Miliband takes action on power connection to the grid

New rules to revamp the way power plants get connected to the UK’s power grid are proposed today by energy and climate secretary Ed Miliband.

The move aims to help new projects waiting to get a date to feed electricity into the grid to get out of the queue, in particularly renewable energy projects such as wind farms.

There is currently over 60 GW of new generation capacity – around 200 projects – that are waiting to be connected to the grid, including around 17 GW from renewable sources.

Ed Miliband announced as part of the Government’s Low Carbon Transition Plan in July that the government would reform the previous system of projects getting a connection date on a first come, first served basis regardless of when the project would start generating energy. This meant some wind farms were given connection dates years after when they were due to start producing electricity. Today’s consultation offers industry a say on three options for how the new system will work.

The proposed scheme will also give investors confidence that projects will be given a connection date that fits in with their project development timeline.

Ed Miliband said: “Access to the electricity grid has been one of the key barriers to the generation of renewable energy in this country. We are determined to resolve this issue. That is why we took powers to do so in the Energy Act and today we are setting out our proposals.

“We need these new projects to get hooked up to the grid as soon as they are ready – both to help tackle climate change and secure our future energy supplies.

“The government will do whatever is necessary to bring about the transition to a low carbon economy and to give investors the certainty they need so that new renewable energy generation is built.”

For the first time, the Government will be making the detailed reforms to grid access rules that are necessary to overcome the delays. Previously, reforms were proposed by industry and then approved or rejected by the regulator, Ofgem.

There are three proposed models that the Department of Energy and Climate Change is consulting on from today:

• Connect and Manage (Socialised): - costs will be shared between all users of the network.
• Connect and Manage (Hybrid): A model that targets some, but not all, of the additional constraint costs on new entrant power stations.
• Connect and Manage (Shared Cost and Commitment): A model that offers the choice to new and existing power stations to commit to the network (which is helpful to Grid in terms of long term management of system) in return for greater certainty over charges, or to opt out and be exposed to additional constraint costs.

Ofgem has already approved interim arrangements to help new power stations connect more quickly, and under these interim arrangements around 1 GW of renewable projects in Scotland have already been offered earlier connection dates.

However this was only ever intended as an interim measure and government is intervening to ensure enduring access arrangements are put in place by June next year. This will be essential for investor confidence that we have a long-term and sustainable framework in place.

The consultation “Improving Grid Access” starts today (25 August 2009) and will close on 17 November 2009.