develop and have begun the process of securing planning permission for their project. This, Manning noted, will help to establish a barrier to entry and raise the bar, thus preventing “Del Boy developers” from putting forward speculative projects that do little more than slow the process for others.
The concern, Manning said, comes from the second part of NESO’s requirements for projects, strategic alignment.
“I think the aligned piece of the plan isn’t really thought through”, he said. The issue is NESO’s attempt to dictate where new capacity should be built based on projections of regional demand, which he notes “like all budgets, will be inherently wrong”. Furthermore, he states that consumers, not NESO, dictate where demand will fall, noting that “the economy drives demand, not NESO. NESO needs to remember that the fundamental purpose of the system is to serve, not to dictate”.
While he noted that some predictions can be made with a reasonable degree of accuracy, such as high levels of demand in traditionally industrial areas such as Teesside, he said the risk of stranded assets due to incorrect modelling from NESO may put off development rather than encourage it.
The potential fallout of the reforms stretches back up the chain to manufacturers. Wenyan Sharp from solar manufacturer SolaX Power said: “What worries us is the changes to the government policy – as a manufacturer, this could cause us a lot of problems when we’re looking into developing new products and technologies. We’re investing all of this into the products, but then what if our clients withdraw their projects – how are we as a manufacturer going to cope with such a short notice period of change?”. Sharp added that many of the people she had spoken to over the course of the two-day conference had expressed concerns similar to hers.
Manning further suggested that while he is in favour of a “good quality barrier to entry”, he believes that once this has been met, developers should be free to take on the risk of wherever they choose to locate their projects, without limits from NESO getting in their way. He noted: “Once you’ve proven that you have the ability and the capacity to deliver by clearing the land and planning, then ultimately, it’s your market decision as to whether you’re going to build an asset here and pay, ultimately, for the grid to bring it to that point. And if I as the developer am wrong, then I will suffer for that.”
There is still time to get this right
The good news is, as controversial or unpopular as these reforms may be, they are not yet set in stone. The specific details are still being looked over by regulator Ofgem and if the industry is unhappy with the proposals, the best hope stakeholders have of bending the system to suit them is simple – get loud.
If NESO is going to achieve its overall objective of supporting both consumers and industry stakeholders, it must listen to the industry’s views, but those views must be stated loudly enough for NESO to hear. As Manning noted: “It isn’t a done deal, but it is going to require an awful lot more pressure”.
