Grid News and Views #9

00:00:05 – Catherine Cleary
Good morning. Welcome to Roadnight Taylor’s Grid News and Views and our first filmed podcast in Roadnight Taylor’s new office space, it’s lovely to be joined by Kyle, Nikki and Philip.

Say hi guys.

00:00:17 – Nikki Pillinger
Hello.

00:00:18 – Catherine Cleary
And I think, probably no surprises, sort of top of the agenda today is Connections Reform. So, we’re very lucky because we’ve got Kyle, who has been tirelessly sitting on probably far too many working groups, industry meetings with Renewable UK as well.

So, Kyle, are you able to give us a bit of an update as to where we are now with Connections Reform and on the CUSC Mods in particular, CMP 434 and 435.

00:00:42 – Kyle Murchie
Absolutely.

It’s been a really busy summer – lots going on, and in particular the consultation, the working group consultation, that was open for a week and a half – really quite short time frame, lots of various elements as they were called, looking at various different parts of the proposed reform process.

But I suppose just a bit of a reminder, so when we’re talking about CMP 434, that is effectively the changes to the connection process, that would be looking forwards at any new applicants. And then 435 is how it would then be retrospectively applied to those that are already contracted in the queue.

So, after the consultation ended, there were about 82 formal responses that were non-confidential and about another 7, that were submitted as confidential – so quite a lot of material, as you can imagine.

00:01:37 – Catherine Cleary
So, you got almost 90 responses?

00:01:39 – Kyle Murchie
Almost 90 responses.

00:01:40 – Catherine Cleary
And actually, that’s pretty, that’s quite high, that’s just like to put that into context that the average CUSC Mod gets about 5.

00:01:44 – Kyle Murchie
Yes.

00:01:45 – Catherine Cleary
There are some really keen geeks.

00:01:46 – Kyle Murchie
Yeah.

00:01:47 – Catherine Cleary
Okay.

00:01:40 – Kyle Murchie
And while not every response was complete, you know, you didn’t have to respond to every single question, I would say the vast majority covered almost everything. So, a huge array of responses and some quite different views and different starting points, so some really agreed that change was necessary. But because each element was quite large in terms of its content, the detail was really important.

So that’s where the working group is at now, trying to go through that detail. In contrast, in addition to that almost 90, there was another 69, plus other stuff unconfidential. So, about another 80 responses that came in for 435.

00:02:32 – Nikki Pillinger
Was there an indication of what kind of stakeholders they were? Because I know a lot of, of industry groups would have responded on behalf of several.

00:02:40 – Kyle Murchie
Yes.

00:02:44 – Nikki Pillinger
Several groups?

00:02:43 – Kyle Murchie
Yeah.

00:02:44 – Nikki Pillinger
Was that a lot of individuals, was it a lot of industry groups, or was it quite mixed?

00:02:47 – Kyle Murchie
It was, it was mixed. I would say there were certainly a couple of key industry groups that submitted, and then those that are already in the working group, either working group members or observers. But in the good news, there were quite a considerable number of responses from, you know, smaller organizations or organizations that aren’t necessarily represented in the working group as well.

So, some of the focus has been over the last few weeks, I was going to say few weeks, but two weeks has been to try to focus in on some of those kinds of key points that maybe haven’t come up because we’ve not been able to discuss them in the working group.

00:03:25 – Catherine Cleary
And DNO’s did respond as well and have been representatives in the working group as well.

00:03:28 – Kyle Murchie
Yeah, absolutely. And TO’s as well – 1 or 2.

00:03:31 – Philip Bale
But I think most people would agree that the current system isn’t necessarily working, and there’s maybe a few outliers who sit in quite a pretty bad situation that don’t want to reverse it. But I think for most parties agree that the current system isn’t optimal. But obviously the bit that no one agrees with is how to fix it and how to fix it in a way that’s quickly without being too detrimental on certain key people, or key parties.

00:03:52 – Kyle Murchie
Yeah, that’s a really good point in terms of time frame. So, some were very much of the idea that there’s a lot of material still to be developed and that we’re therefore not ready – so looking at some sort of delay in implementation. Others said, well, irrespective of the detail, we need to change now; so, what ESO are proposing is a bit of a happy-medium to some extent, where it’s recognized there’s a lot to get through.

It’s not realistic to assume that all that could be prepared and put forward to the authority, you know, within the next month or so. There’s an expectation that implementation would likely be extended out, not January 2025 as what was initially proposed. Exactly when is open for a bit of conversation at the moment, but we’re expecting it probably would be the early spring, given the kind of indication at the moment.

But it’s changing all the time, so that’s one we’ll keep everyone up to date on. In terms of just this week, the working group were discussing some proposed changes, so some quite significant changes from the original proposal. And, I think, yeah, some of the kind of key aspects where there’s a lot of maybe disagreement or quite varied views have either been removed completely to try and simplify the process.

But what the working group are trying to do now is understand what the unintended consequences of those are. You know, any proposal is quite linked, so therefore removing one aspect such as the long stop dates or DFTC being removed from the proposal, that has an implication on the wider process. So moving DFTC, for example then there’s the question of, well how does it work for small or medium embedded customers in particular.

So that’s where the working group is at now, trying to get into that detail of, well, what’s the unintended consequence, and how to best resolve it.

So, I’m not going to go through and run through every single kind of change point. But I think the main thing there, you know, highlight a couple of points or elements that have been removed, but also that Gate One is effectively now going to be optional. So that’s a big shift where if you go down the Gate One route, it would be based upon a desktop study, and therefore similar maybe to a budget estimate you would get from a DNO level. And if you’re wanting to go to Gate Two you could do so effectively without going through Gate One – so quite a change there.

The other big change would be around the milestone requirements kind of post reaching Gate Two, so when you have to of submitted planning by. And a lot of feedback was given based on the various different planning types and the timing now has been adjusted kind of in line with the response that came back.
So, we do have a little bit of an updated calculator that should be going on the website next week, so that has taking into account those changes. So, if you are interested in the detail and want to look at your project specifically, then we can certainly direct you to that through the bottom of the podcast.

00:07:15 – Nikki Pillinger
Is that going to be technology specific planning as well? I know there’s obviously has to be some consideration around, you know, larger technologies like nuclear, offshore wind, etc, I think there was some talk about that being considered in those milestones.

00:07:30 – Kyle Murchie
Yes. Initially in the working group conversations that include nuclear, offshore, they had separate them out. In the consultation, it just focused on specifically planning types or town and country planning DCO section 36, etc. What’s been proposed now is those building blocks are still there in terms of planning, but they have segregated out nuclear, offshore wind and emerging technologies.

00:07:56 – Nikki Pillinger
Okay.

00:07:56 – Kyle Murchie
So emerging technologies, it would be a case-by-case basis. So they’re leaving it open where it’s been negotiated effectively. The starting point would be maybe more in line with the planning type, but it gives the option for that to be negotiated. Same with nuclear and offshore wind is five years.

00:08:13 – Nikki Pillinger
Okay.

00:08:14 – Kyle Murchie
So, they have tried to cater for both without being too specific on technology.

00:08:19 – Catherine Cleary
So it sounds like I mean effectively there’s actually been a bit of a relaxation of the requirement to go into planning or, you know, relatively quickly after getting to Gate Two, and I suppose, you know, we probably expect that there will be a certain amount of pushback or perhaps scrutiny of that within the industry to say, does Connections Reform, sort of do anything, if it’s too easy to, you know, if Gate Two is just land rights, and is it effective enough at cutting the queue.

00:08:46 – Kyle Murchie
No, it was a very good point, because if you consider just taking a few examples and run through the calculator, actually the milestones you’d be getting now under the proposal might be later dates.

00:08:58 – Catherine Cleary
More generous?

00:08:59 – Kyle Murchie
More generous than you would be getting under the milestones and introduced under 376. Not in all cases but in some, and therefore once the working group get into that level of detail, which as I said, the proposal was only, what through the working group just this week. So over the next few weeks, as we get to that detail, you know, there may be, as you say, quite a bit of pushback and subject to further change, but this is the initial change that the ESO has proposed based on the first round of response reviews.

00:09:33 – Philip Bale
I mean, ultimately, they’re balancing a very fine line between Connections Reform has to be effective, it has to remove parties from the queue that are not looking like they’re going to make some sufficient progress, which is then slowing up other projects. But as a result, I’m a little bit concerned at the moment that even though there’s all the talk about the first ready, first to connect, there are some people who are going ahead and getting planning on projects that they don’t have a valid connection offer for at the moment, with the hope that first ready, first connect ends up coming through.

I haven’t yet seen anything that makes it look like that will be an advantage, and that will then result in someone coming through, which then kind of feels like there’s a bit of a mixed message coming out there in terms of at a high level, first ready to connect, first to connect. But in the Connections Reform, at the moment, it doesn’t really look like there’ll be any reordering of the queue based on that.

00:10:24 – Kyle Murchie
It’s definitely something that has been discussed, and there are 19 alternatives now – they are not alternatives to the full process, they are alternative to specific elements. But that’s only 19 that were raised through the consultation process or had already been put forward. There’s still plenty of opportunity for the working group members to raise alternatives, and that is one that they’re discussing as well, whether there’s maybe another measure brought in.

So if you are sitting actually ready to move, how can you best, move forward? Your project designation was mentioned as one mechanism. But again, the detail isn’t yet drafted – and I think that’s the that’s the challenge; the concept may be there, but it could easily get lost if it’s not included in the detail.

00:11:08 – Philip Bale
And one thing just to ask in terms of bay sharing, that’s one of the aspects that has come out as part of Connections Reform. Has there been any significant update on that, which then also could unlock the ability for more people to connect closer to where they’re geographically located and allow slightly more risk element to be going on? Because obviously it’s easy to say as a GB wide, we’re going to assume that a certain percentage of projects won’t end up connecting at a GB level. It’s much more difficult at a specific substation to say, I’m only going to presume half the projects are going to connect, and then all of those ones that actually go through and connect and then you’re left looking pretty awkward.

00:11:44 – Catherine Cleary
So, there is bit of an update on that in that the ESO have published a paper or least drafted a paper, on a bay sharing policy, which, you know, is quite progressive. It looks at customers being able to opt in to bay sharing. So, effectively that could look like, two customers banking a connection into a single circuit breaker, with the TO extending their ownership boundaries effectively, the TO was built, was adopting that shared circuit breaker and potentially building out to the two sites, or having more of a sort of, switching arrangement, where the use of disc connectors would allow you two customers to use the same bay, and that the ownership boundary to be at the end of that bay.

So, there is some good sort of detail work that’s been worked up there. I think one thing to be really clear on is that quite a lot of the initiatives that are coming out of Connections Reform are great ideas, but they’re not yet at a stage where someone can sort of put their hand up and say, I’d like that to be applied to my specific project.

The idea is these will be options that are available for consideration when projects meet Gate Two. So as part of the kind of Gate Two reoffer that parties will get, they will include things like, you know, bay sharing opportunities. So, it looks good at the moment, but I think we’ve yet to see it implemented for anyone.

00:13:02 – Philip Bale
But also just to add, the latest news looks like all GIS switch gear is going to end up being owned by the TO anyway. So effectively it means that some of the AIS solutions will end up having a connection boundary, which then more aligns to where we think the GIS switch gear is going to go to for transmission connections anyway.

00:13:19 – Catherine Cleary
Yes.

So this is probably worth explaining to people Philip, that this is where the TO (so NGED for example) have come out and said where they’re building an entire new substation and that’s a new GIS board, rather than individual customers coming in and having multiple contractors working under their own sort of CDM regulations and so on at a site, the TO has taken a fairly unprecedented step of saying, nope, we’re not going to give you the choice – we are going to build this board as connection assets for you and the customer will still pay for them, but you won’t have the option of delivering them as user works. And that’s going to quite a new policy statement really, that’s been made in the last few months.

00:13:58 – Philip Bale
And which people are going to start seeing MOD Aps. So their previous offer, where they didn’t have that scenario, they opted that they were going to own the circuit breaker, to now effectively reverse out and say you don’t have the option at this point, you have to go back to a default. And like you say, it does make sense, especially on new build sites where it seems crazy for NGED to install the board, and then for someone else to come to a brand-new board, the same manufacturer and bolt the same piece of switchgear onto there – it just doesn’t make sense.

00:14:22 – Catherine Cleary
I completely agree, I think it’s a really sensible, pragmatic decision and hopefully helps with some of the supply chain constraints. You know, you haven’t got five parties trying to engage with the same supplier for one board; so I really support that.

Okay. So I think, other couple of things, whilst we’re on sort of Connections Reform, there has been an update in terms of the transitional arrangements to kind of ease us into, the Connections Reform space.

So, as we were recording this, yesterday the ESO made an announcement to say that the Ofgem have approved the concept of a transitional arrangement. So new applications going into the ESO will now effectively get, a kind of indicative Gate One style offer. So, we’re expecting that to look quite similar to some of the step-one offers that people got as part of the transmission works review two-step process in England and Wales. So, you know, there’d be no study work being done by the TO, you know, you’re not really getting a queue position- you’re just getting a kind of very indicative holding offer, that you would sign and accept no securities, but then it would be once the Connections Reform, sort of TMO4+ process has been implemented, you would then be able to get a firm offer once you met Gate Two, sorry, to be able to get a detailed offer once you meet Gate Two.

I suppose Kyle just sort of thinking to that that time delay issue, because I suppose we were kind of thinking, right well, if Connections Reform is implemented in January 2025, you know, I think on the original sort of timescales, the first kind of Gate Two offers would come out sort of Q3, Q4, 2025. I guess there’s a real risk now actually that people, new applicants going into the ESO for new transmission connections might be stuck with that holding offerfor a really long time; you know, they won’t get a Gate Two offer until the end of 2025 at the earliest.

00:16:11 – Kyle Murchie
I think so.

I think they’re going to be in a situation where reviews will be done early 2026, and obviously for that’s for any new applicant, whether it’s generation, demand, storage.

16:23:03 – Catherine Cleary
It doesn’t include, so just to be really clear, the ESO is planning on holding some webinars (towards the end of August, so probably about the time this goes out), which will cover this in more detail, but this is just brand-new applications. So if you’re modifying existing scheme, if you already a DNO submitting a project progression, those are still allowed to go ahead and you will get proper offers. But it’s about any new applicants into the ESO should be very aware of that.

00:16:48 – Philip Bale
I think it’s one of those things that I think probably broadly across the industry, people would admit that there’s quite a lot of generation schemes already in the queue, that the queue already looks quite bloated. So I think from a generation perspective, that makes sense.

00:17:03 – Catherine Cleary
I don’t think we’ve been advising people, submitting, you know, new applications for quite some time.

17:07:06 – Philip Bale
Agreed.

I think there’s a few very sort of unique arrangements where they could, but they’re very few and far between. For me, where it may become slightly more awkward is the very national significant demand type applications that needs to go through, potentially in some of the areas where actually the demand is part of the transition to a lower carbon economy and ultimately going to be soaking up the renewables in terms of going through. And then that looks like it could end up being a fairly major blocker. So that would be my personal view is that on the whole, fairly supportive of that; it gives some time, it allows them to go through and focus. But for a few niche projects, it feels like it might be the wrong thing of doing – personal view.

00:17:45 – Kyle Murchie
Yeah, it’s a really good point. I think if we’re thinking about, you know, those large demands, that will be really quite significant, the time frames whether you’re looking at like HA Rounds for hydrogen, for example, you know, it’s something that just since the announcement, I have been looking into how those HA Rounds match up with that time frame and therefore, if you’re looking at going forward for HAR. 3 or particularly and a HAR. 4 that, actually you might be in a position now where you’re not going to have clarity on your offer, so how do you need to inform the HAR process?

I think, again, it’s just marrying these two up and understanding that if the connection process is resulting in a bit of a delayed or extended time frame before you’ve got, a kind of, clear view of exactly where you’re going to be connected and whether your project is viable is going to have quite a significance over the next couple of years on what can realistically go forward and be funded.

00:18:45 – Philip Bale
I think I’ll say, even let’s say Elon decides he wants to put a new Gigafactory in the UK, it’s one of those things if then you look at it and you go, well, actually I am going to have absolutely no visibility on where I could connect the project for several years, potentially going into a part of the network where there are no demand restrictions for final demand. If you consider batteries, as we think they are, as being flexible assets, and not being studied -that to me is an element that it does need a little bit of a niche carved out for very key projects that could be very significant to the GB economy.

00:19:19 – Nikki Pillinger
I suppose that’s where you know, that strategic spatial energy planning thing might come in anyway, because there is, you know, there’s a bit more focus coming in on that. As you know, we’ve got the RESPs coming in and the regional energy strategic planners and also looking at sort of what technologies we need in certain areas; so that will be in terms of like generation and demand – yet to see the sort of the detail of that, but I think that’ll be really interesting seeing how that interacts with the planning system and also how that interacts with sort of grid and spatial energy planning and how that all comes together.

00:19:55 – Catherine Cleary
Nikki, how do you think this sort of impacts or like sheds any light on what central government actually wants to do? So Labour, you know, coming in with their sort of, you know, fairly they’ve got pretty big ambitions in terms of decarbonizing the electricity sector, but renewable energy ambitions in general, and I think you’re our go to person when we always ask about sort of the public policy realm.

00:20:19 – Nikki Pillinger
So, Labour’s like big plan at the moment is GB energy. So this has come out of an idea of them wanting to invest in the private energy sector – this could be a really positive thing, equally it could be quite challenging. It could potentially replace private investment, it’s a little light on detail at the moment, but the idea is that Labour as a government, as taxpayers will invest in and sort of kickstart, certain technologies while also supporting mature ones.

The sort of kick-starter technologies are going to be sort of tidal, (which I’m a fan of, so if anyone wants to do any tidal, please let me know), and as of floating offshore wind and, like green hydrogen and then also sort of supporting like the existing industries that we have, so sort of offshore wind, solar, batteries, etc.
We’ve got this sort of strapline of like a clean energy, economy by 2030. The word sort of clean, low carbon, renewable, are kind of bounded around like they’re all the same thing and they’re not really, but I think the idea is that we don’t have any fossil fuels by 2030; certainly not that we don’t have any nuclear or batteries or anything.

But the idea of Labour investing in the energy sector, I think is really interesting one, because I’m not sure there’s a lack of investment, I think there’s a lack of resources, I think there’s a lack of infrastructure – but I don’t think there’s a lack of investment. So I’m not sure that it’s played kind of energy placed in the right way.

00:21:55 – Philip Bale
I think one of the things that there could be more of is probably more big picture strategy. There’s obviously some big picture strategy in terms of the regional, in terms of zones of saying this part of England should have this much solar and how much going through – I wish it would go deeper and more strategic.
This is a demand growth area, so therefore we should be doubling the infrastructure in this area, which would also facilitate renewables and therefore we’re going to go right the way down to the 33 kV level and invest in this because it’s needed before 2030, 2040, and therefore that’s the right thing of doing and tying everything together, looking at demand and generation and what’s needed for electrical vehicles and heating and future industrial commercial demands. It’s kind of that level of strategy still feels a bit piecemeal from what I see at the moment and the future plans. Where there is strategic thinking, it’s very high level, and every time I ask and go, well why aren’t you doing this? Well it’s like this strategy stops at that level, one level too high, and that’s where I hope in the future we’ll get to have going.

00:23:01 – Catherine Cleary
In the spatial strategic energy plans.

00:23:03 – Philip Bale
A bit deeper, a bit more focused on the broader level, so we end up doing the right thing in the right area based on minded two position of going it feels like a good idea that this could double in the future, and therefore it’s a good investment for generation and hydrogen and flexibility in future demand, and then you can see a long term picture, but I just don’t see that at the moment.

00:23:22 – Nikki Pillinger
And I think that’s because there isn’t really that appreciation that the transition needs to be at all voltage levels.

00:23:30 – Philip Bale
Yeah.

00:23:31 – Nikki Pillinger
You know, literally from LV through say, you know, 11, 33, 132, transmission, it’s very easy for governments to focus on transmission lines – a) because they’re quite controversial, b) because they’re very visible. You know, it’s sort of the whole Rewiring Britain, agenda that they have currently.
It’s very easy to focus on transmission lines. But, you know, what we actually need is in, like you said, sort of pre-emptive investment, in all voltage levels.

00:24:01 – Kyle Murchie
A quick one for you, Nikki from me – so everything, you know recently that’s come out, as mentioned, 2030 quite a lot; what are your thoughts given that, you know, in a couple of months’ time, well few months’ time, we’re going to be only five years away, does that feel still kind of achievable?

00:24:19 – Nikki Pillinger
No, no it doesn’t. No, no.

00:24:22 – Catherine Cleary
I feel like now we’re being filmed, that answer was almost too perfect, wasn’t it, you can see the facial expressions.

00:24:27 – Nikki Pillinger
Yeah, if anyone can see my face, sorry about that.

Umm, no. I think 2030 is not realistic, and that’s kind of okay.

00:24:38 – Catherine Cleary
Set an ambition and then, you know, maybe you deliver a few years later.

00:24:42 – Nikki Pillinger
We always need diversity in an energy system, and especially at the moment we still need that and get away from gas completely until we’re actually ready to do that.

00:24:53 – Kyle Murchie
So, setting the scene then by 2030, we’re already on the journey.

00:24:59 – Nikki Pillinger
Yeah.

You know, we should be making an effort to do it, and we are. You know, there’s a huge amount of investment going into energy system, but it needs to be, like kind of as Philip said, it does need to be the right technologies in the right places.

00:25:11 – Catherine Cleary
Nikki, that probably queues up really well for the kind of going full circle back to Connections Reform. We’ve talked about whether or not, you know, Connections Reform maybe does or doesn’t go far enough, I think we want to do a shoutout to sort of, Ofgem, Jack Presley Abbott does a blog, on sort of Connection Reform and Ofgem’s kind of wider takings on this. They’ve published, a recent blog saying that they think they would like the ESO to consider further measures that include things like checks that we are not setting up Connections Reform to facilitate perhaps solar and storage onshore, you know, and make it easy for them and make it much harder for other technologies; so they have introduced the idea of whether there might need to be some form of cap on generation specific types.

So when you get to Gate Two, you know, it might be capped based on some form of technology limit, and I think they’ve also suggested that there might need to be other considerations like financial commitments. So, Philip, I mean, from your perspective, do those kind of additional measures which are quite separate to really what’s been proposed so far in Connections Reform and under the consultation, do they kind of help, do you think go a bit further, have a bit more input in place?

00:26:23 – Philip Bale
I think they do. My personal view is I think it’s probably trying to do it in the wrong way, I mean, I think Connection Reform just needs to do what it was initially set out to do, which is make the bar high enough in a sensible way that sensible projects that have a good chance of going through, can go through and develop. The challenge that I have with technology caps is, I came from a background where I ran a system planning team, I always had a five gigawatts worth of queue of projects that were coming through, and the churn rate of those projects were phenomenal – do I think the same is going to happen today than it did eight years ago? No. I think more projects will actually go through and get built out, but if you cap a project at a certain number, you are not going to get that number through, actually constructed, so that would be the first thing I’d say in terms of going through and making sure that you don’t say, that’s the number the we expect to get connected, and I hear from DNO’s all the time – we’ve got this amount of gigawatts of battery storage, we don’t need any more, and I tell them that not that amount of gigawatts will actually get built out.

There is a huge amount of hurdles every project has to get through before it reaches financial close and it’s committed in terms of construction. Going back to the financial measures, it’s difficult. I like the fact that there is a lot of opportunity for one-man bands to come in and develop projects, primarily because they tend to do it quite well, and if you take really big energy companies that also can do it very well, but a lot of them tend to move quite slower, if we see at the moment there’s a lot of small companies that’s come in, that have developed portfolios of projects and now parties coming through or buying those companies or those projects and then building them out, in terms of going through.

I would be wary of restricting that pipeline because if you introduce really hard financial measures, you may well be stopping those parties who have developed some really good projects. If you look at the three big transmission projects, solar ones, that have got planning recently, they have come from small outfits, who would develop them; if you would have look retrospectively, they probably wouldn’t have met the barrier to entry. So just be wary about sort of unintended consequences of potentially slowing down the development by saying only companies with a bank balance of a certain amount, or any people that can do these projects, have to put 1 million pounds into a project in escrow, it might end up stifling some of the early projects had it been done retrospectively.

00:28:50 – Catherine Cleary
I think I’m quite concerned about the mechanism by which we would introduce any of those additional measures. Kyle, you’re very close to the real kind of the actual CUSC kind of process, and obviously this is a little bit outside that.

00:29:02 – Kyle Murchie
Yeah.

It’s one of the reasons, well, Gate One was still, considered mandatory requirement as part of the original discussion, there was the concept of the holding fee, so you wouldn’t have securities and liabilities at Gate One, because you wouldn’t necessarily know what you were securing against, there would be some sort of holding fee, and that was then removed and replaced with the idea of a long stop date. So instead of being financial, it was, you know, essentially trying to raise the bar so that you could only sit at Gate One for three years. Now, with Gate One no longer being mandatory, the long stop date therefore isn’t relevant and it’s been removed. But the reason the holding offer, sorry the holding fee was removed in the first place, was for a few reasons, but one of the challenges was what are you ultimately paying that for? So at the moment under the code everything that you.

00:29:51 – Catherine Cleary
Sort of cost reflective.

00:29:52 – Kyle Murchie
It’s cost reflective, yes.

Exactly, you’re putting securities down on a particular asset that you’re securitizing against, it’s a fee for a particular piece of work, like an application fee. So how can I ..

00:30:02 – Catherine Cleary
I think I might challenge whether or not quality versus cost reflective, but..

00:30:06 – Philip Bale
Quality versus cost.

00:30:08 – Kyle Murchie
But you know, there’s something associated with a either a physical asset or a process. Whereas if you’re now putting into place, a holding fee that’s based on either it’s the same for every project or based on tech, or capacity. Whatever it happens to, however, happens to be kind of laid out, it’s again, not directly linked to anything.

00:30:29 – Catherine Cleary
We do have pre-, you know, for the securities and liabilities geeks, we do have pre trigger liability thresholds which are pounds per megawatt which are not cost reflective of anything.

00:30:38 – Philip Bale
If you fix?

00:30:40 – Catherine Cleary
Yeah. If you fix. Yes.

00:30:42 – Philip Bale
Yeah, I mean I think there again it’s kind of at the moment, I think part of the challenge of why we find ourselves in somewhat of a pickle is because transmission has done things in a very different way to distribution. So a distribution queue, there is acceptances of money, it’s coming through, and there are people who can accept very long term transmission projects with actual liabilities with zero fees, and people fall off their chair when I tell them that they can accept the gigawatt project with no deposit that’s coming through for some and other projects that are extremely unfair because it happens to have a specific piece of work that’s very advanced.

00:31:15 – Catherine Cleary
That’s been triggered by another party.

00:31:17 – Philip Bale
It’s already been triggered by another little party, it’s being delivered regardless, and therefore they have to put down 100 million pounds worth of securities for some work that’s going ahead anyway. So partly I think we find ourselves in a very unfair system at the moment, and potentially good projects are being penalized and not able to go through and other projects that may not be so good that have long connection dates, can accept with no sort of financial commitment.

I mean, I think there needs to be a well thought out plan which considers securities for projects which at the moment are completely unfair. They are even more unfair for people that are final demand customers; you have to securitize against everything that’s been gone through the infrastructure, non-infrastructure sites, the nearest MIPs Nodes, depending on whether it’s what the naming convention is, the whole system is very archaic and evolved over time, and I think it needs to have a relook over securities, holding fees and look at something that’s going to be beneficial for GB worldwide or GB itself and the projects, and to get us to where we are, and at the moment, I think people are looking at bits of that, but not considering the wider picture -that’s my view anyway.

00:32:23 – Catherine Cleary
I reckon a separate podcast on that, and Philip also gets a prize for this, maybe this could be called ‘Grid News and Views – are we in a pickle?’.

I suspect that is all we have got time for, so thank you very much guys for joining us, and we will see you on the next Grid News and Views.