Uptake of a transmission connection amnesty has been lower than expected, a member of National Grid’s executive committee has admitted.
During a wide-ranging hearing by the BEIS (business, energy and industrial strategy) committee about the decarbonisation of the UK power sector, the grid owner’s UK electricity transmission president Alice Delahunty was probed on the status of the ongoing transmission connection amnesty.
Under this exercise, which was launched by National Grid’s ESO (Electricity System Operator) arm in partnership with transmission owners last October, projects that have stalled or may be marginally viable have the opportunity to give up their place in the connection queue without having to pay a fee.
The aim of the exercise is to enable projects, which are ready to go ahead, to connect more quickly.
The deadline for customers to submit expressions for the amnesty has already been extended to the end of April but at the moment firms have shown little interest in giving up their connection offers, Delahunty said: “Uptake has been lower than we would have wanted, so we have extended it.”
The ESO and transmission owners are now working on an industry code modification that will require all projects with a connection offer to meet set milestones in order to retain their place in the connection queue.
Delahunty added: “We are now looking in a more targeted way at sectors of that pipeline where the blockers may be, making those direct contacts.
“It is clear that queue management will come, so it is clear that if you do not take up the TEC (Transmission Entry Capacity) amnesty, you are likely, if your project is not progressing, to have to leave anyway but then pay your penalties for that.”
However while there has been a recent flurry of reports about long waits, Delahunty said more than 60% of the 170GW of projects wanting to connect to the transmission network have dates to do so within the next 12 months, which she added is more than enough to achieve the government’s decarbonisation targets.
She said that while viable projects are not getting the dates they want, the main issue is one of sequencing and allocation.
Basil Scarsella, chief executive of UK Power Networks, said the southern England distribution network operator is connecting the vast majority of applications it receives from customers.
Claire Dykta, head of markets at National Grid ESO, said there is so much excess capacity in the queue that 30% to 40% of projects in there will not materialise.
She also told the committee that the ESO is in a “live conversation” with the department and Ofgem on whether coal power plants should be kept on standby for next winter, as has done over the last few months to ensure security of supply.
Akshay Kaul, director of infrastructure and security of supply at Ofgem, confirmed that the regulator is working closely with the department and the ESO on steps to ward off the threat of blackouts next winter.
He said: “We should not be complacent in any way about next winter, or even the one that comes after that. It is true that the risks have receded somewhat. Storage levels are high in Europe as well as in the UK, prices are falling and the forward curve looks quite flat, but we certainly don’t want to drop our guard in any way.
“On both the supply and the demand sides, there continue to be actions that can be taken to strengthen supplies, as well as to improve the flexibility of the demand side.”
Pressed on whether the Rough North Sea gas store, the full opening of which is being held up by commercial negotiations between its owner Centrica and the government, is critical for security of supply, Kaul said: “An increase in storage would be helpful, but there are probably other alternatives as well.
“It will come down to commercial arrangements that I am not personally privy to but it would certainly help to have a greater degree of domestic resilience.”
He added that while domestic storage is “quite small in comparison” with the UK’s access to the wider energy market, “every little bit helps”.
Kaul also questioned whether the benefits of more localised wholesale electricity prices, which the government confirmed this week that it is continuing to explore as part of its REMA (Review of Electricity Market Arrangements), would be worth the disruption it would cause to the industry.
“There are theoretical advantages to improving the granularity of locational signals, particularly if you have a highly congested network. But if we can deal with the congestion by changing the way we invest in the grid capacity, that will take out one of the main issues.”
Delahunty said she is “worried” about the government’s move to more localised electricity pricing.