First Report - Grid Capacity in Wales

Select Committee

Welsh Affairs Committee HC 218 21 October 2022

Report Status Government responded

Conclusions & Recommendations 33 items (15 recs)

Source View on Parliament website

Government Response (AI assessment · 33 of 33 classified)

Accepted 15

Accepted in Part 1

Acknowledged 11

Deferred 1

Rejected 5

Government response

Third Special Report - Grid capacity in Wales: Government response · published 24 Jan 2023

Read the government response ↗ Response on the tracker

Recommendations & Conclusions

15 results

4 Conclusion Accepted

Para 49

While we understand that the UK Government must consider the energy and network needs of...

Conclusion

While we understand that the UK Government must consider the energy and network needs of the UK as a whole, we consider that it would be inequitable if the UK were to benefit from Wales’ natural resources for renewable energy … Read more

Government Response Summary

The Government states that strategic planning will always take account of network needs in Wales, pointing to the Holistic Network Design (HND) as the first step towards a Centralised Strategic Network Plan (CSNP), and mentioning Welsh Government representatives input.

Wales Office

8 Recommendation Accepted

Para 63

We note the work by the Welsh Government to develop a long-term plan for energy...

Recommendation

We note the work by the Welsh Government to develop a long-term plan for energy networks in Wales and call on the UK Government to explain how it is engaging with this. The UK Government needs to explain how it … Read more

Government Response Summary

Strategic planning of the network takes account of network needs in Wales, and the Holistic Network Design (HND) recommends connections and infrastructure for projects in the Irish Sea and Celtic Sea. Welsh Government representatives feed into the HND through monthly meetings.

Wales Office

9 Conclusion Accepted

Para 72

Upfront connection costs can be prohibitive and prevent the development of energy projects.

Conclusion

Upfront connection costs can be prohibitive and prevent the development of energy projects. This results in a “chicken and egg” situation whereby developers wait for other developers to commit to the funding of connection costs.

Government Response Summary

The government points to Ofgem's decision to socialise a proportion of network reinforcement costs, BEIS's amendment to connections legislation, existing frameworks for developers to share connection costs and Ofgem incentive schemes as addressing the committee's concerns.

Wales Office

10 Conclusion Accepted

Para 73

We are encouraged that Ofgem is reviewing connection arrangements and we look forward to hearing...

Conclusion

We are encouraged that Ofgem is reviewing connection arrangements and we look forward to hearing more about the progress being made in the run up to 1 April 2023. We consider that due to the tight timeframes set by government … Read more

Government Response Summary

The government describes existing mechanisms to address upfront costs and incentivise developers to share grid connection and reinforcement costs, including Ofgem's decision to socialise a further proportion of network reinforcement costs and existing legislation allowing developers to share costs and receive reimbursement from second comers.

Wales Office

12 Conclusion Accepted

Para 75

A mechanism should be developed to allow small energy generation projects to defer and spread...

Conclusion

A mechanism should be developed to allow small energy generation projects to defer and spread grid connection payments over time.

Government Response Summary

The government indicates that the connections framework overseen by Ofgem and DNOs already allows for instalment payments in appropriate circumstances.

Wales Office

13 Conclusion Accepted

Para 76

We are encouraged to see that the UK Government recognises that grid connection costs can...

Conclusion

We are encouraged to see that the UK Government recognises that grid connection costs can be prohibitively high for developers. However, we are concerned by the decision to move more of the reinforcement costs to the network charges paid by … Read more

Government Response Summary

The government points to Ofgem's decision to socialise a proportion of network reinforcement costs and BEIS's amendment to connections legislation to enable these reforms as addressing the committee's concerns.

Wales Office

14 Recommendation Accepted

Para 77

It is not equitable that grid reinforcement costs should be shared by consumers in an...

Recommendation

It is not equitable that grid reinforcement costs should be shared by consumers in an area because this would create a higher burden for rural households and businesses and those in areas which historically lack existing grid infrastructure. We ask … Read more

Government Response Summary

The costs of connecting a project to the existing network are charged to the connecting customer, and from April 2023, reinforcement costs will be met by electricity billpayers in the relevant distribution area.

Wales Office

17 Conclusion Accepted

Para 91

The planning consent process has created a queue of renewable generation projects in Wales to...

Conclusion

The planning consent process has created a queue of renewable generation projects in Wales to which grid capacity has been reserved before planning permission has been granted.

Government Response Summary

The government acknowledges the issue and is taking steps to streamline connection processes as outlined in the Electricity Networks Strategic Framework. Ofgem and National Grid ESO have published reform proposals, including measures to terminate connections for non-progressing projects and a new two-stage offer to manage the connections queue.

Wales Office

18 Recommendation Accepted

Para 92

The UK Government should work with National Grid ESO, NGET, the DNOs and Ofgem to...

Recommendation

The UK Government should work with National Grid ESO, NGET, the DNOs and Ofgem to revise consenting processes to align the allocation of grid capacity with the application for planning permission. National Grid’s work should be expedited on reviewing commercial … Read more

Government Response Summary

The government recognises the issue and states its intention to streamline connection processes as set out in the Electricity Networks Strategic Framework. Ofgem and National Grid ESO have published reform proposals, including terminating connections for non-progressing projects and introducing a new two-stage offer for faster grid connection.

Wales Office

21 Conclusion Accepted

Para 109

The policy in favour of laying cables underground in AONBs is welcome.

Conclusion

The policy in favour of laying cables underground in AONBs is welcome. However, due to the significantly higher construction costs it is likely that overhead lines will simply be re-routed around AONBs. This will mean that communities and businesses in … Read more

Government Response Summary

Ofgem is revising how customers are charged for connecting to distribution networks to reduce connection costs, and project approval is a matter for Ofgem.

Wales Office

22 Recommendation Accepted

Para 110

The Government should outline the circumstances in which higher grid construction costs, for example due...

Recommendation

The Government should outline the circumstances in which higher grid construction costs, for example due to undergrounding, are justified to enable rural communities to keep pace with the decarbonisation transition.

Government Response Summary

Ofgem is revising how customers are charged for connecting to distribution networks to reduce connection costs, and project approval is a matter for Ofgem.

Wales Office

26 Conclusion Accepted

Para 126

There is a lack of clear policy directing energy development companies on how to provide...

Conclusion

There is a lack of clear policy directing energy development companies on how to provide adequate benefits to communities hosting grid infrastructure.

Government Response Summary

The government states that it has already committed in the BESS to review community benefit options for electricity network infrastructure, and is currently engaging with stakeholders to explore a more standardised approach to local community benefit packages.

Wales Office

28 Conclusion Accepted

Para 141

Without an established system of anticipatory investment in grid infrastructure the significant opportunities for renewable...

Conclusion

Without an established system of anticipatory investment in grid infrastructure the significant opportunities for renewable energy generation in Wales will go under- utilised, which will have an impact on the achievement of net zero targets. Were grid infrastructure to be … Read more

Government Response Summary

The government highlights Ofgem's work to create a price control framework that enables strategic investment ahead of need, along with efforts to accelerate strategic transmission network infrastructure and protect consumers. They state they are already working with National Grid ESO, Ofgem, and network companies on the HND, which identifies key strategic transmission projects.

Wales Office

29 Recommendation Accepted

Para 142

The UK Government should use National Grid ESO’s Future Energy Scenarios to work with energy...

Recommendation

The UK Government should use National Grid ESO’s Future Energy Scenarios to work with energy companies and grid infrastructure owners to determine areas where anticipatory investment in grid infrastructure would be justified to achieve net zero targets. Where anticipatory investment … Read more

Government Response Summary

The government highlights Ofgem's work to create a price control framework that enables strategic investment ahead of need, along with efforts to accelerate strategic transmission network infrastructure and protect consumers. They state they are already working with National Grid ESO, Ofgem, and network companies on the HND, which identifies key strategic transmission projects.

Wales Office

31 Conclusion Accepted

Para 152

The grid network has been built piecemeal on the basis of the energy needs of...

Conclusion

The grid network has been built piecemeal on the basis of the energy needs of the nation over time. The energy system in the UK is changing and electricity grid network design needs to adapt to meet this change. We … Read more

Government Response Summary

The Government is committed to unlocking the required investment to deliver a secure, resilient, net zero-ready network and is taking a leading role in a more strategically planned approach for electricity networks. This includes the publication of the HND and upfront consideration of community and environmental impacts to provide more certainty in the planning and consenting process.

Wales Office