If the UK is to meet its climate change and renewable energy targets and ensure security of supply, large amounts of renewable and other low carbon generation need to be able to connect to our electricity networks in the next decade. Grid access arrangements can delay or prevent these investments from coming forward. In some cases, new generators have been offered grid connection dates as late as 2025. Timely and effective reform is therefore essential.
A joint review of the electricity transmission arrangements in Great Britain was carried out by DECC and Ofgem. The Transmission Access Review was published in June 2008, setting out a programme of reform.
From May 2009, a new 'Connect and Manage' interim regime has allowed National Grid to offer earlier grid access to new and existing generation projects.
On 27 July 2010, following consultation on the options for grid access reform, the Government announced the implementation of a new enduring regime for grid access. This will enable new generation to connect to the network more quickly thereby removing a key barrier to new renewables. Details are available on the Improving grid access - second consultation webpage. The Government has asked Ofgem to monitor the regime’s impacts, and Ofgem’s first monitoring report was submitted on 1 April 2011, while the second was submitted on 30 September 2011.
The Minister of State, Charles Hendry, has responded to both reports.
New electricity transmission network is the enduring answer to capacity constraints for new renewable and other low carbon generation. The 2008 Transmission Access Review argued that in addition to revising grid access arrangements, the way in which new grid infrastructure is planned and developed needed to be accelerated.
The Electricity Networks Strategy Group (a senior industry group including the Transmission Companies, chaired by DECC and Ofgem) developed scenarios of the potential transmission investments needed to connect large volumes of onshore and offshore wind generation required to meet the 2020 renewables target, whilst, at the same time, facilitating the connection of other essential new low carbon generation. These scenarios were published in the March 2009 report Our electricity transmission network: a vision for 2020. Ofgem is currently working with the Transmission Owner companies (National Grid, Scottish Power Transmission and Scottish Hydro-Electric Transmission Limited) on the regulatory approvals for these investments.
GB transmission charges
Transmission Network Use of System (TNUoS) charges which meet the costs of building and maintaining the network, currently reflect the costs electricity generators and suppliers impose on the GB transmission network. They are linked to the generator or supplier's distance from the main centres of electricity demand and generation and the amount of spare capacity on the local network.
Transmission charges are designed to:
- ensure the transmission system develops efficiently and cost-effectively
- encourage new generation projects where there is higher demand
- minimise costs and therefore consumers’ energy bills
- encourage competition in the generation and supply of electricity
It is National Grid's responsibility as the GB system operator to devise transmission charges in accordance with their licence. Ofgem then decides whether to approve these proposals, as the independent energy regulator. Ofgem is currently reviewing the cost-reflective TNUoS charge calculation method.
You can find out more on the National Grid: Charging Statements web page.
Project TransmiT
In September 2010, Ofgem launched Project TransmiT, a fundamental review of the transmission charging arrangements. The aim of the review is to ensure that we have in place arrangements that facilitate the timely move to a low carbon energy sector whilst continuing to provide safe, secure, high quality network services at value for money to existing and future consumers.
Further details on the progress of Project TransmiT can be found on the Ofgem: Project TransmiT web pages.
Transmission charge adjustment
Section 185 of the Energy Act 2004 gives the Secretary of State the power to adjust transmission charges for renewable electricity generators in a specified area of Great Britain. The power can be exercised if renewable development in that area is likely to be deterred or hindered in a material respect by the level of transmission charges that would otherwise apply.
Section 185 of the Energy Act 2004 was amended by Section 25 of the Climate Change and Sustainable Energy Act 2006 to allow any scheme to run until October 2024.
This law was introduced to ensure transmission charges do not deter renewable energy generation in the north of Scotland, where there is significant potential for it.
In 2007, a report that looked at the relative economic viability of developing wind farms in the Scottish Islands compared to the north of Scotland was commissioned. The findings showed much greater potential returns for investors in Shetland and Orkney wind farms than on areas in the north of Scotland, where similar projects are already underway.
This suggested that there was no case to lower transmission charges to make these projects possible. While projects on the Western Isles proved less economically viable, the case for a Section 185 intervention was still only marginal.
You can read the full report about this below:
The follow-up report below confirmed the original findings were reasonable:
A statement outlining the proposed approach was published on 26 June 2008:
DECC is looking again at the case for a section 185 scheme for renewable projects in the Scottish Islands in parallel with Ofgem’s independent review of transmission charges under Project TransmiT.
COSTS OF NEW HIGH VOLTAGE TRANSMISSION LINES
At the Government's request, an independent and authoritative study has been published on the whole life costs of installing new high voltage transmission lines under the ground, under the sea and over ground. The purpose of this study is to provide a well-informed and objective point of reference for the Infrastructure Planning Commission in evaluating planning applications for new transmission connections and reinforcements.
In order for interested parties to understand the process undertaken to produce this report, we are publishing the last draft received from an earlier stage of the project (see below). However, it is important to recognise that this was a working draft, and further refinement and formatting would have taken place before publication as a final document.