Ofgem - Open letter on future reform to the electricity connections process
On 16 May Ofgem published an open letter on future reform to the electricity connections process.
The letter sets out how Ofgem, alongside government and industry, will work to reform the connections process for all parties and ensure it is responsive to customers’ needs and ultimately fit for the net zero transition. It also informs the urgency of having a fit for the future connections’ regime.
Over 40% (120GW) of all new generation capacity holding transmission connection agreements today have connection dates of 2030 or beyond – with the impacts of these issues cascading down into the distribution network.
The objective of this reform by Ofgem is to see electricity connection offers with shorter average connection dates which better meet customers’ needs and enable a timely transition to net zero. Ofgem will consider whether substantial changes to the current connections queue methodology are required and how changes are applied to both new applicants and those parties already in the queue with a connection agreement.
Delivering new connections at the scale required on a sustainable long-term basis will need a combination of three factors:
- strategic network investment (such as RIIO regulatory price controls) to bring forward significant new network capacity efficiently, and at the right time and place;
- efficient and flexible network management to get the most out of the existing network.
- and a fit for the future connections process, which optimises allocation of available capacity so that connections can proceed at pace.
Actions by Ofgem
Short-term action (2023):
- Continue to work with and challenge the network companies, ESO and industry stakeholders to drive forward targeted measures at pace to address key issues. These improvements are being progressed primarily by two industry bodies: the Energy Networks Association (ENA) and the Electricity System Operator.
Medium-term improvements (now – 2025):
- While targeted near-term measures should deliver swift improvements Ofgem expects industry initiatives to consider wider reform options across transmission and distribution. The ESO’s Connections Reform Project and the ENA’s Strategic Connections Group are working collaboratively to consider the case for change and exploring options for more substantial reform of connections processes.
Longer-term outlook (2025 – 2030+):
- Need to ensure the connections regime and access arrangements develop in line with wider system changes. Wide-ranging energy market and system planning reforms are under consideration on this timeframe: through REMA, the introduction of the Future System Operator (FSO), network charging and access reforms, work on regional system planners (RSPs), and evolving strategic planning approaches.
- The Electricity Networks Commissioner’s findings on how we can accelerate progress on network infrastructure are also anticipated to inform the future direction.
Ofgem will also:
- Take a central role in driving progress on the reform of connections.
- Monitor the progress of industry initiatives to ensure these are translating into benefits for consumers as to ensure earlier connection dates - the ESO’s 5-point plan, its Connections Reform programme and the ENA’s Strategic Connections Group – are beginning to deliver important change in the near term.
- Convene industry to drive further action as and when needed.
- Align with the strategic aims from Ofgem’s corporate strategy and the government’s ‘Powering Up Britain’ package.
- Continue to engage with and reflect on recommendations by the BEIS Select Committee on decarbonisation of the power sector, and the proposed Strategy and Policy Statement for energy policy.
Ofgem’s identified set of reform outcomes - key to delivering our aims for connections arrangements.
- Transparent, consistent data giving applicants advance, granular insight into expected grid capacity and level of network investment needed.
- More robust connection applications, enabling well-progressed projects.
- Reforms deliver improvements swiftly, enabling shorter average connection dates to be offered to customers.
- Greater coordination and consistency across system boundaries, supporting more consistent outcomes and efficient and coordinated approaches.
Illustrative stages of reform as the system transitions towards a more strategically planned, integrated whole energy system.
Ofgem welcomes views from stakeholders on the proposals presented in this letter to [email protected] by 16 June 2023 – in particular, on:
- The nature and priority of connections issues (Section 1 – The challenge);
- Priority areas of focus for Ofgem (Section 4 – What you can expect from us);
- Proposed objective, outcomes, and guiding principles (Annex A); and,
- The illustrative reform stages and options for consideration (Annex B).
Join techUK's Energy Capacity Webinar
techUK will be officially responding to this call with members being able to feed into our position through a webinar we will host- Energy Capacity for the Future taking place on 1 June, 14:00-16:00.
Teodora Kaneva
Teodora’s rich background varies from working in business development for a renewable energy lobbying association in Brussels to the fast moving technology innovation startup scene in the UK.
Luisa C. Cardani
Luisa C. Cardani is the Head of the Data Centres Programme at techUK, aiming to provide a collective voice for UK operators and working with government to improve business environment for the data centres sector.
Lucas Banach
Lucas Banach is Programme Assistant at techUK, he works on a range of programmes including Data Centres; Climate, Environment & Sustainability; Market Access and Smart Infrastructure and Systems.
