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Miliband takes action on queue to connect new power generation to the grid

Miliband takes action on queue to connect new power generation to the grid

News Release issued by the COI News Distribution Service on 25 August 2009

New rules to revamp the way power plants get connected to the UK’s power grid are proposed today by Energy and Climate Secretary Ed Miliband.

New rules to revamp the way power plants get connected to the UK’s power grid are proposed today by Energy and Climate Secretary Ed Miliband.

The shake-up will help new projects waiting to get a date to feed electricity into the grid to get out of the queue, and will in particular help renewable energy projects such as wind farms.

There is currently over 60 GW of new generation capacity – around 200 projects – that are waiting to be connected to the grid, including around 17 GW from renewable sources.

Ed Miliband announced as part of the Government’s Low Carbon Transition Plan in July that the Government would reform the previous system of projects getting a connection date on a first come, first served basis regardless of when the project would start generating energy. This meant some wind farms were given connection dates years after when they were due to start producing electricity. Today’s consultation offers industry a say on three options for how the new system will work.

The proposed scheme will also give investors confidence that projects will be given a connection date that fits in with their project development timeline.

Ed Miliband said:

“Access to the electricity grid has been one of the key barriers to the generation of renewable energy in this country. We are determined to resolve this issue. That is why we took powers to do so in the Energy Act and today we are setting out our proposals.

“We need these new projects to get hooked up to the grid as soon as they are ready – both to help tackle climate change and secure our future energy supplies.

“The government will do whatever is necessary to bring about the transition to a low carbon economy and to give investors the certainty they need so that new renewable energy generation is built.”

For the first time, the Government will be making the detailed reforms to grid access rules that are necessary to overcome the delays. Previously, reforms were proposed by industry and then approved or rejected by the regulator, Ofgem.

There are three proposed models that DECC is consulting on from today that build on industry and Ofgem’s work over the last year.
The three models look at different ways to manage the queue and to share the cost of connecting more plants to the system that is to be expected from this system.

The models are:

Connect and Manage (Socialised): - costs will be shared between all users of the network.

Connect and Manage (Hybrid): A model that targets some, but not all, of the additional constraint costs on new entrant power stations.

Connect and Manage (Shared Cost and Commitment): A model that offers the choice to new and existing power stations to commit to the network (which is helpful to Grid in terms of long term management of system) in return for greater certainty over charges, or to opt out and be exposed to additional constraint costs.

Ofgem has already approved interim arrangements to help new power stations connect more quickly, and under these interim arrangements around 1 GW of renewable projects in Scotland have already been offered earlier connection dates. However this was only ever intended as an interim measure and Government is intervening to ensure enduring access arrangements are put in place by June next year. This will be essential for investor confidence that we have a long-term and sustainable framework in place.

Notes to Editors

1. The consultation ’Improving Grid Access’ starts today (25 August 2009) and will close on 17 November 2009.

2. The consultation can be found at: http://www.decc.gov.uk/en/content/cms/consultations/open/open.aspx

3. Ofgem wrote to the Secretary of State in June recommending that he use his powers. See http://www.ofgem.gov.uk/Networks/Trans/ElecTransPolicy/tar/Documents1/Miliband%20-%20250609.PDF.

4. Section 84 of the Energy Act 2008 gives the Secretary of State powers to amend licence conditions and codes for the purpose of facilitating access to, or the efficient use of, a transmission system in Great Britain or offshore waters. These codes and licences are usually amended through a process where industry proposes changes for the regulator Ofgem to approve. The Secretary of State will commence his powers when we implement the new enduring regime, by June 2010. The powers will last for two years from that date.

5. Under Section 102 of the Energy Act, the primary objective and general duties set out in sections 3A-3D of the Electricity Act 1989 apply to the manner in which the Secretary of State carries out his functions under these powers.

Contacts:

Department of Energy and Climate Change
nds.decc@coi.gsi.gov.uk

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