Current± sat down with Lawrence Slade, who was appointed as chief executive of the Energy Networks Association (ENA) in December 2022, to talk about their push to achieve more investment in innovation to the power grid as the industry looks forward to a massive increase in connections over the next decade.
This week the ENA published a 3-step plan to speed up connections to the grid, saying that the existing connections model is “not fit for purpose, especially when many of the projects seeking connection are not yet ‘connection ready’ or do not have final investment decisions in place.”
The ENA’s 3 point plan aims to reform the queue of network connections to promote projects closer to completion, change how transmission and distribution operators coordinate connections and provide greater flexibility for energy storage operators with new contractual options.
Why is innovation essential and what innovations would you most like to see?
The first thing we need to do is deal with the connections pipeline or queue. The big issue there is the overall regulatory regime that governs how projects come into the queue is not fit for purpose anymore. It was put in place when there were a handful of connection requests per year whereas in the last 12 months, we’ve had 169GW of projects come into the queue, which is something like three times the current peak capacity of the UK electricity grid.
To get more renewables onto the system, one way is to make sure the queue is not being dealt with in a first come, first served way, which is how it was set up, but in a way that says ‘if you’ve got everything ready to go, there’s a connection space available for you, we will look at how fast we can get you down the queue.’ We call that First Ready, First Connected.
It’s important to separate the wheat from the chaff in terms of which projects are going to deliver early, as opposed to some projects which are speculative and still trying to organise themselves, but they’ve got themselves a spot on the queue.
Are there also things to do with the planning process that you would like to see changed?
There are elements that we can do as the network sector in terms of how we review projects and move them forward. There’s bits that Ofgem as the regulator need to do in terms of giving us the cover to move projects out of the queue if they’re not ready, and there’s things that government in the broader sense can do in terms of making sure projects get approval at the fastest possible rate whilst ensuring that the democratic process and engaging local communities is done.
One thing I happen to know is that the planning authorities have just taken on another 21 or 22 planning inspectors to help move this process forward. At this particular meeting I was at there was a round of applause when the planning inspectorate said, ‘we’ve just recruited another 21 people’. So there’s bits we can do as networks, bits the regulator can do and bits the government can do, and it’s how those three parties work together to make sure the queue is working and being dealt with in the most efficient manner.
Do the DNOs need more capacity, in terms of skills shortages or investment?
The connection issue is right up there in the top one or two issues that all the DNOs and TOs are dealing with. With the new Department for Energy Security we’ve got a minister for networks, which has never been in the job title before. It gives that minister oversight over a key area in the industry, so if you need government attention you know you’re going to get it.
As we ramp up and increase electrification across the system, I don’t think there’s any doubt that we’re going to have to look at the skills issue and make sure we bring people into the sector on an ongoing basis. No one’s said to me right now there’s a crisis, but we recognise that as we progress, we’re going to have to be upping the workforce.
What are the power networks doing to accelerate investment?
Looking at how we introduce more flexible services; we’ve all been talking about smart grids for years but we’re starting to see that come to fruition now. We were able to contract 1.9GW of flexibility services across the network last year. That has come off the back of all the innovation work we’ve been doing, supported by suppliers in many cases, and at a domestic consumer level as well rather than just the industrial level. Octopus Energy did a lot of things and it could be as much as getting a flash message from them saying ‘turn things off now’. OVO are now doing more, and you’re seeing more and more suppliers offer these services. The more we can automate these things, the easier it will be.
We’ve got 2,500 innovation projects at the moment that have been kicked off through the Open Networks Programme that we’ve been running. We asked a number of questions like ‘how do you dig up a road faster and put stuff back faster?’ The idea is to spend a day in Birmingham with 450 innovators, talk to them about the questions and they’ve got until May 5 to submit, and we will spend the summer going through them. At the moment there are a couple of innovation funds that networks can access like the Strategic Innovation Fund. One of the things we’d like to see is some form of innovation allowance that is accessible by the DNOs that can keep that innovation spend going.
Do you think the urgency of the government is there to change the regulatory environment as much as in the industry?
I think it is. We’ve got a big equation to manage. We know renewables are the cheapest form of electricity now, so we want to get more of those on the system, but there’s a balancing act through to when we deliver that in making sure we get the timing of the investment right, that we’re managing that in terms of any effect on customers bills. So it’s not just what we’re doing on the network side, making sure the networks are ready to carry the additional capacity, it’s also on the demand side to make sure we’re doing as much as possible to make the use of energy as efficient as possible.
Is there a danger of creating clean energy inequality if poorer people can’t afford more energy efficient products?
I think it’s a risk, and it’s one of those areas where it’s incumbent on all of us to work together to deliver the best possible solutions. It’s important we don’t leave people and communities behind. That is energy efficiency programmes, housing programmes. It’s how we make sure we deliver that value and incentives to every customer. If you’re in a private rented property you should be able to put pressure on the landlord to get smart meters installed. It’s one heck of an agenda, the scale of what we have to do.
The other challenge is getting people engaged, how to get the broader population on board with the transition. How you explain to someone whose boiler’s broken and they’re looking at options: do I get another boiler or do I get a heat pump? The heat pump is a planned replacement instead of an emergency replacement, and we’ve got to bridge that gap to help consumers make the appropriate choice.
Is there any other government assistance that DNOs would like?
Making sure innovation funding is there, making sure the planning system is upgraded, making sure government ministers are supporting what the energy sector is doing and being out there saying ‘we need to do this to achieve these targets, why have we got these targets? Because it’s better for you’. Ultimately, you’re talking about a sector that is going to require billions in investment. I think it’s £50 billion for the rest of the decade. The money’s there, my background with the Global Infrastructure Investment Association, you’ve got US$1.3 trillion of assets under management, US$300 billion ready to go in next stage investment.
We know government can’t afford to do it all by itself, so we have to look to the private sector. There is no shortage of money in the private sector to be invested. What we need to ensure that money flows is that there are no shocks to the system, no surprises. What I mean by that is no regulatory or policy changes, like moving the internal combustion engine ban backwards. That’s a bad thing, because people are making investment decisions now based on that deadline. So keep the goalposts where they are and get multi-parliamentary term consistency.
