We recently published a piece summarising the journey so far of Great Britain’s Connections Reform (GBCR) and how it will fundamentally affect all projects. The reform project has now reached a critical juncture where the ESO are consulting on the proposed detailed solution and inviting alternative suggestions from industry as part of the formal industry change process – the previous consultation in June 2023 was an informal consultation. In this article we’ll summarise the ESO’s proposals, what this means for you and how to get involved.
The ESO’s proposal
If you want to read the detail, there are two Workgroup Consultations you can read and comment on by 6th August when the consultations close:
- CMP434 – Implementing Connections Reform – this is designing the enduring arrangements for the connections process.
- CMP435 – Application of Gate 2 Criteria to existing contracted background – this is determining how the CMP434 solution is applied to those projects who already have a connection contract.
These are both in-depth documents describing the discussions the industry have had on the ESO’s proposals. We have summarised the proposals below:
Core Process
There will be a single ‘primary’ process which all transmission connected and embedded generation projects (irrespective of size, location, technology etc – noting some differences below) will go through, consisting of a ‘Gate 1’ and a ‘Gate 2’ as shown here:
- Gate 1 Entry & Offer – This would require prospective projects to have a Letter of Authority to apply in an annual window. This window would last ~12 months (application to acceptance) and result in a highly indicative offer with no confirmed works, costs or location but also no User Commitment or Queue Management milestones.
- Gate 1 ‘Holding Area’ – this is for projects who have accepted their Gate 1 offer but have not yet applied for Gate 2. There will be a maximum time limit of 3 years (a ‘longstop date’) that projects can be in this holding area (without accepting a Gate 2 offer) before they are removed.
- Gate 2 Entry & Offer – In order to apply for a ‘Gate 2 offer’ projects would need to evidence (via a director’s letter) that they have land rights and commit to submitting planning permission by a deadline of Gate 2 offer acceptance (1 to 2 years depending on planning regime). Gate 2 applications would be restricted to windows, of which there are expected to be several per year (exact number and timing is TBC). Practically, this means ESO will accept applications all year, but some applications may have to wait until the end of the window to be formally batched and processed. The Gate 2 offer is still expected to be more certain but is still indicative (i.e. could still change, like today); it will provide a connection date, works, costs and location in addition to User Commitment and Queue Management being applied as well as a Queue position being assigned. Finally, there will be a duplication check to ensure that any Gate 2 applications are not using the same land as any other project who already has an accepted Gate 2 contract.
- Gate 2 ‘Holding Area’ – this is for all projects who have signed a Gate 2 offer but haven’t yet connected. Queue Management milestones will be used as the main method of ensuring projects remain on track to connect but there will also be new requirements to ensure land rights remain suitable as the project progresses.
All projects must progress through Gate 1 before being allowed to Gate 2 – even if the project meets the Gate 2 criteria. However, this could be immediately after signing a Gate 1 offer and there is expected to be a Gate 2 window timed during the year to capture these projects. Finally, the ESO will have criteria by which they can accelerate the connection of a project in specific circumstances, this will be documented in a new “NESO Designation Methodology”.
Modifications
The scope of allowed modifications will be significantly different from today. Gate 1 contracts will maintain significant scope to be modified as needed. However, once a Gate 2 contract is signed, there will be significantly reduced scope of what can be changed without material effects on the project. ‘Significant Modifications’ to a Gate 2 contract will result in either the whole project returning to Gate 1 or a new phase (when additional capacity is requested) being created in Gate 1. ‘Significant’ changes can be summarised by any changes which may result in power system studies – so technology, capacity, date or location changes will all be ‘Significant’ changes. Increases in capacity will also need to be evidenced with updated land rights to reflect the new capacity. ‘Non-Significant’ changes (novation, charging changes etc) can still be requested, and it is expected they will be processed as and when received.
Offshore & Interconnector Projects
The ESO accept that there may be some circularity for these projects – i.e. needing a Point of Connection (PoC) to apply for Gate 2 but needing to apply for Gate 2 to confirm the PoC. Therefore, these projects will have a PoC confirmed at Gate 1 and retained until the longstop date. ESO may also reserve capacity or connection points to facilitate these projects. In addition, these projects will still need to meet the Letter of Authority and Land Right criteria for Gate 1 and 2 respectively, however these will be different compared to onshore projects (i.e. evidence from the Crown Estate/Crown Estate Scotland will be required).
Distribution Connected
For distribution projects without a BEGA1 or BELLA2, a lot of this will be invisible as the DNO will manage it on your behalf. At Gate 1, the DNOs are expected to provide the ESO with a non-binding forecast of their need to support anticipatory investment. At Gate 2, the DNO will need to specify individual projects who have met the Gate 2 criteria and the ESO will provide details of their transmission impact to the DNO. It is expected the DNO will undertake all criteria checks on behalf of the ESO and it is unclear at this stage how the DNO’s processes will adapt to align with this.
For projects seeking a BEGA or BELLA, the above process will apply like a transmission project in addition to the work undertaken by the DNO.
Implementing the above to currently contracted projects
Projects which are currently contracted will have their connection contract updated to reflect the above. This will require all projects to provide evidence of meeting the Gate 2 criteria to have the updated contract reflective of a Gate 2 offer, otherwise it will be reflective of a Gate 1 offer. For avoidance of doubt, only Gate 2 offers will have a confirmed queue position (based on when Gate 2 criteria is met), connection point and connection date. The timing of this evidence submission is currently planned to be between the date of Ofgem’s decision and (assuming Ofgem approve the proposal) January 2025. The ESO will then spend until the end of February 2025 evaluating all the evidence submitted before updated offers are provided in early Autumn 2025.
What happens next and how to suggest alternatives?
The workgroup will review all non-confidential consultation responses (confidential responses will only be reviewed by the workgroup facilitator and Ofgem) and discuss any topics raised – so it is important that any response clearly articulates your position (supporting or opposing) with rationale or illustrative examples. These discussions will help the ESO evolve their solution or other workgroup members to raise and develop an alternative solution to the ESO’s.
Anyone can respond to the consultation but only CUSC parties (CUSC Schedule 1 lists all CUSC parties) can suggest an alternative to the ESO’s solution – this can be a tweak to the ESO’s solution or a brand-new solution. There is also no cap on the number of alternative solutions that can be suggested so we expect there could be a significant number of these. Any alternative solutions put forward needs to address the same defect as the ESO’s solution and be voted by the workgroup as being better than the ESO’s solution.
All alternative solutions voted for by the workgroup and the ESO’s solution will be fully developed by the workgroup and sent to Ofgem to decide between; Ofgem can also ‘send back’ the solutions to the workgroup if Ofgem believe the solutions are not fully formed.
How can TNEI help?
If you’re unclear what this means for you or what to do, we can help. We can provide training on the industry governance processes (which this is a part of) or on the ESO’s proposal to help design your version of a better solution. We can also help you draft and submit your consultation response as well as raising an alternative solution. TNEI can also provide project specific advice of what this currently means for your project. If any of this sounds useful, get in touch with our Grid Team.
