Ofgem has published an open letter providing an update on the processes it is undertaking to progress key initiatives from the November 2023 Connections Action Plan (CAP).
This update follows one issued in April this year, actioning Ofgem and the government’s vision for a reformed grid connections process that facilitates viable projects and is aligned with future strategic network build and spatial energy planning.
The letter explains the framework that Ofgem has been considering, in discussion with Government and ESO, for delivering ‘Target Model Option 4’ (TMO4+) as laid out in April’s letter. The accelerated targets brought in by the Labour government will, according to Ofgem, necessitate further regulatory changes, beyond just TMO4+ code modification proposals.
Initially, connections reform was planned in two phases. However, the need for acceleration and the opportunity for it means Ofgem now considers it “vitally important” that alignment between connections and the strategic planning demands of the GB energy system be incorporated into the current connections reform.
This requires that any necessary licence modifications are considered now, in tandem with the TMO4+ code modification proposals.
Ofgem also notes that, in becoming the National Energy System Operator (NESO), the ESO will take on new and enhanced responsibilities—including the coordinated development of the whole energy system.
Thus, through its licence NESO should take greater control over the connections process for those applications connecting to, using or impacting the transmission system. To safeguard the interests of the industry and meet statutory objectives, this should be done in a form that facilitates the delivery of the strategic plans in an open, transparent way.
Further, Ofgem calls for the NESO to act flexibly and decisively within the parameters of a new governance framework that will be set out by Ofgem following a consultation.
Speeding up the grid connections process
The letter makes clear Ofgem’s intention to consult on new and modified licence conditions to enable the implementation of a TMO4+ connections process. Supporting this, three potential methodologies have been published by the ESO. They are:
- Gate 2 Criteria: This Methodology would specify criteria that relevant applicants connecting to, using or impacting on the transmission system (including relevant distribution connections) need to meet to receive and maintain a connection offer with a confirmed connection location and date, and a place in the connections queue.
- Connections Network Design Methodology: This would set out the process and criteria for formulating indicative and full connection offers at Gates 1 and 2, how the existing queue would be revised after application of Gate 2 Criteria, assessing the network infrastructure needed to enable connection offer and the interaction between the assessment of the enabling infrastructure required for connections and strategic network plans for the wider transmission network.
- The NESO designation methodology: This would set out criteria for the ‘designation’ of individual projects that have met Gate 2 to be prioritised.
For this last option, the proposed criteria for prioritisation would include projects that are critical to the security of supply or system operability, which would materially reduce system/network constraints (and therefore balance costs on consumers), are innovative / emerging technologies, or have particularly long lead times.
According to the regulator’s letter, Ofgem believes that new licence conditions are likely to be needed, which would require the ESO to adopt Methodologies to implement TMO4+. As such, it fully supports the ESO’s ongoing work at this stage in relation to the development of methodologies.
With respect to potential NESO designation of projects, Ofgem says its initial inclination is to view this as a useful and appropriate power for NESO to have, given its role as system operator.
Ofgem is aiming to reach a final decision on the necessary changes to the codes and licences, including approval of any methodologies, by the end of the first quarter of 2025.
