Podcast: Grid News and Views #18 – Part 2

00:00:00 – 00:00:10 – Kyle Murchie  
Hello and welcome to part 2 of our Great News and Views Connectology® Podcast. I’m Kyle Murchie and I’m joined again today with Nikki and Rachael.

00:00:10 – 00:00:11 – Rachael Eynon   

Hello.

00:00:11 -00:00:12 – Nikki Pillinger 

Hello!

00:00:14 – 00:00:57 Kyle Murchie

Right, let’s get into part 2.

The next thing that we said we were going to have a bit of a chat through was Ofgem’s end-to-end review. Again, another topic that feels as if we’ve had a good lot of engagement on before. We’ve also had a couple of conversations now with Alasdair MacMillan from Ofgem, and thanks again to him for those conversations; hopefully that’s been really useful to the audience.

We’ve now had the second consultation, which is now closed. So, wait, what’s the next step, what’s Ofgem planned? Are we waiting for the results of that consultation now, or are there already some actions being taken?

00:13:59 – 00:14:48 – Rachael Enyon Actually starts 00:00:57 and finishes 00:01:45
So I think both – there’s the kind of longer-term actions that the Ofgem are taking away and reviewing responses on, but there has been a lot of good progress in the meantime. So, there are some working groups and workshops that have been set up, and we’ve had a couple of good outcomes from those already. So, there is commitment from that
that the DNOs and NESO will each publish a register of accepted demand connections – so, we’ll start to get some visibility there. The proposal for that at the moment is that that would start at one megawatt and above, but there is interesting kind of a phased approach potentially to bring that further out to smaller projects, so that’d be good.
And there’s some kind of more broader workshops ongoing around what additional data the networks might be able to publish to support the connections process.

00:14:50 – 00:16:49 – Kyle Murchie   
Great, so really already some quite sizable steps forward to put those into action. I suppose it’s worth maybe noting as well that speaking to Ofgem as we have and filling in our kind of views to the consultation already, you know it’s not too late, there’s plenty of, you’ve mentioned those working groups, either directly or indirectly getting involved in them, but also Ofgem’s, I suppose open invitation for evidence; they’re very much looking forward to receiving evidence and they can then help them build the next steps. So, you know, where’s the low-hanging fruit, where are the biggest barriers, and I kind of working on them in parallel, trying to get everything closed off as soon as possible, realistically, between now and ED3 from a DNO perspective and probably even longer term from a transmission perspective. There are some things, to be fair, that have been outlined that will need quite a significant licence change if they were to be implemented and probably a lot of additional discussion on working groups, such as how reliability of delays are ultimately managed and the pros and cons of various different solutions.

So, if I remember correctly, some of this might not come into play until RIIO T4, which, you know, we’ve only just started T3. So, we’ve got quite a bit to go for that long-term plan. But maybe it’ll fit into the RESPs and the SSEP and the CSMP, all again, which are things to look forward to in the future.

But just thinking from our consultation response, is there anything that we want to call out specifically as something that we are really wanting to see as part of the kind of next steps?

00:16:50 – 00:19:21 – Nikki Pillinger   

I think one of the positive things from the consultations were that they were looking at kind of guaranteed standards of performance. These do need to be done quite consciously in that, you know, the DNOs can’t always have the resource available to make sure that these things are done in a certain time frame. So, it’s kind of done pragmatically to a certain extent; but I think there are certain things that could have more guaranteed standards of performance.

I think potentially one of the most interesting things was the kind of guaranteed connection date or connection window and specifically the timing around that. So, I’ve had quite a few conversations with kind of senior management within the DNOs, and they are open to this concept. But in order for it to be an effective means, the DNOs need to actually be able to influence it. So as an example, kind of giving someone a connection, like a guaranteed connection date when they get their connexion offer is completely meaningless. Because the developer, you know, you can have planning time scales that range from, you know, six months to three or four years if you have to go through an appeal and if you’ve got an EIA, if you’ve got a large project. So, we were speaking around kind of better ways of doing that and it’s kind of, would you have a milestone for, you know, or an energization window around like the later milestones,
which seems a lot more sensible. So, you know, when you have a construction plan in place, when you’ve reached financial investment decision, when you’ve got through detailed design, when you have a contractor on board, you know, when is it sensible to have that kind of that energization window available?

And I think that’s something that needs to be looked at really pragmatically. I know there’s the metric of kind of the time from offer to energization, which is used for small demand and to an extent works for small demand. But I think utilising that for large generation is just, it’s not going to work effectively. It’s going to, you know, it provides just a number; it’s a really easy number to come up with, but I don’t think it’s in any way a useful one because projects are so varied in their development and the time that they actually take to build, which is again, you know, spoken about this before, but why milestones are so challenging because projects are so diverse.

00:19:22 – 00:20:55 – Kyle Murchie  
Absolutely. And it’s worth kind of reminding the kind of listeners and viewers as well, that that consultation was really quite broad. It was great to see the breadth and the number of themes that it covered. I think for me, it felt that theme one is probably the lower hanging fruit, that was very much data and transparency focused. And of course, that’s absolutely what Often have started running with, with those working groups and trying to make those kinds of material changes in data.

It’s interesting, I don’t know whether it’s been influenced by some of those initial outputs, given that they came last year, but both potentially other DNOs have done the same, but certainly SSEN and UKPN have changed the level of granularity of the kind of data that you can see from a demand perspective. So, in some of the tools now, you can actually see kind of aggregated level of demand, but separated out between BESS related demand and non-BESS demand at each substation level, which is quite a big step forward from where we were certainly this time last year, and I think having a register will only improve that.

So, it’s maybe just flagging as well that either register that are being pushed forwards will be a big part of the solution, but then for a lot of general users, actually that information, the way it’s presented within various different tools will be quite key as well.

00:20:56 – 00:21:21 – Nikki Pillinger   
Yeah and I think it’s really positive as well, you know, like I said, I’ve been engaging with the DNOs and a lot of them seem very up for doing kind of pre-emptive work, you know, they don’t want to just wait for connections end-to-end review to come out and to be finalized, you know, they want to be working on these things already; they want to be
doing the best things for customers and putting in place things that pre-emptively where they can do and where they’re useful.

00:21:22 – 00:22:56 – Kyle Murchie   
Yeah, it’s a really good point that it’s very similar to what we’ve seen recently with TOs as well, both looking at what we’re doing right now to try and mitigate for the delays or challenges and complexities with offers, but also thinking ahead to, okay, what’s the realistic dates that we can achieve as TOs now from an infrastructure perspective?

Also, it’ll be interesting to see how all that flows into offers, and then the conversations that happen afterwards, but there’s definitely a greater expectation that projects that end up in the queue this time next year, let’s say, will be projects that are good to actually get built out. And I think that’s a very different mindset to where we’ve been in the past, where we’ve got almost a queue of unrealistic magnitude that makes it very easy to really not focus on any given projects, you know, each project is almost a number rather than being an actual deliverable piece of work.

So yeah, some positives, we’ve been optimistic, maybe it’s just spring that’s coming in and making us feel a bit more optimistic. Anything else anybody wants to pull out on the end-to-end review? I think if not, then we’ll probably just go into demand, which is quite a nice kind of stepping stone in from the end-to-end review and talking about demand data. So, what’s going on in the demand space? Rachael, I don’t know if you want to give us a bit of a summary.

00:22:57 – 00:24:27 – Rachael Eynon   
Yeah, well, we’ve had a whole other consultation from Ofgem just on demand. So, building on some of the points in the end-to-end review, but yeah, focusing specifically on demand and the three pillars around that – so, curate, plan and connect. And we’ve now submitted our response and that’s now closed. But there has again been some kind of verbal updates and movement that we’ve heard of since then. So, we put forward A Class Exemption proposal to exempt demand users from the requirement to have a transmission licence if they were to own a high voltage 400 or 275kV assets as part of their connection.

And while there hasn’t been an update on that as such, we have heard from NGET verbally that they are kind of willing to consider that on a case-by-case basis and that being a user choice, case by case, for connections that end up in phase two. So, they’re kind of saying, you know, for phase one, your design is essentially fixed as far as they’re concerned from a study perspective, or it’s a bit too late to be reconsidering that solution and that such, to such an extent. But for phase two is something they would consider, but that would be subject to Ofgem issuing a letter of comfort around that. So hopefully see some more updates there soon.

00:24:27 – 00:26:59 – Kyle Murchie   
Yeah, it’s quite an interesting space now because we’ve gone from, you know, go back what a year or so ago, very focused on reform of the generation and the storage queue, demands, okay, we’ll park you to a large extent, you know, either be, you’ll automatically a strategically align or embedded demand, you’re out of scope, to, hold on a minute, we now really want to look at how demand will interact with generation and storage. And I suppose it’s, you know, definitely been triggered as well by just that huge growth that we saw in demand queue, you know, going from what, 42 sort of gigawatts, T&D combined,
just over a year ago to also to kind of summer 2024 to summer 2025 being about 125 gigawatts – so significant growth driven by AI data center interest, hydrogen, and also just other large industrial decarbonization, so there’s going to be a lot to come on that, but we definitely don’t want a process similar to what we’ve just been through for generation and storage.

It’s maybe worth flagging that point, really, that the demands that we work with are, you know, they’re not in the energy industry. So, I think that’s a really interesting point of difference – you know if you’re a generator, you’re in the industry, you’ve probably got a certain level of general knowledge as a kind of minimum, and you’re also seeking to play in the energy market. Whereas for a lot of demand, that’s not what they’re there for; they’re there to, you know, they’ve got another product to ultimately sell or something to produce and an energy is, you know, this is a replacement maybe to gas, which is quite a different way of looking at it.

So, yeah, I suppose on that, and in terms of engagement, we’ve seen, you talked about obviously the consultation, we’ve got that Ofgem consultation demands and the working groups that come from it. We’ve got DESNZ involved as well from the straight demand perspective, we’ve also got the information request notice that went out to demands. It may be good to just explore a bit more about what are those, who is it, who are they intended for, when the responses need to come out, because there’s quite a lot in there to unpack.

00:27:00 – 00:28:28 – Rachael Eynon   
Yeah, plenty, all with very similar deadlines. So, we have the IRN or the information request notice, which has come out from NESO; so that’s a follow up from the CFI or call for input that went out at the end of last year, So essentially targeting a similar group and that is kind of broadly across demand users at the moment. So worth noting that that has gone out to Gate 1 customers as well as Gate 2, and our understanding is that that includes demand. We would expect the focus to be on data centers, but it is demand more broadly, and LDES are also included in that. What we aren’t quite sure of at the moment is whether storage should or shouldn’t be in there. I think we’ve had some notifications go out and, in some cases, not in others, so still need to clarify that.

But that’s looking for more detailed information about the progress of the project, what kind of financial commitments they’ve made so far and the kind of financial forecast, I suppose, for that project and progress against milestones, both to date and also where they expect to be within the next six months or 12 months – so needs a lot of detail in there. And as you say, Kyle, a lot of these customers won’t necessarily be as familiar with the connections process and there’s a lot of questions in there around user self-build and whether the customer wants to take on any of that build themselves. So yeah, lots to consider in there for a project developer.

00:28:29 – 00:28:31 – Kyle Murchie   

And importantly, it’s not optional, is it?

00:28:32 – 00:28:39 – Rachael Eynon   
No, no mandatory response to that due in on the 13th of April, so not long to go on that one.

00:28:40 – 00:29:23 – Kyle Murchie   
Which is really quite challenging because, as you say, from the type of customers and who it’s going to, particularly as it includes Gate 1, as well as those that are already kind of progressing to Gate 2, it’s quite a broad request. So, it’d be really interesting to understand how successful, what the success rate is and whether there’s another way of going around it because I think everybody wants it to be successful in terms of getting the right information to the right individuals and have that transparency. But I think it’s going to be quite a tough, well, I’d be very surprised if, you know, if we get to 80, 90% of those that it was sent to responding.

00:29:24 – 00:29:25 – Rachael Eynon   

Yeah.

00:29:26 – 00:29:29 – Nikki Pillinger   

Very tight time scale and very little clarity on who actually has to do it in some instances is not ideal.

00:29:30 – 00:29:48 – Rachael Eynon   
Yeah, I think we could end up with quite a broad range of quality and response as well. I mean, you can appreciate for a Gate 1 customer, they maybe haven’t thought that far into their development yet. So being able to comment on kind of full financial scope of the project or milestone progress might be quite difficult at that stage.

00:29:49 – 00:30:32 – Kyle Murchie  
Absolutely, and I suppose then that can lead as well into there was that kind of wider strategic demand and kind of DESNZ input, because we’ve therefore got quite a lot of talk about demand, whether it’s demand Connections Reform or strategic demand, whether we need to be consulting on how demands managed, lots of different aspects, but not only it being led by the DNOs or NESO, we’ve now also got Ofgem and DESNZ kind of independently coordinated, but running separate sessions. So, where does where does DESNZ fit in then?

00:30:33 – 00:32:46 – Rachael Eynon   
Yeah, so there is some proposals put forward in DESNZ as a strategic demand consultation. So, responses for that are due, I think, a couple of days after the IRN, so on the 15th. And that kind of builds on some of the proposals we saw in Ofgem’s consultation and maybe focuses a bit more on how those changes might be implemented if they are taken forward. So, it’s quite clear in there that they want to use the PIA powers, I can’t actually remember what that stands for, but it essentially would allow them to direct those changes to wherever’s required, whether that be code or methodologies to implement the changes quickly.

So, I guess we might see these changes come into play more quickly than we did for the kind of baseline Connections Reform proposals, because they won’t necessarily have to go through a full modification process. But there’s some proposals in there around increasing the queue entry and membership requirements, so that might be a kind of enhanced readiness requirement.  We’ve then also got kind of introducing a kind of designation or strategic project process, so, government would create a strategic plan and within that you’d have a list of demand projects that would be considered strategic demand projects. And it would then be on NESO to consider these as designated in the connections process. So, we can come back to that when we chat about the methodologies.

But then there’s also a third proposal in there to introduce a form of strategic alignment for demand. So that would be having some kind of regional targets, as we saw with the CP30 national and zonal targets, specifically for data centres to look at where they are deemed needed.

But important to note that those aren’t all kind of immediate proposals. So, we might see some of those within between now and the 434 process going live, but some of them will not take place until the next window potentially. So that strategic alignment piece we could see coming in later on down the line.

00:19:47 – 00:19:53 – Kyle Murchie

Thank you very much, Rachael. Thank you very much, Nikki. And thank you very much for everyone else who stuck with us and listened to the podcast. See you in the next one.

00:52:08 – 00:52:09 – Nikki Pillinger   

Thanks, bye.

00:52:09 – 00:52:10 – Rachael Eynon   

Bye.