Connections reform update #3 webinar – questions and answers

00:02:21 – Pete Aston
Hello and welcome to another podcast from Roadnight Taylor. I’m Pete Aston and I’m joined by Kyle Murchie, and we are going to be talking about all things Connections Reform, what else?!

So, this is following on from the webinar that we ran last week, which is our third webinar on Connections Reform, which was incredibly well attended. Nearly 200 people on the webinar which is fantastic. So thank you all for your engagement, if you were part of that. As part of the webinar, we had loads of questions. We couldn’t answer them all on the webinar, didn’t have time. So we said that we were going to do a follow-up podcast to go through some of those questions, and this is what we’re doing now. So we have distilled some of the questions that came through in the webinar, we’ve picked out some themes, we’re trying to pick up on some of those and we’ve got Mr Connections Reform over here in the form of Kyle Murchie. So thank you, Kyle, for using your knowledge.
I think it’s probably worth saying to start with Kyle, that quite a lot of the questions in there you’ve already posted to NESO to try and get some answers from NESO.

00:03:26 – Kyle Murchie
That’s right. There’s quite a few queries that came through. I think we ended up having over 70, so we can’t go through every single one. Also, it wouldn’t be a particularly enjoyable listen! So what we’ve done is, as you said, picked out certain themes to discuss today. But given that quite a few of the queries were pretty broad in nature, some may have already been covered by the methodologies themselves or in other documentation that’s out there, we thought it right to send an anonymized list out to NESO.

They have come back, they’ve fed that into their upcoming webinars and so a few of them they’re going to address front and centre, which I think will be really good. It just helps to distil the complexity even further and hopefully means that the webinars that you join in the future, the same questions shouldn’t be being asked over and over again. Hopefully we’re getting a little bit more clarity and building on the back of that. So they’ve also offered to share some other information as well once they’ve had their webinar. So hopefully we can keep closing the loop.

00:04:27 – Pete Aston
Yeah, that’s good. And NESO are running a few webinars, aren’t they? There’s certainly one coming up soon. It might have already happened by the time this podcast goes live, but I think they’re engaging, aren’t they trying to help the industry get to the bottom of what connections reform is and all the methodologies?

00:04:41 – Kyle Murchie
Absolutely, and it’s quite challenging because at the event that Catherine and Philip and I were at last week, the NESO seminar, that’s very well attended, but it tends to be attended by parties that are already relatively well in the know and, in the loop, been involved in the working groups etc. So as soon as you start to get a lot of the listeners hopefully today involved, there’s loads of questions because unless you’ve been sitting on the working groups for the last few months, a lot of this will be quite new, and even for us that have been, there are aspects last week that came out that were new as well.

00:05:16 – Pete Aston
We did the webinar, what, two days or three days after all the methodologies have been published, so we hadn’t had huge amounts of time to try and distill them anyway. So I guess we’re all still digging into some of these, and I think that’s pretty worth mentioning as well, that some of the questions that we had on the webinar are actually answered quite explicitly within the methodologies, aren’t they?

00:05:37 – Kyle Murchie
Yeah, absolutely. There’s also a NESO Q&A or a frequently asked questions list as well that they do publish on their website, so we can maybe pop a link in to that. With this podcast going out. It is updated and it would be updated quite often through the working groups as well. So there’s quite a lot of material in there and quite a good kind of starting point. We’ve also flagged a few that are maybe out of date, so there’s maybe a process for getting them revised as things change, but it’s quite a good starter for ten.

00:06:06 – Pete Aston
Yeah, and so we certainly recommend everyone who’s interested in this process to go and read all the methodology documents. There’s a lot out there, but there’s a lot of details as well and there’s lots of nuance within the documents. We haven’t fully digested them all ourselves. Definitely go and read them. You were mentioning to me earlier that you think the CNDM document has possibly had least engagement from industry so far.

00:06:32 – Kyle Murchie
Yeah, that’s right. If you think about Gate 2, the Gate 2 methodology is slightly different from what was presented at the consultation stage for CMP 434 and 435, but the fundamentals are effectively the same. So we’ve had entry feedback there. There’s been a lot of discussion within working groups, so when you’re reading that you can see that a lot of thought has already gone in. You might have feedback and constructive criticism, but ultimately there has been a lot of thought behind it. There’s been certainly feedback on project designation. That may be a little bit more varied in terms of who’s in agreement or not, because it really depends on what type of scheme you’ve got and what technology and whether it’s going to be favouring or potentially hindering project progress.
And then, yeah, the CNDM Connections Network Design Methodology..

00:07:25 – Pete Aston
I was going to ask you to say what they were!

00:07:28 – Kyle Murchie
I had to have a think there! But another acronym that we’ve created in the last few months that is effectively the discussion was always to build that on the top of TMO4+ and effectively facilitate the connections reform process. This would have maybe outlined before the sort of timeline for implementation, how offers would actually get issued, that type of structure, and talking about the queue positioning. But that was all being built upon the TMO4+ concept. Actually, what’s been delivered is more top down, so to speak from the CP30 alignment. So, while it does try to facilitate Gate 2 criteria and that TMO4+ process, the CP30 alignment is front and center and that really hasn’t had much engagement.

00:08:21 – Pete Aston
When connections reform was first going, I mean, CP30 wasn’t a thing, was it? So CP30 has been bolted onto it in the last three months or so really.

00:08:29 – Kyle Murchie
Yeah, because since the election and we won’t get political, but since the election that’s come about in quite a short space of time. Yeah, definitely another significant layer, but with significant impact.

00:08:42 – Pete Aston
So before we go into some of the specifics in Kyle, can you just give us a sort of very brief overview of the sort of structure of connections reform in CP 2030?

00:08:52 – Kyle Murchie
Yeah. So for anybody who wasn’t on our webinar, maybe just have a little look at the webinar, because we did run through some slides and it just tried to show in a layered sort of process, or layered approach, of what we’re ultimately looking at.

I suppose the bottom layer was the idea of kind of TMO4+ and the two code mods CMP434 and CMP435. So those effectively facilitate the change. It’s a CUSC mod, so we have to change the CUSC to facilitate the changes proposed. Some of the detail then was taken out of those and have been put into methodologies. Importantly, the methodologies at the moment won’t become within you won’t be forming part of the part of the CUSC. They’re effectively sitting outside the CUSC but they’ll become kind of license requirements. So within the transmission licenses, those will change to ultimately facilitate these methodologies.
Now, these methodologies, as I said, do provide some of the detail and effectively some of the approaches, timescales that would be associated with Gate 2. So that’s Gate 2 criteria. You’ve then got project designation for designating projects and allowing them to move forward for particular, really quite specific reasons. Importantly, you still have to get to Gate 2 for that though. So Gate 2 is still the kind of baseline requirement. And then we’ve got this CNDM, which is, as I said, the newer methodology and the one that then bridges the gap between the TMO4+ plus layer and the new layer of CP30 alignment.
So it’s probably worth just flagging that CP30 is a Government-driven concept of Clean Power 2030. And NESO have ultimately said here’s our views of how we think we can align with the basic concept, but it will be Government that will come out with their recommendations.

00:10:55 – Pete Aston
So NESO’s Clean Power 2030 plan that came out last week is they’ve got what two pathways of varying mix of technologies to go either of these pathways, or somewhere in between, might reach clean power 2030, and NESO provided what they thought was a definition of clean power 2030 and based their pathways on that. But, yeah, the Government still have to go, ‘Do they think that’s what they mean by Clean Power 2030? Have NESO gone too far? Have they not gone far enough?’ Yeah, and the Government are going to be giving their view on that at the end of the year?

00:11:29 – Kyle Murchie
So, the documentation has obviously been submitted now because it’s been in the public domain. So, we’re expecting end of the year, probably January time, I’d say. Time scales have become a little more open. One of the things that did come out last week and we’ve mentioned, I think, on webinars and podcasts before, Q2 of 2025 was the implementation.

00:11:49 – Pete Aston
It was Q1?

00:11:50 – Kyle Murchie
Yes, it was Q1. It was January, wasn’t it? It was the 1st January at one point. Then it was Q2 and now what’s been presented is Q3/Q4. Now that’s for new projects, so new applications at transmission level and also those that would ultimately feed into transmission impact assessment at distribution level, but for the existing queue Gate 2 evidence would be effectively collated in Q2. So now changing the timelines a little bit to say Q2 is more existing queue and, you know, noting that they can’t do all of that in parallel, which I think a lot of people might expect.

Yeah, and that gives a little bit more time as well for Ofgem to one, for the industry to understand exactly what has been put in front of us. Comment, feedback through the consultations, alterations to be made, Ofgem to review the various consultation materials that they’ll be in receipt of and then make decisions on code changes, license changes etc. And then implement. It doesn’t really sound as if you could do that all within three months.

00:12:58 – Pete Aston
It’s basically going to go on all next year?

00:13:01 – Kyle Murchie
Yeah, if we’re talking Q3/Q then that’s already set in the benchmark that you’re definitely the second half of next year, really.

00:13:17 – Pete Aston
I guess, and even in Q2 next year when they’re collecting evidence of Gate 2 progress or not from the existing queue. So the submission date will be somewhere in Q2 next year, but they’re going to take some time to digest all of that and work out what that means, who’s in, who’s out of Gate 2 and so on.

00:13:28 – Kyle Murchie
Yeah, you’re realistically not going to have a Gate 2 offer until the very end of 2025, maybe early 2026, before you’re in a position to accept. Yeah, the time scales do get quite tight.

00:13:37 – Pete Aston
I think, just as an aside, this is a another you know question mark on this sort of reaching of CP 2030, isn’t it in reality? Because there are going to be developers out there many listening to the program who are going to go, am I going to invest any more until I’ve got my Gate 2 position? I know, and that’s a really difficult one and if it’s going to be strung out that long…

00:14:00 – Kyle Murchie
Yeah, if you’re a transmission project and you’re waiting for that investment signal ultimately, and you’re into sometime in 2026, even if you are likely to be connecting in 2029, 2030, that’s a really short space of time for a transmission project to connect. It’s difficult enough for a distribution project. But, yeah, a big challenge with the timescales.

00:14:20 – Pete Aston
And with all the issues raised in the CP 2030 report, on all of the challenges to reach CP 2030, like materials, procurement, resourcing just the sort of stringing out of the connections reform process just ends up compressing all of that time scale even more.

00:14:39 – Kyle Murchie
Absolutely, and you mentioned something really good earlier around that 2030 focus, because the material that’s come out so far and the pots, effectively, that have been defined. I should say when I say defined the pots are not in a document that’s being consulted upon. It is in a impact assessment and a draft impact assessment of that.

00:15:01 – Pete Aston
It’s also Version 0.02 of the impact assessment?

00:15:06 – Kyle Murchie
Exactly! And it’s probably worth noting if anybody downloaded it on the first day that it was released. It has been updated. There were a few errors in it that have been noted and revised. If you are sitting there with a 0.01 version, yeah, do keep an eye out, because the idea of that document is that it will be a bit of a working document. It will be updated. But, as you said earlier, that only focuses on 2030, doesn’t it? It doesn’t set out what plan is out to, kind of 2035 and then beyond.

00:15:33 – Pete Aston
As far as I’m, aware within the Clean Power 2030 and the impact assessment, all those graphs and so on, is that the graphs that show the existing queue, are the existing queue up to 2030 and it’s a little bit unclear, I think, as to exactly what’s gone into that or not. Because obviously everyone knows what the total queue is. What is it? 700-800 gigawatts. So the data impact assessment has only got effectively a subset of that within those graphs and it’s not quite clear as to… You know, I think probably for direct transmission connections, maybe a bit clearer where you’ll go, your direct transmission connection date is whatever X and if it’s before 2030. But for the distribution schemes, schemes, I think particularly it’s a little bit unclear.

00:16:12 – Kyle Murchie
I agree, because, as you say, for transmission you can look at the TEC register and get a good idea. Obviously NESO have a lot more access. They know exactly what your contracted date is at that point in time. But as we all know, at transmission level in particular, that date that 31st October date that you probably got of a given year, or 1st April as they used to have it, effectively the two bookends of the clock change, that date’s probably not going to happen.
So it’s either going to be a slight adjustment or if you’re moving out by a few months, then it might be a MOD app to do. It’s probably worth noting that MOD apps are outside of the gated process, that that was actually a question that came up. So that’s quite an important one because you wouldn’t want to be trying to move your project out by three months and have to wait a year and a half to get to get your offer. But in those sorts of situations where you’re just trying to move out by a couple of months, that could skew those pots that are effectively being set and, as you say, from a distribution level, the NESO would have visibility of what was put forward in the project progression information. As we all know that that’s not necessarily close to reality of what’s actually ready.

00:17:36 – Pete Aston
And I wonder whether they’ve just pulled through those schemes within a project progression where the project progression date said all these schemes can connect prior to 2030.

I guess the other thing it doesn’t quite pick up is, let’s say, your full transmission access date as a distribution scheme says 2035 or something. Lots of those schemes are being accelerated to connect under technical limits to connect. I don’t think it quite picks up the nuances of things that may or may not connect.

00:17:59 – Kyle Murchie
Yeah, definitely, CNDM does try to cover off technical limits to an extent in that it mentions it and it does also flag that it’s something they very much do want to protect, they do want to allow, because it’s seen as very much a good thing for the industry and allowing that process to continue is really important. I think it would be quite dangerous not to, because there’s obviously a lot of questions around the technical implementation of technical limits and if you started stalling that, then it becomes, the value becomes quite limited potentially. So it’s good to have backed that. But I would say the devil is then in the detail of how exactly is that going to work in reality? And I don’t think, based on what we’ve seen from methodologies, that’s quite there in the level of detail that we’ll need to get to.

You could argue that’s maybe for the DNOs to partly pick up in terms of process there. But one big thing worth noting, what we’re looking at here is obviously a transmission process. There’s obviously massive implications on the DNO processes and how they then interact with NESO. But that’s partly for the DNOs and the ENA to pick up as well.

00:19:12 – Pete Aston
So, picking up on eligibility, I think there were a few questions around eligibility in the webinar that we had. Can you just quickly pick up on what connections reform actually applies to?

00:19:18 – Kyle Murchie
Yeah, so effectively everything at transmission level.

00:19:21 – Pete Aston
So generation, demand?

00:19:18 – Kyle Murchie
Generation and demand at transmission level and the slight difference from a distribution perspective. So anything that’s embedded, if it’s seen as relevant, then it would be included – which is a great term I love relevant. But relevant small and medium would also be included and effectively they are relevant if they’ve been part of a transmission impact assessment. Then anything that’s got a BELLA or a BEGA would ultimately be included because they’ve got a direct contract with NESO, and anything that’s then in the large category as well would obviously fit into that. So it is important noting that small and medium and that using that term and that definition across GB would be included, but only if they’ve ultimately been in a transmission impact assessment. It is something we’ve been talking to NESO about and the ENA about quite closely, because you could argue that if you’re triggering or sitting behind enabling works so you’re sitting behind transmission works, you’re actually triggering something. Then that’s quite different to sitting on a transmission impact assessment.

00:20:39 – Pete Aston
So you could be a five megawatt scheme, so you’re relevant. And you’ve gone through transmission impact assessment, but currently you’re in part two of Appendix G and not needing to wait for any transmission work. So, does that mean that you fall under the connections reform, Or you know? Equally, on the flip side, you could be a two megawatt scheme, also have gone through a transmission impact assessment, but have to be waiting for transmission works before you can have full transmission access. So you get, there are some different scenarios.

00:21:13 – Kyle Murchie
Yeah, absolutely. And then there’s maybe a slightly different scenario as well of whether does that mean Gate 2 applies, and then there may be a secondary of whether CP30 is applying, because it also depends as well on you might be able to connect on the technical limits, but if your access at transmission level is into the 2030s, then that might sit in a different pot.

So there’s a nuance there as well that if you are accelerating projects and allowing to connect, that’s also making sure that they can actually still continue to have access.

00:21:32 – Pete Aston
And this is bringing us on to connections in flight. But before we go into that, there is definitely one exception as to what’s not included in connections reform and that’s embedded demand.

00:21:56 – Kyle Murchie
Embedded demand. Yes, I suppose I didn’t mention it because I feel as if I’ve been bleating on about it for months and months. So yeah, embedded demand is not included and that was strategically done because it was felt that that’s not driving the existing queue. But once you get into some of the details, there’s definitely positives and negatives with that. I think maybe some of the unintended consequences, the risk, has been reduced with CP30.

We’ve got a session a little later to actually try and run through some of those examples, just to try to understand if you were a particular project, taking some real examples and taking them through the process, could you end up actually still getting stuck in the queue with a battery, for example? Because that’s the issue, where you’ve got two processes, one for demand, one for generation, and a battery would obviously sit across both at D levels. Maybe you could argue, as I said with CP30, that if a lot of those schemes are maybe no longer needed by 2030, that unbundles that slightly. But, as I said, I think the devil is in the detail there of whether it’s going to be a positive or potentially a hindrance. It’s too easy to say, oh, it’s definitely positive by taking them out, because also the focus is going elsewhere and the process is going elsewhere, so make sure we don’t leave those projects behind.

00:23:08 – Pete Aston
So embedded demand specifically not including connection reform, but will be impacted by connection reform.

So connections in flight. We did have a few questions around my projects connecting, due to connecting, you know, October 2026 or whatever. Am I going to be impacted? Maybe these schemes have already got planning permission and so on, already potentially started the build phase some of these? So yeah, is there anything within the methodologies that speaks into that? Where’s the cutoff line? Yes, is there a cutoff line?

00:23:40 – Kyle Murchie
There is, and actually I’m going to read it out word for word because I think this that the wording is, it’s quite important here. So it’s clause 5.5.5, very conveniently, of the CNDM methodology and it says ‘NESO will ensure that projects which have met the Gate 2 criteria and are already under construction and due to commission in 2026 or earlier will not be adversely impacted by aligning the queue to the CP30 plan’. There’s quite a few words there and quite a few ‘ands’.

00:24:13 – Pete Aston
So yeah, do you want to just pull out all of the ands?

00:24:18 – Kyle Murchie
Yes, so first of all, it’s Gate 2 criteria. So you have to have met the Gate 2 criteria – period.

00:24:21 – Pete Aston
So if you’re in build now, okay, or if you’re due to build next year or something, you still need to put a Gate 2 application in.

00:24:29 – Kyle Murchie
Yes, now there’s maybe a nuance there. When speaking to NESO, they did clarify that obviously, if you’re due to be connecting your building and you’re due to be connecting in 2026, then obviously there’s going to be a bit of a cutover period there. But effectively, yes, if you’re going to be connecting beyond 2025, then you would have to still meet the Gate 2 criteria. The feeling generally is that, well, if that was going to be a viable project, then you should already be in that situation anyway.

00:25:00 – Pete Aston
Yeah, so if you’re building, or soon to be starting to build, you’re going to meet Gate 2.

00:25:06 – Kyle Murchie
Yes, otherwise you’re not really building.

00:25:07 – Pete Aston
Otherwise you can’t build. Can you if you don’t have planning permission or land?

00:25:11 – Kyle Murchie
Yeah, exactly, it’s probably worth noting as well that Gate 2 criteria is still predominantly land related. There is another option for those projects that have a DCO, but they tend to be, that’s been effectively written in there for really large scale projects where it’s not effective to get land.

00:25:28 – Pete Aston
If you’re in nuclear power stations?

00:25:30 – Kyle Murchie
Yeah, exactly. The other ‘and’ is ‘are already under construction’. Now, that definition of construction we did get quite a lot of comments on that and it’s something that we actually raised with the NESO at the time when the paper came out. That definition of what do we mean by construction, because for some it would be you’ve created a bell mouth. Was it construction from a planning perspective? You’ve done the minimum to tick the box or are you actually building the plant, ie the install? What’s going to deliver the capacity? And there’s a few nuances there, because we did pick this up as part of the working group because it had to be quite clear on what you’re talking about in terms of redline boundary limits and what you’re actually building, and be more specific on construction of what.

00:26:17 – Pete Aston
And this is if you’re in construction by the time this is implemented, like the end of this year, or if you’re in construction by Q2, when they do the first gate to assessment for the existing queue. Do we know?

00:26:34 – Kyle Murchie
Yeah, I would expect that it’s due, again it’s not clear but it’s under construction and due to commission in 2026. Now that will be a general expectation that certainly if you’re a transmission connected project, if you’re commissioning in 2026, you’d have to be building in 2025. So once the Gate 2, so you could demonstrate we’ve already started building by Q2 2025 if you’re going to be commissioning 2026. I think that’s generally a reasonable expectation. At distribution level you could argue, you’d probably expect that would be the case, a year and a half to two years before energization.

00:27:10 – Pete Aston
You could have a little 11kV scheme that was one and a half megawatts, what six months construction period. So you’re not going to start building until 2026.

00:27:17 – Kyle Murchie
Yeah, absolutely, and I think that’s where the various layers come in, because you’ve got what is eligible for, what’s the threshold for a transmission impact assessment? That’s something else that’s been looked at in the industry of potentially increasing that up to 5 megawatts, so you don’t pull those projects in and then, as we said, if you are on the transmission impact assessment or included part of it, should you be put through this process if you ultimately are not triggering any transmission works? So certainly, from a distribution point of view, yes, that’s not quite as clear cut.

00:27:43 – Pete Aston
And I guess also if, I don’t know, if you’re starting a construction in 2025 of a very big project and you’ve got a two or three year build period, does that mean that you might not be looking to energize in 2026? Because it’s a really long project, or is that a bit more of an unusual situation?

00:28:10 – Kyle Murchie
Yeah, it’s a good point. I think if you were under construction but you weren’t due to commission in 2026, like you were due to commission in 2027, 2028. I think that’s a good example which for many probably on the call are thinking actually, I would potentially be in that situation, but I’m now potentially going to be under construction, having to then meet the CP30 layer and potentially at risk of not meeting the criteria.

00:28:36 – Pete Aston
So there’s projects like that that perhaps are going to be the most cautious about this to go, I’m actually spending money building, but I might still have to go through this reshuffling process. And will I get into the 2030 pot or not?

00:28:49 – Kyle Murchie
Yeah, I think we said on the webinar, I’d say definitely again, when I was reading these documents and I’d suggest everybody else does the same – have almost two lenses, so look at it first of all through the lens of does this work as a process and feedback there and your thinking and the concerns. But take timescale out of the equation. Because I think if you do that you might get a slightly different answer to then when you add the time layer on top, that you might get a slightly different answer to then when you add the time layer on top.

00:29:44 – Pete Aston
So then, Kyle, moving on from timescales and the transmission process, like we’ve been talking around, there were a few questions within the webinar around G99 applications versus Gate 2 applications, similarities, differences. Plus, you’ve got the issue with the recent ENA consultation that was out around increasing the bar for G99 applications. So I was just wondering whether you can quickly talk us through what is it that the ENA was trying to do within their consultation in terms of raising the bar for G99, how that compares across to Gate 1 and Gate 2 applications at transmission and some of the issues around that.

00:30:24 – Kyle Murchie
Yeah, it’s another really important topic and I think, possibly overshadowed by TMO4+, the connection reform piece, and then what’s come out more recently around CP30.

But effective, parallel to TMO4+, the DNOs and the ENA were looking at the opportunity to effectively raise the bar for those coming in through the distribution network and doing that at application stage. And what we’ve ended up with is effectively a potential position where there’s much more alignment between the two. You could argue on one hand, but actually bringing a lot of the Gate 2 requirements much earlier in the process. So we’re at transmission, yes, you could go straight in a Gate 2 application and I think that was the feeling that if you’re at transmission level, you’re quite likely going for a Gate two application, because Gate 1 is effectively a budget estimate equivalent and therefore, if you’re putting an application in at distribution level, should you not be doing effectively the same? And while that line of thought is understood, it is noting that coming in at distribution level, you first of all need to get your actual distribution connection point. That’s hurdle number one.

00:31:43 – Pete Aston
You have to do that. That’s not optional, is it? It’s not like Gate 1 at transmission, the G99 application at distribution is mandatory.

00:31:51 – Kyle Murchie
Absolutely. And once you’ve done that, you could then ultimately say, okay, I’m now ready to go through the Gate 2 to process and ultimately then enter the process which has been outlined as part of the code mods for progression reform. So I think, bringing a lot of those land requirements forward and saying, at application phase or application stage, you need to be able to demonstrate a land option or some sort of heads of terms accompanied by a letter of authority, that’s quite a big jump from where we are now and, I suppose, a question about whether that’s really going to deliver the results that the DNOs were ultimately looking for.

00:32:32 – Pete Aston
And also whether it’s feasible from a developer point of view to actually get heads of terms or a three-year option agreement in place prior to making a grid application. There is quite a lot of work involved with a landowner up front to to do all of that, and it’s like the chicken and egg scenario, isn’t it? Why would I go to the landowner and get all of this if I don’t know I can get grid application, but what’s the point of getting a grid application if you can’t get your landowner? So it’s, to some extent, it’s got to be a little bit iterative. You need to get some landowner approval before you make your grid application, and then it’s almost needs to increase as you go through the process.

00:33:12 – Kyle Murchie
Yeah, exactly, and ultimately, if you’re coming in without any knowledge of where you’re ultimately going to be connected to at distribution level, you may have done some sort of feasibility beforehand to get some indication of what that might look like. As we know, there’s still quite a few steps there in determining whether the project from a DNO connection perspective is actually viable, which needs an offer to come for the DNO, that to be reviewed and ultimately accepted, and then when you’re in that position, that starts to strengthen up the ability to then go and firm up land and effectively start to meet the Gate 2 criteria. So I think it’s maybe while, as we said earlier, at a really high level you can understand the concept of trying to align the two, but it’s recognizing that distribution have further steps because they are going through a DNO or a transmission connected IDNO. So by raising the bar too far potentially you could be detrimental, impacting customers also being able to invest and make investment decisions that early on. As you say, if you have nothing in front of you on day one, then it’s very difficult to go and commit to all that spend.

00:34:24 – Pete Aston
And one of the ENA questions in their consultation was at what stage of the connections process do you feel that DNO should align with the TMO4 land requirement, ie at what point should DNO applications align with the Gate 2 applications that you’d make a transmission? And it feels like the point at which a DNO application should align with that is when the DNO customer does the Gate 2 application. Why do it any earlier?

00:34:48 – Kyle Murchie
Exactly and ultimately at the moment, based on where we are now with G99 applications versus what’s been proposed for Gate 1 at transmission level, effectively those requirements would align. So if we kept that alignment and then said that’s aligned and the next step up for both distribution customers and transmission customers would be a Gate 2 process, then that effectively keeps more of a level playing field. Yes, transmission developers may decide to go straight into Gate 2, but, as we said, they have a slightly different process because they’re not having to go through a DNO or a T-connected IDNOs. So, yeah, part of it feels as if we’re raising the bar as well without evidence. I think that’s a kind of crucial point as well. Lots of changes are going to be coming in. A lot of these transmission changes are going to put G99 applications in anyway. Therefore, we’re at risk of trying to raise the bar on top of a new bar that’s significantly different from where we are now, that hasn’t been tested. So, yeah, it doesn’t really help from an investor confidence point of view in my opinion.

00:35:49 – Pete Aston
No, and there was some other bits around the sort of increased requirements of the G99 application, around the requirement to have some sort of viability study showing sort of key technical, financial, operational feasibility, milestones on the project. All of this sort of, budget, that’s a pretty high bar, I think, for the DNO applications and that almost feels even higher than the Gate 2 application requirement.

00:36:22 – Kyle Murchie
Yeah, yeah. For me it jumped out as being more aligned with potentially some of the market financial instruments. So, like the capacity market and balance the mechanism, those sorts of processes, because if you think about an actual completion milestone or substantial completion milestone for the capacity market contracts, those require you’re drawing out resources, budgets, bent dates you’ve been quite critical on. Is the project actually where it’s suggesting it is ultimately got to? But that’s a market driven exercise rather than a connections driven exercise. And we’ve said before, I think, elsewhere that the distance between the market and the connection process is definitely narrowing. But yeah, if you are sitting there with a potential project and you’re ultimately at that moment in time, you don’t know the cost of the connection, you don’t know the time scale for the connection, you don’t know the upstream constraints, limitations. You’ve got the CP30 layer as well which might have an impact or quite a significant impact on whether you can or can’t connect. But even to get that information you’ve been asked to submit, appear and submit a viability study and drawing out much more significant detail that you wouldn’t generally have at that stage of the project feels quite out of line.

00:37:40 – Pete Aston
So I think that probably covers quite a lot of the questions we had around the G99 application versus the Gate 2 application. I think we’ll move on from that one. By the time the podcast goes out that, yeah, that ENA consultation will have closed, I think the new ENA G99 rules will come on 1st January. I think that’s a new time scale. Anyway, it was due to be like last month and now it’s going to be 1st January. So maybe we’ll go back again, who knows.
But picking up on DNO applications, there was quite a lot of talk on the webinar, lots of chat around the ordering of schemes in the queue, in the methodologies, around that sort of reshuffling of the queue that we’ve talked about already, and around the idea of should DNO projects be based on project progression date in the reshuffling or should it be based on the DNO original application date. So I think it’s fair to say on the chat there was quite a lot of people in favour of saying that DNO projects should be based on their original application date. So what are some of the pros and cons around the different dates, project progression date versus DNO application date?

00:38:51 – Kyle Murchie
And I suppose caveat, I’m very much in the camp of it’s a transmission process and therefore needs to be based upon a transmission date, ie the date of the project progression. I completely understand if you’re in the shoes of being a DNO-connected customer then in theory, at a high level, absolutely sounds as if there’s a big advantage of it being your distribution application date, of course, because it’s going to be significantly earlier. I think there’s a slight issue in the approach that we’ve had in the past where there’s such a significant time between the DNO application dates and the project progression, which I think is therefore would skew things quite considerably because you could potentially got 12, 18 months between the two dates easily, if not more in some cases. I don’t think it’s as simple as just looking at that date and thinking that would put you in a better position, because by basing it on the project progression date, you’re therefore really focusing in on the access that project has to the transmission network effectively.

And if you start moving to a DNO-based date, it potentially could disadvantage some projects which may have been accelerated under technical limits. It would make it very complicated if you’re now basing it on a date that was potentially before technical limit agreements. So that’s not going to help everybody in all cases. Plus, you’ve also got the fact that DNOs do naturally have the ability to prioritize or push forward projects that ultimately are progressing. So if you’re DNO-connected project and you are actually paying the fees, pushing the project forward and delivering all the data that’s required, then you of course you naturally will start progressing ahead of another project that is technically ahead of you in the queue but if you’re ultimately not in a position to do so, then projects do still get built out. So if you’d start to then realign things based on a date that’s potentially several years ago, you do have a detrimental impact on those that ultimately have been, not necessarily reordered but reprioritized, resourced based upon or filtered down based upon actual works.

00:41:19 – Pete Aston
So I guess one question I have on the using of project progression date. So, under the methodologies being published, the queue is going to be reordered on a technology basis, isn’t it? Let’s take solar, for example. You strip out those who aren’t going to be connecting before 2030. Then you do various other realignments around planning and so on, and then at some point there’s a cutoff. But a project progression contains schemes that are solar, battery, wind, whatever, a whole range of different technologies. The solar schemes, for example, that are in a project progression. I guess they would just be given the date in the queue based on that project progression and then in a different queue there’s some batteries that were in the same project progression who’d be given the same date. So I guess there is a little bit of a confusion there with separating out technology types out of the project progression?

00:42:15 – Kyle Murchie
Yes, yeah, because you’ve got, as you say, project progressions that have multiple technology types and you potentially have several project progressions for a particular GSP. So how is that all going to be realigned? I think the important thing that’s being called out through some of the working groups is effectively trying to manage as much of this as possible through appendices and trying to draw that out and split it out into more manageable chunks. So the DNO will have a lot of that split out which might not be split out today. There was also talk around splitting out for a day going forward maybe the demand and generation elements of the, effectively sitting under the mod app, which again would be separated out and a little bit cleaner. So there’s definitely process in there that needs to be specified so that there’s the devil’s in the detail, and I think there’s a few different ways in which that could actually transpire and actually look physically. But yes, it’s, it certainly has been noted that’s a complexity.

I would say, maybe noted, that’s been complexity, but actually I agree that the unpicking of that is quite a complicated process and isn’t necessarily going to be a five-minute job.

00:43:27 – Pete Aston
And I guess the other thing within that sort of reordering process is that you reorder certain schemes based on whether they’ve got planning, have been submitted for planning or haven’t gone into planning. And of course a project progression is a multitude of projects. So I don’t quite … Do the methodologies pick up about if you’ve picked out all the schemes that have got solar from this project progression but obviously if you have planning and if you don’t, where’s that going to sit within that sort of reordering piece? Or has that not been thought of?

00:43:59 – Kyle Murchie
I think it’s been thought of, but there’s an element where, I suppose the transmission process is trying to outline what, and NESO are outlining what it would do from a transmission perspective and there are layers, and we are probably starting to get into layers downstream of that where ultimately, the DNOs with support from the ENA would have to outline what they’re going to do as a standardized part of the industry, in terms of supporting that, in terms of what information they’re providing and how they will manage that customer base. I think another complexity on top of that, though, is at this moment, as we know, the zones are license areas, they’re not GSPs. You’ve also got that other hurdle as well.

00:44:47 – Pete Aston
You mean the zones are from a transmission level?

00:44:49 – Kyle Murchie
From a transmission level, yes, but even if you’re looking at it from a distribution level, you have each distribution license area called out and the buckets associated with it have been indicated through the impact assessment. But we’ll need to have that next layer down of knowing what does that mean at each GSP and what are the opportunities to move pots around slightly if one was under committed in one area versus another GSP. And at the moment the process effectively facilitates some movement. But in a practicality term, that’s quite complicated. It’s not a straightforward we’ll just move 50 megawatts from one GSP to another. There are also physical assets, SGTs, there that have got limitations as well, and then the downstream network also has a part to play as well.
It might be that the GSP can actually take it, but how many limitations does the 30kV board or 132kV board downstream actually have? So I think quite a complicated matter. And of course, CP30 alignment is only indicative. At the moment that impact assessment is a draft, as we said earlier, and version 0.2, so definitely lots still to come in that area, but quite a big, I suppose that is the question – can that layer really be added in, you know, sometime in 2025?

00:46:15 – Pete Aston
Connections Reform is an onion because it has lots of layers and when you peel it’s going to make your eyes water. I like that.

00:46:22 – Kyle Murchie
There was one question I did have for you, though, which was on..

00:46:28 – Pete Aston
I’m not supposed to be answering the questions, Kyle.

00:46:30 – Kyle Murchie
I thought I’d get this one in because I’d like to hear your answer. So financial instrument, that’s been another layer that’s been talked about quite recently, and another complexity. So, the caveat here is we were trying to steer away as much as possible from financial instruments, but it did come up quite a lot in the questioning from our webinar, so probably worth touching on it to some extent. What are your thoughts on what was proposed with the financial instrument and where do you think it has got to?

00:47:03 – Pete Aston
Just to summarise for those that don’t know what the financial instrument is, it was basically going to be a £20,000 pound per megawatt, effectively securities requirement, cancellation charge requirements such that as soon as you go through Gate 2, if you then pull out, you’re paying a minimum of £20,000 pounds per megawatt. If your cancellation liabilities from the rest of the scheme were higher than that, you’d pay the higher amount cancellation charge. So this was a top up to a minimum, the minimum level of £20,000 per megawatt which could be significantly higher than your current cancellation liabilities on the project.
I think the idea of it is to obviously put a bit more skin in the game, to use that term that’s often banded around. So that you only do this if you’re really keen to move forward. I think, certainly what I’ve been hearing from lots of developers who are naturally going to be less in favour of this than the network companies, is a lot of the developers are saying but for some of them, with large portfolios, they’re just not going to be able to finance it. So, for some developers with very large portfolios, they’re talking about tens of millions of pounds of risk on their projects if they want to push all of them forward through Gate 2 and that’s a very heavy burden for them and they might not be able to manage that. I guess, if I look at it from a network company’s point of view, they go hey, this looks great because we’re only going to get schemes moving forward who really want to proceed. It feels to me like it’s just maybe a bit of a blunt tool to do the job and it feels like a difficult one to get the level of as well, because if you just keep reducing the £ per megawatt level, then at some point it gets low enough to go it’s not a bar at all. So it just almost to me feels like it’s not quite the right thing to do. I don’t quite know where it’s come from as well, because of course there’s been all this talk for you know, 12, 18 months around connections reform and Gate 2 and readiness criteria. Then there’s been the whole needed criteria added in with the Clean Power 2030. And then, almost out of the blue, comes this financial instrument. Is everything else not enough? Do they really need a financial instrument? I think that’s my thoughts on it. I don’t know if you’ve got any insight either.

00:49:26 – Kyle Murchie
Yeah, I completely agree. I think the for me it is a blunt instrument. The intention really is to try to well, I view it looks as if the intention is to bring the financial instrument in to cut the queue down probably more quickly. This was based on what was discussed in the working group and where the code mods were going. Yeah, it was definitely a big change for the industry, but it wasn’t necessarily the change that we’d first started talking about in terms of the level of commitment and the level of change. A lot of more complex areas like EFTC, long stop dates and really Gate 1, was effectively changed quite significantly from the consultation phase onwards.

So I can see why there was then a question of if this is going to come in and change the queue over a couple of years, is that timely enough? Do we need something that’s a bit more brutal, more of a cannonball and changing things up? CP30, I suppose it’s an interesting layer because it came in really after the changing government and a bit of a push from a government perspective. So the financial instrument it must have been in the background, I would say from the summertime because there was also consultants that did the analysis were trying to pull out some potential figures. And I know there’s been a lot of, of course, what those figures were based upon and ultimately, what the overall brief was initially. So to get into all of that, I think it’s been recognized that, okay, there’s been a lot of constructive and strong feedback to NESO. They’ve set up a call for evidence, a call for ideas, a call for information, one of those. So that is open at the moment and they are looking to gain feedback and ideas on what a financial instrument could look like. It’s been interesting though what really keeps coming up is, a financial instrument can’t just be a sticking plaster over the security mechanism that we’ve got at the moment. There are already many issues and mods in the pipeline. There’s a mod in the pipeline to take final sums away and move those large demand customers under section 15 of the CUSC. So all of that is in flight and needs to happen because of reform and, ultimately, the changes there that’ss the lead out that model in itself.

00:51:48 – Pete Aston
So it also feels to me like this financial instrument is that they could have just introduced this 18 months ago and saved all the pain with working groups of on connections reform – just gone we’re just going to charge people a lot of money, and if your pockets aren’t quite deep enough, then tough, you’re out.
And I think on that as well, that it does feel to me like this financial instrument favours those developers who are very large and who’ve got very deep pockets, because some of the really large historical developers that have already been in the energy industry for years, like some oil and gas giants, might well go okay, it’s just money, but we’ve got deep pockets. But those smaller developers who may be just about scraping by with some of these projects, this could be very significant for the whole business model.

00:52:36 – Kyle Murchie
Absolutely. Yeah, it adds another layer on, but, as you say, another layer that’s not necessarily fair and transparent and it comes back to the question of is it another layer too far, based on everything that’s..

00:52:46 – Pete Aston
Making the onion too big Kyle?

0:52:49 – Kyle Murchie
The onion too big… adding another layer on the outer when we don’t really know yet what the impact is of the other layers of the onion. We’re using this onion analogy now.

00:52:57 – Pete Aston
I love it. It’s great. Yeah, I think we can connect it with a visual on this as well.

00:53:03 – Kyle Murchie
Yes, definitely, we’ll do that for next time I think.

00:53:04 – Pete Aston
With all the talk of onions, I think it’s time for us to stop this. So, unless you’ve got anything else, Kyle, that’s worth picking up it feels like we’ve actually done a very short, long webinar podcast to follow up on a very long webinar. So, yeah, I think it’s been good, but any last thoughts, Kyle.

00:53:22 – Kyle Murchie
For me it’s just please do respond to the consultations where you see fit. I suppose importantly on the consultations, it’s not just about a light response to everything. It’s much better to respond to one specific area and put a lot more effort into it. Even just from an engagement perspective, we don’t want the engagement statistics to be skewed because you get high volume of consultation responses but actually very low quality. So we’re finding already that many other participants are doing the exact same just really trying to focus on what’s most important to them or what they can bring evidence to support either a particular concept or try to constructively feedback and develop. So for me, that’s something we are doing, but I think it’s an ask as well for the industry and those that are able to either do that directly or come to others, the likes of ourselves to support doing that, because, yeah, the change is so significant and we have talked about it a lot, but it’s only really just scratching the surface, so there’s a lot more to dig into and even if everything as is got accepted, as we’ve said already, there’s so many other layers, Appendix G piece and the number of customers under one Appendix G are going to have to get split out, and how is that realistically going to look and feel? That’s another level of detail, but we as an industry need to need to resolve.

00:54:44 – Pete Aston
Thanks very much, Kyle, for all your input and wisdom on this. And we want to say thank you to you for listening if you’ve stuck with us throughout this podcast, well done and throughout the whole connections reform process. Please tune in for another one of our podcasts or webinars. We’ll no doubt be doing another one soon and just to say thank you and goodbye.

00:55:13 – Kyle Murchie
Thanks, Pete. Thanks everyone for listening.