From gridlock to an orderly queue? Positives and pitfalls of Britain's connection reforms

This year will be critical for the electrification of the UK power system with the Labour government aiming for clean power by 2030. However, the delay to connect renewables projects to the grid remains a significant barrier to this ambitious target.

The UK is witnessing a surge in renewable energy projects, with the sector poised to reach a market value of over £41bn ($51.8bn) by 2035, according to the Association for Renewable Energy and Clean Technology (REA). But a recent report by Bloomberg NEF states that the country is spending four times more on renewables projects than it is on grid connections.

Over £200bn worth of renewable energy projects face grid connection delays of up to fifteen years, creating a logjam that jeopardises decarbonisation efforts and discourages vital investment.

The factors contributing to this logjam can be broadly linked to the historically slow investment in new grid infrastructure and a grid connection process that has been operated on a “first come, first served” basis.

The UK’s National Energy System Operator NESO has confirmed more than 750GW of projects are currently queuing for connection to the grid, with the backlog of projects only increasing. This includes projects that are unlikely to ever go ahead as outdated regulation has meant that unviable projects and speculative applications are clogging up the queue.

NESO’s reforms, outlined in the bold Connections Reform package submitted to regulator Ofgem at the end of last year, represent a positive step towards tackling the grid backlog. Its intention is to align the grid connection process to the UK Government’s Clean Power 2030 plan, which, amongst other things, creates regional 'permitted capacity' caps for different renewable energy technologies. NESO has also announced a pause on new grid connections to focus on implementing the new reform system.

The need to clean up the grid connections queue is universally accepted. Given the scale of the challenge and the associated time pressure, NESO has made a good start with its suite of change proposals submitted to Ofgem.

However, there are some inevitable concerns. Key amongst these is the potential for developers to have stranded investment in areas where the current grid connection queue looks likely to exceed the regional permitted capacity for that particular technology. NESO has attempted to address some of these concerns by creating “protections” for projects that are either consented or already in the planning system.

However, these protections are not absolute and for projects that have yet to enter planning, the risk of being left with no prospect of grid connection is very real.

The industry is also wrestling with a complex set of change proposals and attempting to predict their impact upon their development portfolios. Given the extent of the change to the connection process rules that is in train, there is also a certain degree of inevitability, but the need for regular clarifications and updated FAQs from NESO is making developing projects more challenging.

Ultimately, the UK government, NESO, and Ofgem need to keep in place reasonable safety nets for “real” projects that could be caught out by the new CP30 regional permitted capacities.

Effective implementation of the connection reforms will be crucial to their success. The reforms will only have their desired effect if implemented in a decisive and transparent manner. NESO must be prepared to be robust and transparent in its management of new Gate 2 grid offers. Equally significant will be NESO meeting its commitment to publish updates of progress of connections against CP30 permitted capacity limits.

The introduction of some strategic system planning, such as the Clean Power 2030 Action Plan, is needed to deliver the best value decarbonised energy system for the consumer.

Connections reforms have the potential to be a significant contributing factor in realising this outcome, but it will require strong leadership from NESO to deliver the reforms in a way that removes the slow projects while sustaining momentum in essential new investment.

As a global company supporting 41GW of assets across 24 countries with varying policy and regulatory approaches, we support faster permitting, accelerated investment in grid expansion, and smarter market design.

These factors are essential to ensuring a just transition and a future where everyone has access to affordable zero carbon energy. The UK government must ensure it is working in tandem with the right stakeholders across the industry who can help deliver clean power by 2030.