Source · Select Committees · Welsh Affairs Committee
First Report - Grid Capacity in Wales
Welsh Affairs Committee
HC 218
Published 21 October 2022
Recommendations
8
Accepted
Para 63
We note the work by the Welsh Government to develop a long-term plan for energy...
Recommendation
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 …
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Government Response 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.
Wales Office
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14
Accepted
Para 77
It is not equitable that grid reinforcement costs should be shared by consumers in an...
Recommendation
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 …
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Government Response 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.
Wales Office
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22
Accepted
Para 110
The Government should outline the circumstances in which higher grid construction costs, for example due...
Recommendation
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 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.
Wales Office
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29
Accepted
Para 142
The UK Government should use National Grid ESO’s Future Energy Scenarios to work with energy...
Recommendation
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 …
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Government Response 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 the HND, which identifies key strategic transmission projects.
Wales Office
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Conclusions (9)
4
Conclusion
Accepted
Para 49
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 …
Government Response 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.
9
Conclusion
Accepted
Para 72
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 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.
10
Conclusion
Accepted
Para 73
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 …
Government Response 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.
12
Conclusion
Accepted
Para 75
A mechanism should be developed to allow small energy generation projects to defer and spread grid connection payments over time.
Government Response Summary
The government indicates that the connections framework overseen by Ofgem and DNOs already allows for instalment payments in appropriate circumstances.
13
Conclusion
Accepted
Para 76
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”.
Government Response 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.
21
Conclusion
Accepted
Para 109
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 …
Government Response 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.
26
Conclusion
Accepted
Para 126
There is a lack of clear policy directing energy development companies on how to provide adequate benefits to communities hosting grid infrastructure.
Government Response 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.
28
Conclusion
Accepted
Para 141
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 …
Government Response 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 the HND, which identifies key strategic transmission projects.
31
Conclusion
Accepted
Para 152
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 …
Government Response 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 environmental impacts to provide more certainty in the planning and consenting process.