Source · Select Committees · Business and Trade Committee
Recommendation 45
45
Deferred
Paragraph: 194
Enable National Grid ESO to require projects meet strengthened grid connection milestones.
Recommendation
The UK’s “first come first served” approach to grid connections is failing to deliver the volume of connections required. Projects which may be speculative or slow-moving risk being prioritised over those that are more viable. While we welcome National Grid ESO’s five-point plan to tackle queue management issues at the transmission level, we do not believe this has proved successful to date. We recommend that Ofgem allows National Grid ESO to require projects already in the queue to meet strengthened milestones. If projects are unable to meet these, network operators should be able to prioritise other more viable projects in the queue. In response to this report, we ask that National Grid ESO explains what steps it is taking to work with the Distribution Network Operators to stop projects that want to connect to the distribution network getting stuck in the transmission queue. We would welcome direct intervention from Government on these issues if required.
Government Response Summary
The government highlights its consultation on the Strategy and Policy Statement (SPS) for Energy Policy and the establishment of the Future System Operator (FSO), which will manage electricity and gas networks. The response outlines these ongoing policy and structural developments, but does not directly commit to changing the 'first come first served' grid connection approach, strengthening project milestones, or requiring National Grid ESO to explain DNO collaboration.
Paragraph Reference:
194
Government Response
Deferred
HM Government
Deferred
148. The Government published its consultation on the Strategy and Policy Statement (SPS) for Energy Policy in Great Britain on 10 May 2023. The consultation will run for 12 weeks, concluding on Wednesday 2 August 2023. 30 Decarbonisation of the power sector: Government Response 149. The SPS has been developed in accordance with the Energy Act 2013. It sets out the Government’s strategic priorities and other main considerations of its energy policy; the policy outcomes to be achieved as a result of the implementation of that policy; and the roles and responsibilities of those who are involved in implementation of that policy. 150. Ofgem and the Future System Operator, once established, will be required to have regard to the strategic priorities in the SPS when carrying out their functions. 151. Ofgem’s principal objective is to protect consumers interests, and this included consumers’ interests in the “reduction of greenhouse gases”. 152. However, the Government appreciates that an amendment was voted into the Energy Bill by the House of Lords to introduce a statutory net zero duty for Ofgem. The Government has carefully considered the effect of this amendment with Ofgem and sought legal advice, to ensure that the Lords’ amendment would not impact the hierarchy and intended effect of Ofgem’s duties. 153. The Government is therefore content to amend Ofgem’s existing duty to consider a reduction in greenhouse gases by making specific reference to the net zero targets in the Climate Change Act 2008, reaffirming the government’s commitment and mandate in achieving our net zero targets and ensuring that Ofgem’s role in net zero is clear. Conclusion but response deemed necessary The Future System Operator (FSO) is expected to provide strategic oversight of the planning and coordination of the power system, but there is a still a lack of clarity over its specific roles, responsibilities and powers, as well as how it will interact with the Government and Ofgem. It is vital that the FSO is adequately resourced and that there is sufficient accountability and scrutiny of its work. 154. Subject to the passage of the Energy Bill, the FSO will have the powers needed to discharge their functions effectively. 155. The FSO will manage the electricity system in real time, bring together the planning for the electricity and gas networks into a single institution and build up capability to undertake whole system network planning. There are a number of other potential roles that the FSO could take on over time, for example in relation to local and regional energy planning, data, heat, transport, hydrogen and Carbon Capture Usage and Storage (CCUS). 156. The obligations on the FSO will be set out in licences and regulated by Ofgem, and Ofgem will ensure that other licensees have appropriate obligations themselves to manage their relationship with the FSO. 157. Ofgem will also assess the FSO’s business plans and performance and allocate funding through a price control process. This ensures that the FSO will be appropriately funded to discharge its functions efficiently.