Jeremy Hunt’s £55bn tax grab last week marked the death knell for Liz Truss’ ill-fated mini-budget, but many of the energy policies and goals promoted by her predecessor Boris Johnson remain intact.
Not only did the Chancellor reinforce Johnson’s funding pledge for Sizewell C, but the Energy Security Strategy from April has stayed in place, alongside its highly ambitious targets for renewable generation.
This includes vast plans for offshore wind and solar power, with the Government aiming for 50GW and 70GW of both power sources by 2030 and 2035 respectively, to boost the country’s energy independence and meet its environmental goals.
However, without reform, National Grid faces zombie projects stuck in development limbo – unable to progress through the planning system, alongside huge bills to turn off operating turbines to prevent the UK’s creaking network from breaking down.
There is also the looming prospect of a lack of power distributed to key population hubs hundreds of miles from future energy sources like offshore wind and solar farms.
This raises the question of whether National Grid, the UK’s energy motorway network for domestic power supplies, is prepared for such a mammoth task.
National Grid: Fail to plan, plan to fail
Ben Wilson, chief strategy officer for National Grid, told City A.M that to meet Downing Street’s targets, it would need to connect the grid to a further 40GW of renewable power over the next eight years – a sixty percent boost on current capacity.
In his view, there were three things National Grid needed to push for: anticipatory investment, planning reform, and updating the connections process.
But such a scale-up will be highly dependent on National Grid building the necessary power lines, storage facilities and interconnectors to distribute power across the country, including shifting historic amounts of offshore wind power from the North Sea to the south of England.
Wilson called for developers of energy projects and the National Grid to work in concert to ensure new sites were connected to the grid more quickly, and improve how and where it spends money to make improvements.
“When we see these developments coming, such as offshore wind leases, we need to be able to start planning to reinforce the grid – and construct that reinforcement in parallel with developers working on their projects and before the connection request,” Wilson said.
He was also in favour of financial support for communities facing inconvenience from new projects to reduce opposition to vital infrastructure
Wilson said: “If you are impacted by local infrastructure that is only right that there should be community investment to come hand in hand with that.”
He expected the Government to be consulting on the prospect of financial compensation in the new year.
This follows comments from National Grid chief executive John Pettigrew earlier this month, when he told City A.M. the Government should consider how it can provide “benefits to local communities that are hosting infrastructure.”
Barnaby Wharton, director of future electricity systems at industry body Renewable UK, believed National Grid had to be ready for the shift from fewer generators set up close to demand at fossil fuel plants, to lots of renewable generators being built hundreds of miles from British households.
He suggested this meant there will be an increasing need to build more transmission infrastructure, such as power pylons or underground copper cables, quickly.
“The regulatory structures we have in place don’t allow for that pace of deployment,” warned Wharton, adding that the regulatory regime is too focused on “minimising cost today rather than seeing the long-term value in the network.”
Speeding up the planning process for rolling out transmission infrastructure seems like a no-brainer for Downing Street, which is aiming to shave three years off the planning cycle for renewable projects, with offshore wind turbines, for example, taking up to seven years to complete under the current planning system.
Going National: Planning reforms essential
National Grid also noted one of the key influences on planning for the country’s green future were National Policy Statements (NPS) – which are used to shape energy developments.
While the government has a new strategy in place, the latest NPS was established under the former Energy and Climate department back in 2010-11.
“It’s very important that NPS is updated and reflects the amount of renewable generation that is required, but also references the network required to connect it – and the current ones don’t do that,” Wilson said.
“They focus on generation; they do not focus on networks.”
National Grid has also made some of its own adjustments to steps to make the development pipeline for energy projects more efficient.
As things stand, proposed new renewable energy projects enter the Transmissions Entry Capacity queue, which are approved on a first come first serve basis, rather than whether they are fully funded and ready to go.
But if projects want to exit the queue, due to issues with funding or planning, they face financial penalties. This system has led to viable renewable energy projects being delayed – with nervous project managers in the queue fearing losses if they step aside.
To address this, National Grid has set up a temporary amnesty – providing companies with the ability for people to exit the queue if they feel the project is not going to go ahead without having to suffer financial penalties.
Wilson conceded, however, that the queue process might need some further tweaking in order to get more renewable projects up and running, and connected, quicker.
The Government has been approached for comment.
Monopoly: The Grid’s dominant status
Despite National Grid’s recent reforming zeal, the group is not without its critics.
Octopus Energy’s boss Greg Jackson argued last month National Grid is “not fit for purpose” and was the biggest challenge to building more renewable energy sources.
He argued there should be more options for developers looking to connect their projects to the UK’s energy grid – questioning its monopoly status.
At the Times Earth Business Summit last month, he called on the UK to follow the example of other countries such as India and Brazil with “contestable grids” where connections can be fielded by competing contractors.
Rachel Fletcher, director of regulations and economics at the energy firm, argued that it was simply taking too long for new renewable energy projects to get grid connections.
She said: “If you know best place for your wind farm and the place that people want it – that is good for birds and good for catching wind – if it is on a bit of the network that is already at capacity, then you have to wait a very, very long time to get to get a connection to get to get an upgrade.”
The energy expert also questioned whether National Grid should maintain its monopoly status – with the organisation showing too much reliance on settled ideas at the risk of lacking innovation.
Fletcher said: “For example, putting storage next to a wind farm might be a more effective and cheaper way of dealing with the impact of that wind farm on the grid, than putting more copper in the ground. But the network companies – clues in the name – are hardwired to think about particular solutions.”
She warned there was a risk in defaulting “to the same old same old solutions”, which might not be the most cost effective.
These remarks reflect the daunting challenge ahead for National Grid – which will have to meet such criticisms with actions rather than words, as the UK seeks to transform its entire energy sector.