Time to kick unviable projects out of energy connection queue
The UK has moved mountains on clean economic growth, expanding its economy by two thirds, while becoming the first G7 nation to halve its emissions since 1990.
Our world-leading, home-grown green industries could be worth as much as £1 trillion by 2030.
If we are to deal with the projected tripling in electricity demand in the decades ahead, as more people switch to electric cars and more data centres are built to feed our AI needs, then we need to go further. But one thing has been holding us back: an outdated and oversubscribed energy connections queue.
That is why the National Energy System Operator (Neso), with the government, Ofgem, industry and investors are leading a series of root-and-branch reforms to end the gridlock. And why Schroders Greencoat, as a leading investor in Great Britain, backs the £40 billion annual private investment opportunity these reforms represent.
Imagine a coffee shop with just one power socket. There’s a queue of people with laptops and phone chargers ready to plug in.
Some aren’t quite ready so they leave the queue, but they still ask and expect their place to be saved. Others with vital immediate work to do have no choice but to wait outside the door. In the confusion, no one knows who should really take priority. Delay and uncertainty ensue.
That’s a bit like the way connecting to Britain’s electricity system has been working. Strong, ready-to-go projects are being left behind and waiting a decade to connect as a result.
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Despite the initial successes of the first-come, first-served approach to grid connections, which helped the early and rapid deployment of renewable power and batteries, there were unintended consequences.
The value of having a connection offer led to more unviable and speculative projects, with no intention to build. Outdated rules meant that for any project, plans had to be made to design and build the pylons, offshore and onshore electricity cables to support them. All at a cost to the consumer.
As a result, the queue has grown tenfold in just five years, and together the projects in it exceed 800GW, four times the generation needed by 2030.
Dormant projects have blocked promising clean energy ventures that are ready to connect and have stood in the way of further clean economic growth across Great Britain. That must change.
By abolishing the first-come, first-served system, we can ensure that the connections process enables what is needed, when it’s needed, where it’s needed. Neso can free up space for shovel-ready wind and solar power, and make room for the data centres and electric vehicle superhubs of the future.
Neso will soon begin informing projects from the previous queue whether they have been moved to a new delivery pipeline. What we’ve been clear about is that not every project can progress in this round.
But Neso and Schroders Greencoat know that clearing the gridlock is essential to giving developers and investors the certainty they need to unlock jobs, develop supply chains and supercharge £40 billion a year of economic growth.
Overhauling the connections process isn’t a panacea. Transmission owners still need to build thousands of kilometres of new electricity cables. Planning reforms must be implemented.
But by putting in place these major changes to how we plug in to the grid, we are taking a big step forwards to help make sure the vast economic potential of Britain’s clean energy transition is realised.
Kayte O’Neill is chief operating officer at National Energy System Operator; Minal Patel is global head of infrastructure at Schroders Capital