The electricity network in Great Britain is undergoing extensive transformation. Energy regulation expert Scott Rodger explores some issues for the hospitality industry to consider when looking to connect to the grid.
The electricity network in Great Britain is undergoing extensive transformation, driven by the government's overarching goals of net zero and decarbonisation.
Huge increases in the deployment of renewable energy generation, increased electrification and the need to upgrade the grid mean investment in networks is estimated to cost over £60 billion by 2030.
Meanwhile, due to a range of factors (including processes which have not kept pace with the volume of connection applications), the length of the "grid queue", the queue of customers waiting to get connected to the electricity network, has expanded exponentially.
The grid queue now sits at 730GW waiting to be connected across demand and supply connection applications, with customers receiving a connection date which is on average more than five years after the date they requested. This is a recognised problem. The system operator, together with regulator Ofgem and the wider industry, have been working to fix this through various reforms, but these will take time.
So, what implications does this have for hotel developers, including both new constructions and renovations that require new or upgraded electrical connections?
Delays
Firstly, it may mean delays in getting connected to the grid, with these delays persisting and perhaps increasing until the issues with the grid queue have been sorted out.
If a developer is looking to install facilities that will have a high demand (such as several electric vehicle charge points, etc.), upgrades to the network may be required, and these take time to build, which could impact the programme for developing a new hotel.
Other factors might also result in delays, such as the need to obtain third party consents – for instance, if a new cable needs to be run through someone's land.
Queue management and getting bumped out the queue
Secondly, developers will need to be aware of network companies' approaches to managing the queue.
Connection offers are now sometimes made subject to the customer achieving certain milestones in the development of their projects.
Failure to achieve a milestone by the required date might not be accepted by the network operator, who may be dealing with a congested network and a queue of other applicants waiting to get connected. Therefore, the network operator may use this failure to terminate the connection offer and move the developer to the back of the queue.
This means that developers will need to be even more focused on diligent project management, to avoid the risk of losing the connection date in their original offer. Connection offers are standard documents, "one-sided" (in that they tend to benefit the network operator), and with limited scope for negotiation.
It is important to understand all the obligations under the connection offer and to not lose sight of any deadlines and milestones.
Space for substations
Thirdly, network companies will often require space to install their equipment, including substations – particularly for sites with larger demand.
If network upgrades are needed in the area, and space is otherwise at a premium, this can often take developers by surprise.
For instance, the network operator may require a significant area of land for a new substation which a developer had other plans for. But without this, the connection might not happen.
Developers will benefit from understanding their electricity demand needs early, along with the condition of the local network. This might involve early engagement with a specialist to help manage interactions with the network operator.
These are just some of the factors to consider when looking to connect your development to the grid.
It is important not to lose sight of these and wider considerations when analysing your energy needs and to seek expert guidance at an early stage where required – particularly for larger and more complex developments with significant energy demands.
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.
