Recommendations & Conclusions
15 items
4
Conclusion
First Report - Grid Capacity in Wales
Accepted
While we understand that the UK Government must consider the energy and network needs of the UK as a whole, we consider that it would be inequitable if the UK were to benefit from Wales’ natural resources for renewable energy generation while Welsh households, businesses and industry were not adequately …
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While we understand that the UK Government must consider the energy and network needs of the UK as a whole, we consider that it would be inequitable if the UK were to benefit from Wales’ natural resources for renewable energy generation while Welsh households, businesses and industry were not adequately connected to the grid.
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Government response AI summary
The Government states that strategic planning will always take account of network needs in Wales, pointing to the Holistic Network Design (HND) as the first step towards a Centralised Strategic Network Plan (CSNP), and mentioning Welsh Government representatives input.
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Wales Office
8
Recommendation
First Report - Grid Capacity in Wales
Accepted
We note the work by the Welsh Government to develop a long-term plan for energy networks in Wales and call on the UK Government to explain how it is engaging with this. The UK Government needs to explain how it is taking into account Wales-specific 38 Grid capacity in Wales …
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We note the work by the Welsh Government to develop a long-term plan for energy networks in Wales and call on the UK Government to explain how it is engaging with this. The UK Government needs to explain how it is taking into account Wales-specific 38 Grid capacity in Wales challenges and opportunities when considering grid design and how it is ensuring that Wales is able to benefit from the increased investment and development associated with grid reinforcement.
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Government response AI summary
Strategic planning of the network takes account of network needs in Wales, and the Holistic Network Design (HND) recommends connections and infrastructure for projects in the Irish Sea and Celtic Sea. Welsh Government representatives feed into the HND through monthly meetings.
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Wales Office
9
Conclusion
First Report - Grid Capacity in Wales
Accepted
Upfront connection costs can be prohibitive and prevent the development of energy projects. This results in a “chicken and egg” situation whereby developers wait for other developers to commit to the funding of connection costs.
Government response AI summary
The government points to Ofgem's decision to socialise a proportion of network reinforcement costs, BEIS's amendment to connections legislation, existing frameworks for developers to share connection costs and Ofgem incentive schemes as addressing the committee's concerns.
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Wales Office
10
Conclusion
First Report - Grid Capacity in Wales
Accepted
We are encouraged that Ofgem is reviewing connection arrangements and we look forward to hearing more about the progress being made in the run up to 1 April 2023. We consider that due to the tight timeframes set by government net zero targets, urgent work should be done to overcome …
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We are encouraged that Ofgem is reviewing connection arrangements and we look forward to hearing more about the progress being made in the run up to 1 April 2023. We consider that due to the tight timeframes set by government net zero targets, urgent work should be done to overcome prohibitive upfront costs and the ‘chicken and egg’ situation by incentivising developers to share grid connection and reinforcement costs.
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Government response AI summary
The government describes existing mechanisms to address upfront costs and incentivise developers to share grid connection and reinforcement costs, including Ofgem's decision to socialise a further proportion of network reinforcement costs and existing legislation allowing developers to share costs and receive reimbursement from second comers.
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Wales Office
12
Conclusion
First Report - Grid Capacity in Wales
Accepted
A mechanism should be developed to allow small energy generation projects to defer and spread grid connection payments over time.
Government response AI summary
The government indicates that the connections framework overseen by Ofgem and DNOs already allows for instalment payments in appropriate circumstances.
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Wales Office
13
Conclusion
First Report - Grid Capacity in Wales
Accepted
We are encouraged to see that the UK Government recognises that grid connection costs can be prohibitively high for developers. However, we are concerned by the decision to move more of the reinforcement costs to the network charges paid by “all electricity consumers in the area”.
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We are encouraged to see that the UK Government recognises that grid connection costs can be prohibitively high for developers. However, we are concerned by the decision to move more of the reinforcement costs to the network charges paid by “all electricity consumers in the area”.
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Government response AI summary
The government points to Ofgem's decision to socialise a proportion of network reinforcement costs and BEIS's amendment to connections legislation to enable these reforms as addressing the committee's concerns.
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Wales Office
14
Recommendation
First Report - Grid Capacity in Wales
Accepted
It is not equitable that grid reinforcement costs should be shared by consumers in an area because this would create a higher burden for rural households and businesses and those in areas which historically lack existing grid infrastructure. We ask Ofgem and the UK Government to define what is meant …
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It is not equitable that grid reinforcement costs should be shared by consumers in an area because this would create a higher burden for rural households and businesses and those in areas which historically lack existing grid infrastructure. We ask Ofgem and the UK Government to define what is meant by the phrase “in the area” and to explain how they will ensure that rural or isolated communities will not be unduly burdened.
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Government response AI summary
The costs of connecting a project to the existing network are charged to the connecting customer, and from April 2023, reinforcement costs will be met by electricity billpayers in the relevant distribution area.
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Wales Office
17
Conclusion
First Report - Grid Capacity in Wales
Accepted
The planning consent process has created a queue of renewable generation projects in Wales to which grid capacity has been reserved before planning permission has been granted.
Government response AI summary
The government acknowledges the issue and is taking steps to streamline connection processes as outlined in the Electricity Networks Strategic Framework. Ofgem and National Grid ESO have published reform proposals, including measures to terminate connections for non-progressing projects and a new two-stage offer to manage …
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Wales Office
18
Recommendation
First Report - Grid Capacity in Wales
Accepted
The UK Government should work with National Grid ESO, NGET, the DNOs and Ofgem to revise consenting processes to align the allocation of grid capacity with the application for planning permission. National Grid’s work should be expedited on reviewing commercial contracts with developers reserving grid capacity, where those projects have …
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The UK Government should work with National Grid ESO, NGET, the DNOs and Ofgem to revise consenting processes to align the allocation of grid capacity with the application for planning permission. National Grid’s work should be expedited on reviewing commercial contracts with developers reserving grid capacity, where those projects have consistently failed to achieve planning permission.
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Government response AI summary
The government recognises the issue and states its intention to streamline connection processes as set out in the Electricity Networks Strategic Framework. Ofgem and National Grid ESO have published reform proposals, including terminating connections for non-progressing projects and introducing a new two-stage offer for faster …
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Wales Office
21
Conclusion
First Report - Grid Capacity in Wales
Accepted
The policy in favour of laying cables underground in AONBs is welcome. However, due to the significantly higher construction costs it is likely that overhead lines will simply be re-routed around AONBs. This will mean that communities and businesses in those areas will remain isolated from grid infrastructure and face …
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The policy in favour of laying cables underground in AONBs is welcome. However, due to the significantly higher construction costs it is likely that overhead lines will simply be re-routed around AONBs. This will mean that communities and businesses in those areas will remain isolated from grid infrastructure and face high costs to connect to the grid.
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Government response AI summary
Ofgem is revising how customers are charged for connecting to distribution networks to reduce connection costs, and project approval is a matter for Ofgem.
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Wales Office
22
Recommendation
First Report - Grid Capacity in Wales
Accepted
The Government should outline the circumstances in which higher grid construction costs, for example due to undergrounding, are justified to enable rural communities to keep pace with the decarbonisation transition.
Government response AI summary
Ofgem is revising how customers are charged for connecting to distribution networks to reduce connection costs, and project approval is a matter for Ofgem.
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Wales Office
26
Conclusion
First Report - Grid Capacity in Wales
Accepted
There is a lack of clear policy directing energy development companies on how to provide adequate benefits to communities hosting grid infrastructure.
Government response AI summary
The government states that it has already committed in the BESS to review community benefit options for electricity network infrastructure, and is currently engaging with stakeholders to explore a more standardised approach to local community benefit packages.
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Wales Office
28
Conclusion
First Report - Grid Capacity in Wales
Accepted
Without an established system of anticipatory investment in grid infrastructure the significant opportunities for renewable energy generation in Wales will go under- utilised, which will have an impact on the achievement of net zero targets. Were grid infrastructure to be built on an anticipatory basis in areas where there is …
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Without an established system of anticipatory investment in grid infrastructure the significant opportunities for renewable energy generation in Wales will go under- utilised, which will have an impact on the achievement of net zero targets. Were grid infrastructure to be built on an anticipatory basis in areas where there is a high probability of the construction of future energy projects, this would reduce the risks of costly grid infrastructure not being utilised. Furthermore, multi-connection substations, such as the MOS described by Celtic Sea Power, could have an important role in both reducing the costs and delays associated with grid construction and in providing strong locational signals to establish local supply chains. While we are encouraged that Ofgem’s stance has changed in favour of anticipatory investment and that BEIS is looking to strengthen Ofgem’s powers in this area, we consider that this does not reflect the urgency of the situation.
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Government response AI summary
The government highlights Ofgem's work to create a price control framework that enables strategic investment ahead of need, along with efforts to accelerate strategic transmission network infrastructure and protect consumers. They state they are already working with National Grid ESO, Ofgem, and network companies on …
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Wales Office
29
Recommendation
First Report - Grid Capacity in Wales
Accepted
The UK Government should use National Grid ESO’s Future Energy Scenarios to work with energy companies and grid infrastructure owners to determine areas where anticipatory investment in grid infrastructure would be justified to achieve net zero targets. Where anticipatory investment in grid infrastructure is deemed justified, the UK Government should …
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The UK Government should use National Grid ESO’s Future Energy Scenarios to work with energy companies and grid infrastructure owners to determine areas where anticipatory investment in grid infrastructure would be justified to achieve net zero targets. Where anticipatory investment in grid infrastructure is deemed justified, the UK Government should encourage the development of multi-connection substations in order to establish local supply chains, which can then support the connection of future renewable energy projects.
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Government response AI summary
The government highlights Ofgem's work to create a price control framework that enables strategic investment ahead of need, along with efforts to accelerate strategic transmission network infrastructure and protect consumers. They state they are already working with National Grid ESO, Ofgem, and network companies on …
Read full response →
Wales Office
31
Conclusion
First Report - Grid Capacity in Wales
Accepted
The grid network has been built piecemeal on the basis of the energy needs of the nation over time. The energy system in the UK is changing and electricity grid network design needs to adapt to meet this change. We are encouraged to see the Government shifting to a more …
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The grid network has been built piecemeal on the basis of the energy needs of the nation over time. The energy system in the UK is changing and electricity grid network design needs to adapt to meet this change. We are encouraged to see the Government shifting to a more strategic, planned approach to the network and welcome the recent policy work to set this out. However, given the complexity of delivering new grid infrastructure, the urgency of net zero targets and the multiplicity of different actors involved in the sector, we consider that there is a need for a more joined-up approach, which ultimately must be led by the UK Government.
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Government response AI summary
The Government is committed to unlocking the required investment to deliver a secure, resilient, net zero-ready network and is taking a leading role in a more strategically planned approach for electricity networks. This includes the publication of the HND and upfront consideration of community and …
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Wales Office