The Energy Transition | Ofgem Supports Latest Grid Connections Reform Proposals

This week we look at Ofgem's support of the ESO's latest proposals for reforming the grid connections process, RenewableUK's proposal for co-location to accelerate an integrated energy system...
UK Energy and Natural Resources
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This week we look at Ofgem's support of the ESO's latest proposals for reforming the grid connections process, RenewableUK's proposal for co-location to accelerate an integrated energy system, National Grid and Electron's new partnership to encourage participation in UK flexibility markets, and more.

Ofgem supports ESO's latest proposals for reforming the grid connections process

Ofgem has shown support for the Electricity System Operator's (ESO) plans to reform the grid connection process in an open letter.

As we previously reported, the ESO announced a reformed "first ready, first connected" process applying to both new and existing energy generation projects. This process will consist of two gates to entry into the connections queue, the second of which will require a project to secure both land rights and a date of submission for the planning application. With a target of 1 January 2025 for implementation, this approach aims to halve the connections queue which currently sees customers being offered connection dates in the late 2030's.

Ofgem noted that the reforms have the potential to achieve the vision Ofgem committed to in its Connections Action Plan (CAP) published alongside the Department for Energy Security and Net Zero last November. Specifically, the letter sets out how the proposals will deliver the desired outcomes of the CAP, including:

  • raising entry requirements to reduce the number of speculative applications and unviable projects entering the queue;
  • removing stalled projects to prevent delay to viable projects by releasing unutilised capacity; and
  • better allocating available network capacity via a clear process to accelerate connections ready to connect.

Ofgem did, however, state that it will continue to monitor the development of the proposals to assess if they go far enough and whether further measures may be appropriate. It also set of a number of areas that it expects the ESO to consider in developing the proposal, notably:

  • the risks associated with the proposal as well as forecasted benefits;
  • any regulatory and legislative changes required to enable or mitigate risks;
  • contingency options should the proposal not meet the expected time frame or benefits; and
  • how to pragmatically prepare for the reforms and manage customer expectations prior the implementation date.

For further information on the potential impact of grid connection reforms, see our Insight.

RenewableUK proposes co-location to accelerate an integrated energy system

RenewableUK (an energy trade association) has published a report on the importance of co-location in accelerating an integrated energy system.

Co-location involves developing multiple generation projects (including energy storage) or combining different technology types at the same grid connection point. Battery storage is currently the technology at the core of co-location, due to its scalability. However the industry is becoming increasingly interested in a combination of solar, green hydrogen or other longer duration electricity storage technologies.

The report highlights that only 12% of onshore wind and solar farms in the UK are co-located with battery storage or hydrogen electrolysers. RenewableUK states that regulation and policy are "hindering" the growth of co-location projects. To increase the amount of renewable energy from battery storage and green hydrogen, new sites are required to be developed or capacity of existing sites needs to be built out. However, securing planning permission can be a long and costly process. This is in addition to difficulty with grid connection processes: storage assets currently face a delay until 2030 to connect to the grid.

RenewableUK reports that co-location can make more efficient use of grid capacity and can lower the cost of renewables, by reducing the capital and operational cost of the shared assets. Considering grid connection delays, co-location also makes more efficient use of grid capacity.

National Grid and Electron announce partnership to encourage participation in UK flexibility markets.

National Grid has announced that it will partner with London-based power market software outfit Electron to merge their respective flexibility market platforms. The initiative aims to boost interoperability between the UK flexibility markets to increase the volume and value of flexibility for both system operators and flexibility service providers (FSPs).

The collaboration will see the integration of Electron's flexibility platform ElectronConnect into National Grid's Market Gateway platform, to create a "self-service web portal" that allows FSPs to directly connect their assets into the network and benefit from access to real-time network data.

The Market Gateway platform will continue to operate on an auction clearing basis. However, FSPs will have access to the tenders through the ElectronConnect platform which will provide an end-to-end service for its users from onboarding, bidding, dispatch and payment.

National Grid said its strategic partnership with Electron illustrates its commitment to developing an "open ecosystem demonstrating interoperability between market platforms". The collaboration aims to make it simpler and more valuable for FSPs to participate in flexibility markets, increasing engagement across the distribution network and promoting low prices for consumers, particularly in periods of peak demand.

This initiative follows National Grid's partnership with Piclo earlier this year which connected over 60,000 flexibility assets registered on Piclo's platform to the Market Gateway interface. Since its inception in 2023, National Grid states that the Market Gateway platform has procured more than 17 gigawatt-hours of flexibility services, allowing National Grid to defer more than £80 million in network updates.

Jo-Jo Hubbard, Electron CEO and co-founder, said that the integration with Market Gateway "is very much part of our vision of how these interactions between different market platforms and utilities have to work at scale." However, the next goal is to ensure that an FSP that is registered and qualified to connect assets in one area is able to "port" that data across to a separate market.

More than one in five cars to be EVs in 2024 according to new Global Outlook

The latest Global Outlook from the International Energy Agency (IEA) has revealed that nearly one in five cars sold worldwide in 2024 is expected to be an electric vehicle (EV). New research included in the Outlook examined key areas of interest in global electric mobility, including: the deployment of electric vehicles and charging infrastructure; battery demand; investment trends and related policy developments in major and emerging markets. The report states that the number of EVs sold globally has grown by over 25% more in the first quarter of this year compared to growth rates in the first quarter of 2023. Sales remain concentrated in major industrial markets, with 95% of sales so far in 2024 being recorded in China, Europe and the US.

The report comments that the research is indicative of a growing emergence of EVs globally, and that prices are beginning to decrease. This is a key point, as the IEA has stated that enabling the mass adoption of EVs hinges on the successful launch of EVs that are affordable, a problem which continues to plague the industry and EV adoption rates.

To accompany the increase in global EV sales, the IEA has estimated that the global number of public charge points will exceed 15 million by 2030 - a four-fold increase compared to the almost four milling operating in 2023. The IEA has indicated that the uptake in EV usage is dependent on the public having access to suitable chargers to ensure a just transition.

This article was written with the assistance of Khushal Thobhani, Jessica Sawford, Charlotte D'Arcy, Luke Hopper and Hannah Bradley, trainee solicitors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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