The National Energy System Operator (NESO) has proposed a code modification that would support the future grid connection queue.
As part of its reforms to the system by which it handles projects waiting for a connection to the electricity grid, NESO proposes a new Connection and Use of System Code (CUSC) modification to introduce a Progression Commitment Fee. The fee would work alongside the connections reform currently being considered by Ofgem.
The proposed fee will be subject to a defined activation trigger, that if activated would mean generation project developers would have a fee payable on termination or reduction in capacity, with the fee increasing over time.
This would apply to generation projects that had progressed through the first stages of the connections process to be part of the Gate 2 connections queue but not yet submitted a planning application.
NESO proposes that initially the fee would be equivalent to an additional £2,500/MW for the project and would increase by an additional £2,500/MW every six months, up to £10,000/MW, during the time a project is in the Gate 2 queue without a submitted application for planning consent.
Kayte O’Neill, chief operating officer of NESO, explained: “If activated, the proposed Progression Commitment Fee will maintain the impetus for projects to regularly assess the viability of their project – ensuring that viable projects in the connection queue continue to progress and deliver future electricity generation capacity.”
Following NESO’s submission of the CUSC modification, director of its connections programme Matt Vickers wrote that the additional requirement will only be triggered if projects in the early stages of the Gate 2 queue are not progressing as expected “and if there are still too many unviable projects hindering the progress of others without being replaced by suitable alternatives”.
“If we determine that the trigger point is reached, we will carefully consider whether to introduce this additional fee, and it will not be a decision taken lightly.”
When NESO first consulted on its grid connections reform, stakeholders were against a proposal that would see a financial instrument mean developers put up cash security to be able to pass Gate 2, proposed at £20,000 per MW. The maximum a project developer could be charged has been revised down a lot.
Vickers states the consensus was that this security level was too high, upfront payments could keep non-progressing projects in the queue, and applying security throughout the process was unfair due to limited control over planning permissions. He added that industry concerns have been considered and “we hope it will not be needed, which is why it remains dormant with a trigger”.
