[Author: Rebecca Litvack]
Welcome back to Energy Buzz, your regular snapshot into the latest topics in the energy industry from Hogan Lovells. Here we explore the pressing need for additional grid capacity.
Britain’s offshore wind capacity has grown by 50% in the past five years and is set to double in the next five, but the grid is struggling to keep up due to a lack of transmission capacity to connect the new renewable energy sources.
According to a recent Bloomberg NEF report, the UK has been investing four times more in renewable energy projects than in the necessary grid infrastructure to support them. The UK has spent approximately £1bn this year alone to turn off wind turbines during periods of high wind, with the grid unable to handle the excess power.
However, the need for greater investment in grid infrastructure to keep pace with the rapid expansion of renewable energy is far from a recent development. In December 2022, Ofgem introduced a new Accelerated Strategic Transmission Investment (ASTI) regulatory framework to fund and incentivise delivery of strategically important transmission infrastructure to connect offshore generation. More recently, Ofgem published a consultation on their end-to-end review last month, consulting on connections incentives and obligations. Key themes identified by Ofgem included setting minimum criteria for project readiness, offering both indicative and firm connection dates, and applying new criteria to the existing connections queue. These reforms are expected to facilitate faster and more efficient grid connections, providing a clearer pathway for new renewable projects.
Now, in a major milestone to deliver on the Prime Minister’s Plan for Change, the government has set out their detailed plan for achieving clean power by 2030, and the new independent National Energy System Operator (NESO) outlined the pathways to achieve this goal. The transition to renewable energy faces several key barriers, including obtaining planning consents, lengthy connection queues and the pressure on the grid from intermittent renewable generation. To overcome these challenges, strategic planning is essential to streamline the approval process for new projects, allowing them to come online faster. Additionally, addressing the grid pressure from intermittent generation requires the integration of energy storage solutions and flexible technologies.
These developments signal a promising future for the UK’s energy sector. By addressing the current grid infrastructure challenges and successfully navigating the evolving regulatory environment, there is a significant opportunity to create a more resilient and efficient energy system. This transition will not only support the UK's renewable energy goals but also strengthen its position in the global energy market.
Make sure to keep an eye out for our next edition of Energy Buzz, which will provide an overview of the Government’s new Plan for Change which supports the UK’s mission to achieve clean power by 2030.
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