Andy Willis, CEO of Kona Energy, calls on the UK Government to be more realistic with its clean power goal.
The new National Energy System Operator (NESO) recently delivered advice to the Government where it stated that achieving clean power by 2030 is possible, but would require a ‘herculean’ effort.
My personal view is that the 2030 date is not realistic and the reforms that have been proposed would make it impossible. That doesn’t mean we should abandon our quest for a clean power system, however, it just means we should explore a new date – and 2035 is definitely more realistic.
The Clean Power 2030 plan and associated Connection Reform works well in theory and is a remarkable piece of work from NESO. The fact that there hasn’t been a greater call for future judicial review highlights the industry acknowledges the issue at hand and is receptive to change.
However, we must consider reality and what is achievable. That’s exactly what we’ve done at Kona Energy, and to that end, we have some ideas of our own.
Managing the connections queue
Firstly, as the advice from NESO made clear, the task is ‘herculean’, so it’s important to take the low hanging fruit. Transmission projects which secure Capacity Market agreements or CFDs should be exempt. Investor confidence is crucial and clashing policies will damage this.
Additionally, we need to prioritise advanced projects. A land option does not constitute ‘readiness’ and is a low barrier to entry. Projects which have achieved planning and can reach a final investment decision in the next six-months should be prioritised.
Managing the queue in this way and actually enforcing some rules – such as removing projects that have been sitting idle for years – could help speed up the whole process. Unfortunately, Connection Reform provides yet another lifeline for these projects, while they also stand to benefit even more thanks to their early queue positions, while projects that are ‘shovel ready’ but at the back of the queue could continue to suffer with long waits.
It’s time for a reality check
The 2030 deadline was always one born out of optimism, but we need to consider the reality of the situation. Transmission owners are not building new connections for ‘ready’ and live projects before 2028 due to significant design resource limitations. Further uncertainty in the coming 12-months means fewer projects will be operational before 2029.
Furthermore, procurement and financial investment decisions take time. It can be more than 24 months for extra-high voltage transformers and switchgear to be procured. As the clock ticks closer to 2030, the likelihood of achieving the Government’s goal becomes less and less likely, and for near-term projects, additional investor uncertainty will simply delay investment decisions and projects being built on time.
Achieving a clean power system affordably
Constraint costs are critical to support net zero. If transmission constraints reach £10 billion a year, as forecast, due to slow or delayed transmission works then public confidence in renewables will evaporate. History is not favourable when considering projects such as the Western Link or Hinkley Point C.
It’s not just about constraint costs either, storage has been perennially undervalued. Glossing over 90% plus skip-rates in the Balancing Mechanism, NG-ESO and now NESO has not understood the potential role of storage in the electricity system.
NESO modelling is based on 2018 CAPEX costs and assumes one cycle a day of operation. If NESO used present-day pricing and 2+ cycles a day they would see both the need for storage and net-welfare benefit would be significantly higher.
Let’s be realistic
The Electricity Networks Commissioner, Nick Winser, set out 18 recommendations as part of his report that he submitted to the UK Government back in August 2023. Those recommendations highlight how we could cut transmission build times for major transmission projects to 7 years. It is now almost 2025 – that means Connection Reform has taken over two years alone. NGET connected 3GW of generation to its network in 2023.
So, while the Clean Power 2030 ambition is laudable, it is clear we will not meet it.
