Ofgem’s New Rules to Fast-Track UK Electricity Grid Connections for Renewable Projects

Summary

• Ofgem, the UK energy regulator, has introduced new rules to accelerate electricity grid connections for projects, aiming to address a backlog of up to 15 years in the current first-come, first-served system.
  

• The rule change, effective from November 27, 2023, allows National Grid ESO to enforce strict milestones in connection agreements and terminate projects failing to meet them. The first terminations are expected in 2024, with a retroactive effect.
  

• The initiative, part of National Grid ESO's five-point plan to expedite grid connections, targets the removal of 'zombie projects' from the queue and the establishment of clear milestones, aiming to attract investment and create a more efficient environment for low-carbon initiatives.

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The UK energy regulator, Ofgem, announced new rules that will aid in its mission to speed up electricity grid connections for new projects. In doing so, it is forcing the so-called ‘zombie projects’ from the connection queue.

The current connection process has led to a backlog of up to 15 years and works on a first-come, first-served basis. On the roster are projects encompassing onshore and offshore wind farms, solar farms, and enterprises focused on battery storage.

It has been reported that this waiting time for low-carbon projects to connect to the electricity grid has deterred investment in renewable energy projects.

The rule change will be implemented on 27 November 2023. It will enable National Grid ESO to work with strict milestones in connection agreements and terminate projects that fail to meet the agreed milestones. The rules will have a retroactive effect, with the first terminations expected to happen in 2024.

National Grid ESO had announced earlier this year that it was implementing reforms to expedite connections to the electricity grid. The reforms are embedded in its five-point plan. It had already established that key milestones that projects will need to hit include “securing financing, acquiring land, obtaining planning permissions, and commencing construction.”

The decision to remove 'zombie projects' from the queue, coupled with the implementation of strict milestones, aims to alleviate the waiting time, fostering a more efficient and investment-friendly environment for low-carbon initiatives.