00:16:21 – Philip Bale

Welcome all to this quick podcast around Engineering Recommendation 130 and whether it should apply or not to embedded connections which are going through technical limits approach. So, it’s got myself, Philip Bale and we’ve got Pete here to go through and discuss when people get technical limits offers, should they have this clause added in or not, and if it’s appropriate or not.

First of all, do you want to do a little background Pete, in terms of Engineering Report 130, why it was brought in and the changes that happened, I think in 2023?

00:50:15 – Pete Aston

Yeah, there’s quite a lot. So, I guess the parent document is P2, so about security of supply, and so that’s got all the different requirements you need for different size of group demands. And then Engineer Report 130 then just goes into extra levels of detail around that, and things like how do you treat battery storage. Previous versions of P2 and ETR 130 didn’t really mention battery storage, and so DNOs had to go well, how do I treat a battery? It’s an import capacity. Okay, I’ll treat it as just a normal group demand, a normal part of a group demand and so you very quickly end up filling up networks with batteries.

01:43:02 – Philip Bale

And triggering some quite significant network reinforcement for M-1 and M-2 conditions.

01:48:00 – Pete Aston

And triggering all of that, I think quite sensibly.

ETR 130 then changed a few years back through the ENA and basically one of the outcomes from that was that batteries can now be, or must now be, treated as non-firm. So, any outage condition, anything that a battery can be interrupted in order that you don’t need to do huge amounts of reinforcement on a network just in order to keep a battery operational.

02:26:31 – Philip Bale

So effectively, they’ve signed a DSR contract, which basically means, in the event of an M-1, M-2, M-3 event, that they can be turned on, not restored, and have effectively said that they’re providing this contract at zero cost, which effectively means, then, that they don’t count as proper demand.

02:45:33 – Pete Aston

And DSR being demand side response.

02:17:54 – Philip Bale

Yes.

02:42:06 – Pete Aston

So, it’s sort of like twisting the battery operator’s arms behind their back thing. You have a connection offer that says that you’re happy to be turned off whenever we need you to be, or you don’t have a connection offer.

02:59:31 – Philip Bale

And it’s probably worth saying that we have been applying for these schemes with the derogation, with the DSR clause, actually well before 2023.

So, we had schemes where the battery storage would have triggered significant reinforcement, and we didn’t think it was right. So therefore, we asked the DNOs and said please can we have a specific clause that says that we’re not counting towards P2 demand, group demand, don’t do the reinforcement for M-1, M-2, we will accept the lower security supply and arguably I’ll agree that it’s the right thing that has been done.

03:32:58 – Pete Aston

Yeah, I think from a just an industry point of view, having that in is probably a good thing, because it’s going to mean less costs for connecting battery storage customers, less costs for bill payers overall, and that’s probably a good thing. I think this particular thing that we’re talking about is then how it gets applied, because theoretically ETR 130 was only applied to new schemes, so it wasn’t retrospective to every accepted battery scheme in the kit.

04:07:29 – Philip Bale

No, and the specific wording, which is a little bit vague, is a variation. So, if you have an accepted scheme that was accepted before that didn’t have this clause in there and if you then make a variation to that offer, then the DNO is within their rights to add in the ETR 140, or the EP 130 clause, or EREP 130 clause in there.

04:34:49 – Pete Aston

Lots of different names – they keep changing.

04:36:29 – Philip Bale

Absolutely.

04:36:48 –Pete Aston

It’s 130.

04:37:46 – Philip Bale

Which basically means, at that point, then, that you accept a lower security supply to avoid the network reinforcement of the network, some of which you didn’t trigger, other people may well trigger in the future.

04:49:22 – Pete Aston

Yeah, and so the key there is what defines the variation.

04:57:00 – Philip Bale

Absolutely, and this is the reason for this podcast is that, we saw a technical limits offer that came out for a customer at the time had the option of accelerating the connection under technical limits by one year and, fairly deep buried in the T&C’s, talked around peppercorns and around giving up the ETR130 clause that was in there, so effectively accepting a DSR, and this is one that I felt was particularly wrong. We have gone back and raised and said that we don’t think it’s the right thing to do because we don’t think that a technical limits offer, which is ultimately an agreement between the customer and NESO to allow an earlier connection to make use of headroom on the network that’s there already, constitutes a variation of the distribution offer, or especially not a significant variation. But unfortunately, in this instance, the DNO is taking the option of clawing it back and effectively ensuring that any customer that wants to have technical limits within their offer has to give up their security supply, which I think the key thing is that the right thing to do or not? Is that an appropriate variation?

06:15:22 – Pete Aston

Yeah well, I think just before we talk about that, the implication for that customer, or for any customers who have this, is your current offer, which doesn’t have technical limits. So, you can’t connect until transmission reinforcement works are done. But your distribution access is whatever it said in the offer in the first place. You know, probably you’re going to stay on for a first circuit outage, probably. You might even stay on for some N-2 outages, as well. Whereas you then accept the accelerated connection under technical limits, but you can now get turned off for literally any DNO outage.

06:56:31 – Philip Bale

You are writing a blank check in the connection agreement.

06:58:43 – Pete Aston

And you don’t know what that is going to look like.

07:00:01 – Philip Bale

The key thing is how that could change in the next 10, 15, 20, 25 years, and that’s the big unknown.

In discussion with this and conversations with the DNO and the DSOs, they said ‘but we wouldn’t use it in that way’ and I said ‘well, that’s great, just quantify when you are planning on using it, when you’re not going to use it and the impacts from the customers’. And ultimately the answer has come is we’re not going to do that. We’re going to say that if you accept this technical limit offer, then ultimately you’re giving up that right. And the bit that was really bad for this one specific scheme and customer is that I think it’s incredibly likely that under CP2030, the scheme could potentially come forwards anyway, which actually means that they wouldn’t ever need to use the technical limits offer. But having accepted the technical limits offer, they’ve given away that right in perpetuity. And I get the reason why the DNO wants to do it, because it helps them prevent doing reinforcement that they may feel isn’t appropriate at the network point, and it’s consistent with what they’ve done with everyone else.

The key thing for me is, is it a raid on terms and conditions at the later stage.

08:17:05 – Pete Aston

It sort of feels like it is a little bit and it feels like if it isn’t really explicit in the variation about what the implication is, that quite a lot of customers could miss it, and I think that’s probably one of my concerns is maybe more about how it’s presented rather than the fact that they want to do it.

If there was like big flashing lights going, if you accept this, this means your DNO access is going to get worse, and you could be turned off quite a lot. Think very carefully about whether you sign on the dotted line. You know, if it’s on page four and not very well highlighted and in fact, which customers really know what ETR calls ETR130 is really going on about? So yeah, I think perhaps some of this about the presentation of it as much as it is about the fact that they’re trying to do it. I guess if the rule says variation and doesn’t, ETO130 says variation and then it isn’t really quantified what that means, maybe I’ve got some sympathy that the DNOs feel that they can do it.

09:30:07 – Philip Bale

Agreed, and I think that’s ultimately there is that we were told that we were the only people who have raised this so far.

There’s obviously been a lot of people who have accepted technical limits offers, potentially not realising what they had in the first place and what they’ve given away.

What makes it incredibly difficult is it’s very difficult to quantify what’s the implications of giving up that ETR 30 access right that’s coming through and what that could mean to the scheme in the long term. But obviously the key thing is transparency over there. Personally, I think it is probably right that we’re not reinforcing networks for battery storage ahead of need where it isn’t actually needed, because battery storage isn’t factories and homes and schools and hospitals. But it is the transparency around it and I think the key thing for me is a technical limits variation, I don’t think is a valid variation. I think what we should do is have a time machine and go back before all of the battery storage schemes in came in to make it very clear what the access rights should be for battery storage. It’s something that should have been applied in P2 far earlier and now as a case of how, if people are giving up their ETR130 rights, having some level of visibility of what that actually means for their scheme, which means more transparency around how it will be used in the future.

10:55:13 – Pete Aston

Yeah, I mean, if these ETR130 clauses had been applied five years ago, say, and all new voucher schemes knew that that’s what they were getting in for, then they’d have looked at the implications of that at the time. I think bringing it in retrospectively, like this again maybe, is within the letter of the law.

But if it means that your annual availability goes down from, I’m just spit balling it, 90% availability to 60% availability, or even 90% to 85% availability. That’s still a change that wouldn’t have been factored into the financial modelling of that particular scheme and might still be missed all the way through to energisation.

11:40:04- Philip Bale

Absolutely, and we’re talking here potentially some of the key understanding is also is that will DNOs be pre-curtailing schemes in the event of an M-2 event as well, which could have very significant implications for things like tower restringing, tower painting, all of those sorts of things. So, I think it’s definitely something that needs a bit more visibility, and I think the key thing is that I would take away from this is – if you have accepted a technical limits offer, be aware of what it actually says. If you get offered a technical limits variation offer, be aware of your existing T&C’s and how this could change in the future.

12:15:48 – Pete Aston

And I think there’s a real decision to make to go, if technical limits will bring forward your connection date 10 years, yeah, that’s a pretty significant benefit, and so you might be prepared to accept a loss of DNO access as a result of that. If he’s bringing forward your connection 10 months, well, it’s probably not going to provide any benefit accelerating that quickly under technical limits, so the loss of your DNO access is then much more significant over the lifetime of the project.

12:50:22 – Philip Bale

And I think it also depends on which network that you’re connecting into as well if you’re an 11kV customer, a 33kV customer, a 132kV connected customer, and whether you’re on a radio network or a mesh network. It’s the understanding of what will the DNO do differently. Will they connect more demand up to that network before they then trigger reinforcement, which then means over time, what’s your risk implication? And I think that’s something that probably needs far more visibility and ultimately, each of the DNOs are probably going to do things differently. They’ve all at the moment got their own design standards and policies of what they will do and that can evolve in the future projects. So, people are signing up to things now that they will have no certainty of how it will change for the lifetime of their project.

13:35:42 – Pete Aston

And the way these non-firm clauses under ETR130 get implemented could change, couldn’t it from DNO to DNO, so it could be a sort of an ANM style scheme where they maybe get ramped up and down.

13:49:18 – Philip Bale

Or a straight interstrip.

Or just that or a turned off in the event of if this happens …

13:56:00 – Pete Aston

If this transformer goes out…

13:57:03 – Philip Bale

A control engineer could turn you off.

13:59:00 – Pete Aston

Or you’re on ANM but you’re not going to be. You know, you’re just going to be curtailed and not compensated for it, and you could just …

14:07:35 – Philip Bale  

Or a maintenance effect of I’m going to maintain that transformer so I’m going to turn this scheme off to avoid losing demand.

14:13:49 – Pete Aston

Yeah, yeah, it’s pretty significant, I think your words about look really carefully at the offer, the technical limits variation is really important because different DNOs will be doing things differently, because there may be some DNOs that aren’t even doing this.

14:28:42 – Philip Bale

I think there is. We’ve seen technical limits offers which doesn’t include this, and we’ve seen technical limits offers that do include this. So, yes, it’s very much a case of reading the fine point in the offer that you’ve got to understand the implications.

14:41:52 – Pete Aston

I wonder if there are some DNOs haven’t written it in the variation that think that they might still be able to do it, because that’s what ETR130 says.

14:51:16 – Philip Bale

Potentially.

14:51:20 – Pete Aston

Because they’ve done a variation, therefore they can apply this. So that would be interesting. Hopefully that hasn’t happened, because that’ll be even less transparent than putting it on the page four or something.

15:01:38 – Philip Bale

And that would be one for the lawyers?

15:20:31 – Pete Aston

Yeah, I think so.

15:04:36 – Philip Bale

Okay, so I think that’s probably wrapped it up for this one. So I think the key thing to take away is, if you’re getting a variation of any sort, especially around technical limits variation, be very careful around what you’re signing and I think, to all of the DNOs and the DSOs out there, I think I’d like to encourage a little bit more transparency around when you’re doing things, why you’re doing them and, more importantly, what will the impact for customers be, because that has a significant impact on the financial viability of projects, or it could do, and trying to understand and quantify that. Thanks, Pete. Thanks for your time.

15:38:40- Pete Aston

Thanks Philip.

15:38:45 – Philip Bale

Thank you all.