The UK Electricity Grid: Overcoming connection barriers

Tom Luff Head of Electricity Network Delivery and Access Team, DECC

9 February 2011

Agenda

Electricity grids and climate change Overcoming barriers to investment The offshore coordination challenge Ensuring timely connections Key upcoming milestones

Electricity networks will play a key role in some of Governments top priorities
Tackling climate change and securing energy supply are key Government priorities EU renewables target required 15% of UK energy (30% of electricity) to come from renewable sources) A quarter of existing generation to close by 2020 Urgent need for a diverse range of new energy infrastructure Renewables New nuclear Clean coal and gas Electricity networks are vital to enabling this transition Upgrading New infrastructure to transport new energy sources to demand

Low carbon and energy security targets

New energy infrastructure needed

Vital role of the grid

DECC works with the independent regulator to deliver networks policy

Department of Energy and Climate Change (DECC) Ministers set strategic policy objectives

Independent regulator (Ofgem) develops and implements regulatory policy

DECC is currently reviewing Ofgems regulatory role

Industry delivers the necessary changes in the network

The ENSG and the price control framework are helping to ensure the right investments are made
Statutory obligation on National Grid and the Scottish transmission owners to develop and maintain the electricity transmission system Must be efficient, co-ordinated and economic and have regard to amenity Approval for investment governed by Ofgems price control system Framework for the next price control period is currently being developed by Ofgem (RIIO framework) The Government and Ofgem set up the Electricity Networks Strategy Group (ENSG) Identified the strategic network investment required to meet 2020 renewables targets best available overview but not a plan Ofgem has set up a process for approving anticipatory investment identified by ENSG over 400m approved so far

The Electricity Market Reform (EMR) White Paper will have implications for all this work

Planning Act reforms were designed to streamline decision making

New planning regime as a result of the Planning Act 2008 Infrastructure Planning Commission (IPC) is the decision-making body for nationally significant infrastructure projects Will become Major Infrastructure Planning Unit (MIPU) giving Ministers the responsibility for taking the decisions National Policy Statements (NPSs) will play a central role Primary documents used by IPC when making decisions Integrate environmental, social and economic objectives and provide clarity on the need for infrastructure Important to have more clarity on the relative costs and impacts of different technologies We welcome the independent study on the costs of undergrounding being completed by IET and KEMA General reference document for all interested parties, including the Infrastructure Planning Commission

DECC and Ofgem are working to ensure the new offshore transmission regime develops in a coordinated manner
Offshore competitive regime companies bid to own and manage transmission assets Important that offshore transmission enables delivery of our short- and longer-term targets Key challenges: Non-alignment of interests of individual transmission constructors and network as a whole? Interaction with planning? National Grid produce an annual Offshore Development Information Statement (ODIS) Helps facilitate the achievement of the coordinated development of the offshore and onshore grid Offshore Transmission Coordination Advisory Group (OTCAG) to consider Feasibility of configurations (e.g. integrated and radial) Potential additional measures required

Government intervention has reduced connection barriers

Previous grid access regime constrained development of renewable generation Connection dates as late as 2025 Government intervened to ensure timely solution Generators can connect once local works built; socialised constraint costs Interim solution agreed in May 2009 (Connect and Manage); enduring regime announced in July 2010 following consultations This improved connection times Earlier connection dates offered to 51 projects (over 24GW) Offshore wind accounts for 11 (19GW) of these With help from Ofgem and NG, we are monitoring impacts

Cost of connection (transmission charging) is currently being reviewed through Ofgems Project TransmiT

Major upcoming milestones

February 2011 KEMA / IET independent study into the costs of undergrounding March 2011 Spring 2011 Offshore Transmission Coordination Advisory Group (OTCAG) first meets Revised National Policy Statements (NPSs) laid before parliament for ratification / approval Expected DECC publication of the Ofgem Review Ofgem publication of Project TransmiT Next price control review period starts

Spring 2011 Autumn 2011 Spring 2013