New approach to grid connections – what it means for landowners?
Changes are being introduced which should cut grid connection times for farmers and landowners wanting to implement a renewable energy project.
The Government and Ofgem have jointly published a Connections Action Plan, which sets out ambitious targets to reduce grid connection timescales.
Currently, renewable energy projects seeking grid connections are facing lengthy delays, with many projects being offered connection dates as far away as the late 2030s. Meanwhile, there are many projects that have got connection agreements which will never connect because the projects have stalled.
The Government has realised that this means the connections process is not fit for purpose and requires fundamental reform in order to deliver its net zero targets.
The Connections Action Plan sets out six key areas for Ofgem, government, the electricity system operator (ESO) and the network companies to drive further action and significantly reduce connection timescales. These are:
- Raise entry requirements – The ESO will now require a landowner Letter of Authority to evidence permission from a landowner for a transmission network connection on their land (a Letter of Authority is already a requirement for distribution network connections). This should deter speculative applications. Transmission networks carry high-voltage electricity across the country with lower-voltage distribution networks delivering the power to homes and businesses.
- Remove stalled projects – Milestones will be introduced into transmission connection contracts that a project must meet or face termination of their connection contract. This will release capacity for viable projects.
- Better utilise existing network capacity – To reduce connection timelines changes will be made to how the impact of connections on the network is calculated. More flexible connections will also be offered.
- Better allocate available network capacity – There will be a move away from a first-come, first-served approach to one that connects projects that are strategically important, readier to progress and are able to quickly make use of capacity
- Improve processes and network date visibility for connection customers –Ofgem will undertake an end-to-end review of connections incentives, obligations and requirements on the ESO and networks companies to ensure there is more consistency.
- Develop longer term connections process models aligned with strategic planning and market reform – Steps will be taken to ensure the connection process is integrated with strategic planning and market reforms
It is estimated that these actions should result in more network capacity (both at the transmission and distribution levels) becoming available as soon as Q1 2024.
What does this mean for landowners?
For landowners with existing connection offers for future renewable energy projects, their connection dates may be brought forward and for those applying for new connections, the connection dates offered should besooner than they would be under the current regime. However, it may take some time for the full impact of the changes to filter through the system.
Landowners with their own connection agreements, should get in touch with the network operator to find out whether their connection date may change. Where a landowner has signed an option agreement and the developer has applied for the grid connection, the landowner should keep in close contact with the developer on connection timings.
The planned changes may well result in renewed interest from developers in land for solar and battery energy storage schemes in locations where the grid was previously constrained. While this could represent an opportunity for landowners, it is vital that professional advice is sought before considering such a scheme. Landowners should also seek advice if option holders are seeking to persuade them to let option periods or connection dates be extended.
Whether you have been approached by a developer about a project or would like to consider a project on your land, Strutt & Parker’s Renewable Energy Team would be more than happy to advise. For more information, please contact Jeremy Dawson (Head of Renewable Energy) or Florence Elmhirst.
