The industry has a problem. The connections queue currently contains more than double the generation capacity that is required in Great Britain. This poses the question, how are the networks handling the overabundance of generation developments and how will their solutions impact the future of GB’s pipeline of renewable energy?
What is the Connections Queue?
The connection queue comprises projects waiting connection to the network, with generators now being offered connection dates into the late 2030s and almost 2040. As of 5th November 2024, NESO published in their Great Britain’s Connections Reform -Overview Document’ that the connection queue currently consists of over 750 GW of capacity. TNEI estimate that the current transmission queue, in addition to the distribution queue (>1 MW), could supply close to twice the required installed capacity for the most ambitious 2024 FES scenario (Holistic Transition) as seen in Figure 1.
The connection queue continues to grow on a monthly basis, with the rate of new applications staying firmly above the total number of projects connecting or terminating. The number of applications received each year has risen from 359 applications received in 2017/2018 to 1802 applications received in 2023/2024. In June 2024, 32 new connection applications were submitted to NGESO, yet there were only 2 project terminations, and no new connections made. This shows the lack of projects progressing which is causing the increasing size of the connection queue.
What are the consequences of a large Connections Queue?
The large queue poses an issue for network planning and reinforcements. Having a constantly growing queue containing unrealistic projects leads to plans for unnecessary reinforcements and therefore delayed connection dates for all generators trying to connect, amongst other side effects. As a consequence, developers are facing inflated enabling works which increases connection costs and cancellation charges.
This problem requires a solution, and there are a number of different options which have been developed and implemented with the aim of improving the grid connection process.
Solution 1: Do nothing
The first option is to simply do nothing and consider if the current process is robust enough to solve the problem itself. However, as there are currently no signs of the connection queue decreasing in size, this is unlikely to solve the problem.
A more likely outcome is that the connection queue continues to grow, and the problems faced by developers become more severe. Further delays to connection dates, increased connection costs and ultimately a lack of progress which culminates in a poorer, delayed return for investors. Less confidence in investment into the GB market would cause renewable development to stagnate and possibly lead to a less diverse network.
Another solution is needed to solve the problem.
Solutions 2: Letter of Authority Requirements
Published in November 2023, the OFGEM and DESNZ joint Connections Action Plan (CAP) prompted ESO to raise the requirements for developers to submit connection applications.
As of 28th March 2024, the implementation of CUSC modification CMP 427 raises the entry requirements for transmission connected onshore developments. The modification requires developers to submit a Letter of Authority (LoA) at the time of initial application in order for the project clock to start. This follows suit with distribution connections which are already required to submit an LoA with application.
An additional requirement of the change is the introduction of Energy Land Density. This is the use of minimum acres/MW for each technology type. This certifies that the LoA covers a land area large enough for the type of development planned.
The aim of this change is to ensure transmission developments have formal engagement with land owners at an earlier stage and are able to progress with construction in the future before securing a connection agreement.
In effect, this will help prevent more speculative projects with no land from entering the connection queue in the first place. This provides a queue which can be more accurately planned for, reducing the number of unnecessary reinforcements.
However, since the LoA requirement’s introduction, a significant reduction in the number of applications is yet to be seen. So what else is being done to reduce the size of the connections queue?
Solution 3: Queue Management Milestones
Another solution NESO is implementing is the inclusion of queue management milestones which are now being added to construction agreements contained within Appendix Q. This was introduced in the CUSC code modification CMP 376: Inclusion of Queue Management process and was implemented on 27th November 2023.
The effects of this change mean that any new applications made after 27th November 2023, including modifications to existing contracts, will be subject to queue management milestones if the project is due to connect after 27th November 2025. If the evidence for these milestones is not submitted by the required date, then NESO have the right to terminate the project.
This follows the change in distribution connections to include connection milestones in all generation offers issued after 2017. Each DNO will have the ability to remove projects from the queue if the milestones are not met.
Despite this new termination right, NESO and the DNOs are only reporting an extremely low number of terminated projects each month, while the queue continues to grow. What further change is needed to reduce the queue?
Solution4: Connections Reform
GB Connections Reform is being developed and is due to be implemented from Q2 2025, with a transitional period currently underway. The reform will be a complete change to the grid connection process. NESO intended to move to a ‘first ready, first connected’ principle. Under this method, the developers which are able to prove their project is ready to connect first would be offered a connection date first. This could be earlier than the dates offered in the ‘first come, first served’ system previously in place.
However, following NESO’s request for information (RfI) from developers in May/June 2024, Ofgem believe this new principle may not be enough. Ofgem’s blog post ‘connection reform – going further’ changed the new principle to ‘first ready and needed, first connected’, due to the RfI indicating to Ofgem that the ‘first ready, first connected’ principle would lead to an insufficient reduction in queue size and an energy mix which does not align with the forecasted system needs in 2030 or beyond, with oversubscribed solar and BESS projects.
The reformed process will change to a gated system with application windows opening twice each year. Gate 1 will be an optional administrative checkpoint for large projects (offshore developments, interconnectors) to secure a provisional location at an early stage. Gate 2 will be a more traditional ‘full’ offer containing connection date, location and securities.
Embedded generators will be able to apply to their DNO/IDNO throughout the year. However, the DNO must then submit any required ModApps to NESO in a gate 2 window.
The latest development to this new system was the expansion of the concept of ‘needed’ in NESO’s recent presentations, published alongside the Clean Power 2030 report (CP30).
In NESO’s ‘Gate 2 Criteria Methodology’ it has been set out that projects wishing to progress to gate 2 must meet both a readiness criteria and strategic alignment criteria. The readiness criteria will require proof of land or planning while the strategic alignment criteria will require projects to align to Government’s CP30 plan, be a ‘designated project’ as set out under NESO’s Project Designation Methodology, or be a transmission connected demand project mot in the scope of CP30.
By implementing the strategic alignment criteria NESO hope to ensure that the connections queue formed after GBCR will fulfil the country’s generation requirements up to 2030, as set out in CP30. Projects which do not align with CP30 will be considered for progression in the 2030-2035 queue if they align with the requirements set out in the Strategic Spatial Energy Plan.
These new methodologies are still in consultation with final responses due by 2nd December 2024. The final code modifications and associated methodologies will be submitted to OFGEM by 20th December with a decision due in Q1 of 2025.
TNEI’s previous insight into GBCR can be found here.
Solution 5: Strategic Energy Planning
In addition to the changes made to the connection process, one solution to the problem involves improving the planning of the energy networks to ensure they appropriately meet the country’s needs and linking this to the connections process.
In June 2023 the UK’s first Electricity Networks Commissioner recommended the creation of a Strategic Spatial Energy Plan (SSEP) which will forecast the areas where new infrastructure must be built and when it will be needed; the plan will be the responsibility of NESO.
As well as the creation of a SSEP, NESO will be taking the position of Regional Energy Strategic Planner (RESP) which will ensure energy networks are regionally coordinated and are able to inform local system and network needs.
If applied appropriately the SSEP and RESP could have the potential to more effectively plan and operate the GB energy networks, making the grid connection process more efficient with visibility into future energy requirements. As mentioned above, Ofgem have recently expressed a desire to see more of the links between planning and the connections process.
The Future
A range of solutions have been implemented in the aim to reduce the size of the connections queue. None of these are silver bullets, and it’s likely that all of them (and possibly more) will be needed. The largest of these solutions, GBCR has begun to be implemented with a transitional period which started on 2nd September, after which all BCA applications will receive an indicative ‘Gate 1 style’ offer with no details of connection works or securities. How could this affect the queue and how does the future of GB’s grid connections look?
Whilst these changes do have the potential to provide faster connections and discourage less serious projects from sitting unnecessarily in the queue, it comes at the cost of having a large amount of uncertainty for developers surrounding their connection site, connection date and the costs involved throughout the process.
Further to the high levels of uncertainty, the move to a gated system with the possibility for queue order to be dictated by network requirements, may prove to be more restrictive on developers.
How can TNEI help?
There are 5 main ways we can help developers with our grid expertise:
- Provide detailed techno-economic offer reviews for the transitional period, gate 1, and gate 2 offers.
- Estimation of expected queue management milestones.
- Preparing grid connection applications including G99, BEGA, BELLA, BCA and ModApps.
- Advise on the most economically beneficial point to terminate projects with an existing connection agreement.
- Support on future industry changes and its effects on you and your relevant projects.
To find out more on this topic, or for support on how these changes will impact project planning and consents, please get in touch.
