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Navigating the Upcoming Changes to NGESO Connections Reform

The Eclipse Power Group, a leading Independent Distribution Network Operator (IDNO) and Grid Consultancy, is preparing for significant changes to the National Grid Electricity System Operator (NGESO) Connections Reform.

The Electricity System Operator (ESO) unveiled initial proposals to further develop the comprehensive long-term connections reforms announced in December last year.

The proposals aim to apply the “First Ready, First Connected” approach to the entire connections queue, potentially bringing significant changes to the way projects connect to the grid.

Moving to First Ready, First Connected

NGESO has since introduced CUSC Modification Proposals CMP434 and CMP435 aimed at overhauling the process for applying for Transmission capacity. The objective is to give priority to connections in the queue that are prepared to move forward.

The favoured proposal, known as TM04+, emerged from industry steering groups comprising of industry stakeholders such as Transmission Operators (TOs), Distribution Network Operators (DNOs), Independent Distribution Network Operators (IDNOs), generators, and demand users.

OFGEM has prioritised this proposal, and the workgroup aims to finalise recommendations by November 2024, with implementation scheduled for January 2025.

This process is fluid, and amendments and alternatives can be proposed via the working groups, so it is possible that the final implementation will look different. The reform is a crucial development for stakeholders across the energy sector, including renewable energy developers, DNOs, and end consumers.

Key Highlights of the New Proposals – Gated Approach:

Broad Application of Reforms:

Unlike the earlier plan, which would have applied only to new connection applications and significant modification applications from January 2025, the new proposals will extend the First Ready, First Connected model (known as TMO4+) to the entire existing queue.

This will apply to all generation projects with a transmission impact (typically > 1 MW), and all directly connected demand projects. Presently embedded demand and supply points are exempt.

This change is designed to expedite connection dates by prioritising projects that are ready to proceed.

Potential Queue Reduction:

ESO’s internal analysis suggests that these proposals could potentially halve the size of the queue, enabling earlier connection dates for viable projects. This will be achieved by raising entry requirements, removing stalled projects, and better utilizing and allocating existing network capacity.

Streamlined Process:

  • Single annual application window (January – February)
  • Gate 1 offer = indicative connection date and POC, no securities or queue management
  • Gate 2 = land rights (option to lease/purchase) and path to submit planning by agreed date
  • Gate 2 offer = finalised POC, works and connection date, securities and queue management apply

Under the reformed gated approach, projects will start at ‘Gate 1’ and must meet certain criteria to reach ‘Gate 2’. At Gate 2, projects can secure a queue position and a connection date.

Projects in the existing queue will have a chance to meet Gate 2 criteria before the reforms are implemented, allowing them to retain or request an accelerated connection date.

Gate 1 will enable Transmission Operators (TOs) to comprehensively plan the network and potentially make proactive investments ahead of Gate 2, aiming to expedite connections. Additionally, Distribution Network Operator (DNO) connections will have access to Distribution Forecasted Transmission Capacity. This allows DNOs and IDNOs to forecast required transmission capacity up to 10 years in advance, aiding TOs in their modelling efforts. This will also allow DNOs to give an indicative transmission access date with their offer.

Upon reaching Gate 2, projects can apply for advancement to accelerate their connection. DNO projects are expected to have four application windows each year to submit this evidence to NGESO.

Industry Support and Regulatory Process:

The proposals, which received broad support from the Connections Delivery Board, will require changes to industry Codes and Licence Conditions.

OFGEM has granted approval for these changes to be progressed urgently, and ESO is currently driving the required Connection and Use of System Code and System Operator Transmission Owner Code modifications (CMPs and CMs) in partnership with the wider industry.

Depending upon the outcome of these modifications, the reformed process could be in place by January 2025, pending final regulatory approval.

What do you need to know?

All existing projects in the queue have the opportunity to demonstrate they have met Gate 2 requirements through a ‘Request for Information’ (RFI), with the deadline to submit being 28th June 2024.

This RFI is for information purposes only to assess the impact of the proposals and will not be used to allocate Gate 2 positions. Developers are encouraged to complete this to enable the proposals to be most effective.

Why these changes are necessary?

The connections queue has been growing rapidly, with the transmission connections queue increasing by more than 275GW since October 2022, averaging over 20GW a month. The total queue across transmission and distribution is projected to exceed 800GW by the end of 2024, far surpassing the installed capacity needed by 2050.

Applying the First Ready, First Connected model retrospectively will help manage this growth and ensure quicker connections for viable projects.

What’s Next?

ESO is developing implementation plans in collaboration with Ofgem, the Government, and the wider industry. Stakeholder engagement will remain a priority, with formal consultations taking place as part of the code modification process.

 There will also be opportunities for workgroup members to propose alternatives. Transitional arrangements may be implemented to reduce the need to re-issue multiple offers as gate 1 or gate 2. Currently, it’s proposed that transitional gate 1 style offers will be issued for clock-starts from 1st August 2024.

Further Information:

For more detailed information on the proposed reforms, please refer to the document published by ESO Connections Reform | ESO (nationalgrideso.com)

Eclipse Power and Eclipse Power Solutions will keep our customers updated on these developments and how they may impact ongoing and future projects.

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