Chris Seeks Clarification On "Connection Reform"
Q120 Sir Christopher Chope: Can I ask about connection reform? First, when we define connection reform, it is basically the rationing of access to the distribution network—is that really what it is?
Kayte O’Neill: I would describe connections reform in two parts. One is ensuring that we have the right processes in place to be able to bring connections that are ready and are needed or strategically aligned with what GB needs and get them on to the system. That is part one of connections reform.
The other part of connections reform, as we have talked a bit about, is ensuring that the network exists to be able to move that power around the country to where demand is. It is not about restricting access. I will say, though, that the queue as it currently stands is massively oversubscribed. Our system today is about a 50 GW system and there are 750 GW of connection applications currently in the queue. So I would not describe it as restricting access; I would describe it as ensuring that we can connect what is needed and what is ready.
Q121 Sir Christopher Chope: But instead of allowing the price mechanism, for example, to be used to prioritise applications for connections, you as a regulator are basically imposing your decisions. That is why I use the expression “rationing”. Essentially, you are taking the decisions as to who can get to the top of the queue, and you are doing it not on the basis of price but on the basis of other factors, many of which may not be disclosed.
Kayte O’Neill: It is really important—and it is the case today and will be the case going forward—that connections processes, rules and codes are completely transparent, and that there is nothing going on behind the scenes about decisions we are taking about what connects and what does not connect to the grid. Historically we have had purely a first come, first served process. The next person in the queue to apply is the next person that gets connected.
Currently that queue is so long and there is so much in the queue that some of the offers for connection are out in the back end of the 2030s. That is just because of the sheer volume of projects that came before the last project on a first come, first served basis. Going forward, the relative position of projects in the queue is retained. We are not throwing the whole queue up in the air. However, we are removing from the queue projects that are speculative, have no intention ever of connecting and are simply getting in the way of other good projects that are sitting behind them in the queue.
Q122 Sir Christopher Chope: Yesterday you made a fresh announcement that revised some earlier proposals. What do you think the impact is of that and why did you make those revisions?
Kayte O’Neill: The decisions that we set out yesterday were a positive set of decisions very much grounded in the feedback that we have had from stakeholders through the extensive consultation that we have done on these reforms. These reforms are maybe one-in-10-year type reforms and it is important that we consulted and heard from developers what they need to ensure certainty and confidence in the processes. The biggest change that we announced yesterday was on ensuring that projects that are already proven to be good projects—they are well-developed, people have investment money in them and they have applied for and been granted planning permission—can be assured entry into the queue. That was the big change that we made yesterday, to say: “If you have been granted planning permission, your place in the queue is assured.”
Q123 Sir Christopher Chope: There are other elements of that as well. There is concern being expressed that a lot of projects will still not get past the starting line and past your regulations. For example, your report says that 90% of solar projects should be allocated to the distribution network. Why 90% and not 100%?
Kayte O’Neill: Projects get allocated on to the system where they are appropriately sized to be located. Local solar, community solar, solar developments that are of a size appropriate to connect to the distribution network, should connect to the distribution network, reserving space on the transmission network for the bigger projects that need to connect at that level.
Q124 Sir Christopher Chope: Shouldn’t we just be making a bigger distribution network so that it covers the country in the same way as the gas grid does?
Fintan Slye: Perhaps I can make a point of clarification. It is not that 90% will be allocated to the distribution network and the other 10% will go away. The other 10% is connecting to the transmission network. That is based on the size and scale of the queue that we have seen to date. Solar projects are typically of a size and scale that will connect to the distribution network. There are some big projects—what we would call “utility-scale solar”—that would connect to the transmission network.
Q125 Sir Christopher Chope: Like the one that was swept away by Storm Darragh in Anglesey? That was connected to the main distribution network.
Fintan Slye: I do not know the specifics of that one.
Q126 Sir Christopher Chope: You didn’t see the pictures? It is a complete scene of carnage. Was it 19 acres of wind farm completely destroyed? Anyway, I am sure that the Chinese manufacturers will benefit from being able to renew all that.
Can I ask you about how precisely you will determine which projects are strategically aligned? Who will decide that? Will somebody in your office decide it or will there be criteria so that people know in advance?
Kayte O’Neill: Strategic alignment will be alignment, in the first instance, to the Government’s clean power action plan, so aligned to how much that plan says we need of any given technology in any given location. Over time, strategic alignment will be alignment to future plans. The SSEP then will pick up and—
Q127 Sir Christopher Chope: So the man in Whitehall knows best. That is really what we are talking about, isn’t it?
Kayte O’Neill: No, what is important is that we connect to the grid the level of infrastructure that is needed to meet clean power and to bring economic benefit and growth to GB. There is a limit to how much generation connection we need on the system, whether it is through the clean power plan or through future strategic plans. It is important that we send that signal of how much of a given technology is needed and that demand is uncapped so that we can bring as much demand on to the system as possible.
Sir Christopher Chope: Can I ask one more question?
Chair: We are going to move on, so this is your last one.
Q128 Sir Christopher Chope: On the timescale, I am told that originally you said that you might not be able to indicate which projects were needed until the end of 2025 or early 2026. Is that still the situation or have you been able to advance that timetable? That length of wait is very bad for investors.
Kayte O'Neill: Through things such as the announcements we made yesterday we have been able to give greater certainty to the projects that definitely will be able to connect that they will be in the queue. Projects that have planning permission know that they will be in the queue and they can continue through their development process. That is clear. That is one of the big benefits of the announcement made yesterday.
More broadly, we need to follow due process and ensure that we follow the codes and the rules and that as we make these changes—these reforms to the processes—we do it in the proper way. That means there are timelines set out in codes that we must follow. Those timelines will see us take the majority of 2025. It will be clear to projects that are ready, that meet the readiness criteria, which are very transparently set out, that have the planning permission that they need and that are in line with the level of connection that will be set out in the clean power plan that they should have a place in the queue.
Q129 Chair: To confirm absolutely something you just said about projects with planning consent, can you confirm that any project with planning consent by May 2025 will be shielded from the impact of your grid connections reforms?
Kayte O'Neill: That is right. If the planning application was submitted before 20 December, which is when we will submit our final, fully formed proposal to Ofgem, and if that planning permission is granted by May, the project will be in the queue.
-ENDS-
