The availability of grid connections and the drive to bring connection dates forward is a topic that is dominating industry discussions. It’s well-known that limited capacity on the electricity network is preventing us from connecting renewable energy projects to the grid, with developers facing an average waiting time of over five years to connect. This has begun to seriously hamper progress towards net zero, and the government, in partnership with Ofgem, is investing billions of pounds into expanding the network to create additional capacity and ease waiting times.
Whilst there is no question that this work is badly needed, it isn’t the only way. As the industry has rushed to find a solution, we have overlooked how efficiently current connections are being used, and whether National Grid ESO or the local DNOs are getting enough bang for their buck. Before we simply pump money into expanding and creating new connections, and pass on the higher cost of doing so to consumers, it’s essential we fully realise any untapped potential of current grid connections, allowing more renewable power to be exported to the grid more imminently.
The concept of utilisation
We need to start by looking at the ‘utilisation’ of each project connected to the grid; in other words, the actual amount of electricity exported to the grid compared to the maximum amount possible with that connection.
Utilisation figures for renewable energy projects are lower than those linked to traditional fuel sources. The intermittent nature of renewables naturally limits the amount of electricity a connection exports, as a solar project will only generate during daylight, for example.
To put this into perspective, a connection for a nuclear power station may export to the grid >90% of the maximum possible amount of electricity, whereas a connection for a solar power project may only export up to 12.5%. A similar outlook emerges for wind and current battery storage projects.
However, whilst lower utilisation figures are to be expected for renewable energy projects, many are falling below what is possible. It’s therefore only prudent to explore where there is untapped potential in the current system that might allow more renewable power to be exported whilst reducing the need for such costly and extensive grid upgrades. Even a small increase in connection utilisation could reduce the need for new connections.
Whilst removing zombie projects from the queue has been touted as a cost-effective solution to grid connection issues, it only really represents the most obvious approach. Improving the utilisation of existing and future connections could open up other pathways and may even be more cost effective once the ‘easy’ win of removing zombie projects has been completed.
How can we increase the utilisation of existing connections?
The utilisation of grid connections has largely been overshadowed by conversations around grid upgrades and expansion. It hasn’t yet made its way into mainstream discourse, but at Balance Power, we’ve identified some possible pathways to increasing utilisation for connections with either solar PV, wind or short duration (≤1h) battery storage projects.
At the light-touch end of the scale, the government and stakeholders such as National Grid ESO could proactively encourage asset operators with operational projects to develop business cases for investment in technologies that would improve the utilisation of their connection. This method would be most suitable either for an existing solar PV project that could benefit from a battery storage system, or adding additional storage capacity to a short duration system.
The aim of this game is to stimulate a new marketplace that brings asset operators of existing connections and renewable energy project developers together in such a way that encourages increased utilisation figures and a more cost-effective way to bring about the improvements needed to the grid.
If this stimulus proves insufficient and an interventionalist approach is deemed necessary, the government could introduce a ‘non-utilisation’ tax on renewable energy operators who do not deliver high enough utilisation once they are connected to the grid, setting a minimum attainment figure that could increase each year to drive up standards. The income generated could in turn be used to fund the grid improvements that would otherwise be needed.
What about longer-term new connections?
We have more flexibility in how to approach connections that are further out, as it’s possible to introduce new rules about how connections are granted and managed going forwards.
The simplest and most obvious option is to set minimum utilisation standards for a connection to be granted in the first place, or provide the option to pay an additional connection premium to compensate for under-utilisation where that standard is not met. This would likely result in co-located solar and battery storage projects being delivered as standard, with commercial advantages being sought through more and more innovative coupling strategies.
If we wanted to go further, there is the option of realigning the connection queue, prioritising projects with the highest utilisation figures. Developers at the front of the queue should have the opportunity to protect their position if they met new utilisation targets with the risk of being jumped if they can’t achieve it. This would act as a strong incentive for developers to design projects more aligned with minimising grid costs by ensuring the highest possible utilisation figure prior to applying for a connection, ultimately driving up standards across the board.
A grid fit for the future
There’s no doubt that increasing the availability of grid connections and driving to bring these connection dates forward is critical and should continue to be aggressively pursued, but it is just one part of the wider puzzle of creating a net-zero compliant electricity grid.
With grid connection issues currently under the government’s microscope, now is a crucial moment to reflect on how well the grid is being managed and to implement new and bold strategies that not only make the system more effective but also bring about better value for taxpayers.