Ofgem policy to push ‘zombie projects’ out of grid connection queue

Britain’s energy regulator Ofgem has announced a new policy to clear ‘zombie projects’ clogging up the transmission queue in the UK and cut the waiting time for energy grid connections.

The new rules are hoped to speed up electricity grid connections for viable projects and allow stalled or speculative developers to be forced out of the queue.

Ofgem said the change is a big step away from the existing ‘first-come, first-served’ system, which has led to a long queue of energy projects which could generate almost 400GW of electricity – well in excess of what is needed to power the entire British energy system.

The new queue management milestones will be implemented by the UK grid’s operator, National Grid ESO, from 27 November 2023 and will be introduced to both existing and future grid connection agreements.

This will terminate stalled projects that are blocking the queue for high-voltage transmission lines and means ready-to-go generation and storage.

The rule change will give National Grid ESO the power to introduce strict milestones into connection agreements and terminate projects if they do not hit them at each project stage.

The ESO will publish guidance on 27 November on how it will use its powers with first terminations likely to happen as early as 2024.

Commenting in a release was Eleanor Warburton, Ofgem’s deputy director for Institutions for Net Zero Energy Systems Management and Security, who called the move a “big step towards phasing out the first-come first-served queuing system.

“We want new power on the grid as quickly as possible, so if you’re ready, you can connect sooner. If you’re not ready and are blocking the progress of others, you’ll be removed – you can’t sit on the queue with no consequences.”

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A clogged-up connections queue

Weeks prior to the policy announcement from Ofgem, British energy company Centrica found in a commissioned report that queues for new energy projects seeking connection to the transmission grid are being blocked by ‘phantom’ project developers – those who may not have land rights and haven’t applied for planning consents.

According to the report by Charles River Associates, the estimated size of these power projects in the queue is 62GW, roughly one-fifth of all power in the queue.

Centrica’s CEO Chris O’Shea said at the time that such projects should have construction agreements terminated if developers miss key milestones, urging Ofgem to give National Grid ESO the power to remove projects from the existing grid queue.

Their report suggested that the oversubscribed queue, and longer wait for connections, have a damaging effect on the investments that could drive the UK’s energy transition and energy security.

Commenting in response to the announcement was Simon Ede, a vice president of Charles River Associates’ (CRA) energy practice, who stated how the current system was “designed for a world with a small number of large fossil fuel generators connecting each year. That is now long gone.

“The first-come-first-served arrangements have led a rapid proliferation of renewable energy projects, but the existing queue has become oversubscribed by a factor of 3-4 compared to what industry believes is needed, with many projects in the current queue unlikely to ever come to fruition.

“The new arrangements allow for more active management of connections, shorten the amount of time it takes to connect viable projects, and accelerate decarbonisation of the electricity system.”

Ofgem CEO Jonathan Brearley also said in May that urgent reform to the connections system was vital to unlock new investment and hit national targets – 50GW of offshore wind capacity by 2030 and 70GW from solar by 2035.

Grid transformation

Today’s announcement from the energy regulator comes ahead of a joint connections action plan which Ofgem and DESNZ (Department of Energy Security and Net Zero) are due to publish later this month.

It comes ahead of the government’s response to recommendations to halve the time to build transmission infrastructure by the then Electricity Networks commissioner, Nick Winser.

It also builds on National Grid ESO’s five-point plan, which includes near-term initiatives with Ofgem support that will create capacity and accelerate connection dates for transmission projects.

Julian Leslie, chief engineer and head of Networks at the ESO, called the move a “milestone moment in the ESO’s efforts to lead the transformation of the grid connections process, making it fit for purpose for a modern network that is rapidly evolving and decarbonising.

“The ESO will be uncompromising in our approach to driving out projects that cannot meet their connection date, paving the way for more viable projects that have a real chance of plugging into the grid, energising the UK economy.”