The UK Government has committed to a fully decarbonised electricity system by 2035 and to net zero by 2050. In parallel, electricity demand is expected to increase by over two times (from demand levels recorded in 2020) by 2050 as sectors (including transport, heat and industry) electrify.
Given the current timeframe to develop transmission infrastructure (12 – 14 years) and limited investment in transmission networks, there is growing concern that the queue to connect renewable and low-carbon electricity generating assets to the transmission grid will significantly slow the energy transition and impede achievement of the UK Government’s commitments.
Against this backdrop in 2022 the Electricity Networks Commissioner, Nick Winser, was tasked with advising the UK Government on how to hasten delivery of transmission infrastructure in Great Britain. Winser delivered his response to the Secretary of State in June 2023, and was supported in his efforts by a companion report published by the not-for-profit technical research body Energy Systems Catapult, which Winser chairs (the “ESC Report”).
Main challenges to delivery
Winser and the ESC Report identified several key challenges and opportunities currently arising in transmission delivery.
- The complexity and uncertainty around energy system transformation manifests significantly in the associated planning and decision-making processes and is exacerbated where incremental, project based / siloed approaches are followed. It is broadly recognised that there is a great need and appetite for a system-wide strategic approach, a key aspect of which would be a transformation of the transmission system to support the much-wider energy system transformation needed as part of the overall decarbonisation and net zero ambitions. As with most major infrastructure projects, the process for delivery of transmission infrastructure is complex and involves multiple stakeholders and currently its delivery is a collection of adjunct processes lacking coordination. An end-to-end process implemented in principle and practice would contribute to pace and efficiency in delivery.
- In respect of the regulatory process, where approval is granted for groups of projects rather than individual projects, this is already demonstrating better value for money for consumers while achieving a greater pace of infrastructure delivery.
- The tensions between the need for infrastructure to support social and economic wellbeing and the impact that transmission delivery infrastructure has on the environment, people and communities need to be addressed.
- New infrastructure should seek to be environmentally viable and acceptable to local citizens and communities. Design standards would offer clarity and allow meaningful engagement with the community at an early stage and reduce opposition.
- Supply chain and skilled worker constraints are a major cause of concern given the scale of global demand for transmission infrastructure and consequently for products and services in electrical, mechanical, civil engineering and other sectors.
- Outages on existing assets are a necessary part of connecting new generating assets or reinforcing the transmission network. A process to plan and undertake outages will need to balance the risks to system security and service delivery to customers against the requirements for building network capacity and maintaining pace in project delivery.
Recommendations
The Electricity Networks Commissioner’s response to Government proposes a range of recommendations to support transmission delivery and achieve a seven year end-to-end delivery timeframe (i.e. from the point of identifying the need for new infrastructure to completion of construction and commissioning) – which is predicated on the implementation of the full set of recommendations. Below, we have highlighted the key recommendations, from both a technical / commercial and legal / regulatory perspective.
Technical and commercial recommendations
- Strategic Spatial Energy Plan and Centralised Strategic Network Plan
To create sufficient certainty of projected need to enable progress at an increased pace and bridge the gap between government policy and network development plans, the ESC Report suggests the development of a Strategic Spatial Energy Plan (SSEP) by the Future System Operator (FSO) in collaboration with the Department for Energy Security and Net Zero. Under the SSEP, supply and demand and their likely whereabouts would be forecasted and spatially mapped across Great Britain over a period of several years.
Via such mapping, the SSEP would capture all network plans including a hydrogen network plan, a carbon capture utilisation and storage plan and regional energy plans. The ESC Report suggests a marine environmental assessment and offshore delivery route map also be included as part of the SSEP, to support identification of seabeds where offshore generation can be located, as well as required connection and transmission infrastructure. Additionally, it is recommended that two Centralised Strategic Network Plans (CSNP) be developed by the FSO from the SSEP, which track the implementation of processes over a range of time periods.
- Cost Benefit Analysis
Different methodologies are adopted for the cost-benefit analysis during the lifecycle of each project (for example, the planning and regulatory stages focus on the capital cost of the project, whereas the delivery and outage planning stages consider the capacity constraint costs). While the main driver for the cost-benefit analysis is to protect consumers, the methodologies and criteria are not reflective of the “whole-project” approach needed for holistic analysis and do not consider the wider economic and societal benefits from meeting the net zero targets. It is recommended that all cost-benefit analyses are carried out on an end-to-end basis and should reflect whole project costs and wider societal benefits.
- Supply Chain Reform
As outlined above, increasing global competition to secure manufacturing capacity for transmission equipment and the resulting supply chain constraints constitute significant risks to transmission delivery in Great Britain. A specific issue faced by transmission asset developers is that the lead-time for manufacture for certain equipment and material (particularly, transmission cables) is substantial – up to seven years in some cases. To provide greater certainty on size and content of orders, the ESC Report encourages developers of transmission assets to build longer term relationships (placing reliance on the SSEP), to engage on detailed design work earlier in the process (thereby facilitating the purchase of long lead items) and to collaborate with both the supply chain and government to enable the development of manufacturing capability in Great Britain. The other element of the recommendations focuses on the need for standardisation of equipment – the Great Britain standards for such equipment are often different to those applicable globally.
- Route Design Standardisation
Transmission route selection (and acquisition) is a fundamental part of planning of transmission line projects. At present, the identification of routes during the design stage can require significant time and resources, as multiple options must be considered to determine the one most suitable. As an alternative, the ESC Report proposes the adoption of an automated corridor routing process.
In a similar vein, the range of approaches and technologies that can be drawn upon in designing new infrastructure, can lead to differences in regulatory and planning approvals. In response, the ESC Report proposes the preparation of Electricity Transmission Design Principles (ETDP) to provide greater clarity and consistency on route design. The ETDP will be a public document detailing the principles and methods used to design the transmission system and decide the configuration of assets (onshore or offshore, overhead or underground). It is considered that the use of uniform principles (and related standards), that are endorsed by Ofgem and Government ministers, would then remove the need to create multiple route designs for regulatory and planning purposes, saving both time and effort.
- Electricity Transmission Infrastructure Updates
In terms of further updates, the ESC Report suggests the National Policy Statements (NPS) of England & Wales and the National Planning Framework (NPF) of Scotland, should be reviewed and updated every five years (while also permitting smaller changes on an interim basis) to support the need for new electricity transmission infrastructure required to meet net zero targets. In addition, the Electricity Networks Commissioner proposed that the energy NPS should be updated urgently (after the current round of changes undergoing consultation) to reflect the recommendations of the ESC Report.
Legal and regulatory recommendations
- Regulatory Approval Process
Various recommendations in Winser’s response to Government contemplate a centralised and strategic approach to the development of a programme of projects and the underlying design and specifications of the projects. In particular, regulatory approvals should not re-assess aspects of a project that satisfy other elements of such centralised planning and implementation. Accordingly, the SSEP and the CSNP would form the basis for the initial needs case for the programme of projects, such that separate regulatory approval would not be required to justify a need for the relevant project. The ETDP would form the basis for assessment of route design (i.e. as long as the route design was consistent with the ETDP, further project-specific approval of the route design would not be required).
- Competition for Transmission Ownership
As outlined above, contestability is being introduced in the delivery and ownership of onshore transmission networks. The need for such competition is to protect consumer interest and reduce costs, however, this needs to be balanced with the requirement for certainty on the pipeline of projects (which, as detailed above, is essential to address the supply chain risk and global competition for manufacturing slots and cables). To support this balance, it is suggested that both (a) incumbent transmission owners are retained; and (b) phased competition (based on criteria set by the Government and Ofgem) is introduced for onshore projects. The ESC Report expects that time will be saved from the delivery process by phasing contestability so that incumbent transmission owners know what is expected to be delivered, while Ofgem will also save time by not needing to decide if projects should be exempted from competition on an ongoing basis.
- Reduction of Planning Process
Lastly, under the current legislative regime, decisions on planning consent in Scotland fall with Scottish authorities and Scottish Ministers, while the legislative framework for those decisions is a reserved matter set out in the UK Electricity Act 1989. It is considered that this dual process and public local inquiry requirements in Scotland often cause delays, and in response the ESC Report suggests a number of changes to reduce these processes to a maximum period of 12 months, including:
- introducing pre-application requirements (e.g. environmental surveys) to reduce the need for additional information requests;
- developing a new application form which states what information is required for an application to be acceptable; and
- removing the public local inquiry requirement in Scotland, and instead allowing Scottish Ministers to hear more specific issues where a planning authority objection arises.
While further time will be required to assess the extent to which these recommendations are adopted by UK Government and relevant bodies, they provide guidance on the developments we might expect to see as Government and industry alike endeavour to achieve decarbonisation and net zero targets. Energy Security Secretary Grant Shapps has said that he welcomes Nick Winser’s findings and will consider the recommendations before presenting an action plan later this year.
We will continue to monitor these developments and report in due course. Please do not hesitate to get in touch with one of our experts in the meantime with any questions on the fast changing energy transition landscape.
For further information, please contact:
Maryam Adamji, Partner, Linklaters
maryam.adamji@linklaters.com
