The Minimum Scheme is the grid connection design that provides the required capacity at the lowest overall capital cost, as estimated by the Distribution Network Operator. It has its nuances though, and grid connection offers need to be examined carefully.

Article by Pete Aston – acknowledged expert in networks

Pete joined Roadnight Taylor from Western Power Distribution, the UK’s largest DNO, where he was Primary System Design Manager. He led a team of sixty responsible for all connections to the extra high voltage network, as well as leading WPD’s interaction with National Grid (NGET and NGESO) at the transmission/distribution boundary.

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13th February 2023

When a Distribution Network Operator (DNO) prepares a grid connection offer, the design they use must meet the criteria of what is called the ‘Minimum Scheme’. Sometimes this is referred to as the ‘least cost scheme’. This article explains what is meant by this and how it affects the cost of the connection.

The phrase Minimum Scheme is defined in the same way in Section 5 of the connection charging methodologies of each of the DNOs:

“The Minimum Scheme is the Scheme with the lowest overall capital cost (as estimated by us [the DNO]), solely to provide the Required Capacity.”

It sounds simple enough, but it contains a lot of nuance. The first thing to point out is that the Minimum Scheme does not mean the lowest cost to the connecting customer. It means the lowest overall cost.

But what assumptions has the DNO used to estimate the various elements of cost in the two options? In Option 1, if the reinforcement works have been inflated, then it would distort the comparison in favour of Option 2. Equally, if the network extension works in Option 2 have been under estimated, it would make Option 2 look more favourable than Option 1.

One assumption that DNOs sometimes make is to be too optimistic on the assumed cable routes. The DNO might assume an almost direct route across fields from the site to the point of connection (POC) to give a very low predicted cost (to favour that option), whereas in reality a road route might be more likely. DNOs therefore sometimes need to be challenged over the assumptions they have made.

The situation may require additional scrutiny following the implementation of the Access and Forward Looking Charges Significant Code Review (SCR) on 01 April 2023. From this date, generation connections will only pay for reinforcements at the same voltage level they are connected to, and demand customers won’t pay towards reinforcement at all.

This means that reinforcements of transformers or circuits at higher voltages which are currently funded to some extent by connecting customers, will be fully funded by DNOs. Connecting generators or demands to a higher voltage level will therefore remove reinforcement requirements on transformers, or will cause generators to contribute to the reinforcement at the higher voltage levels.

Whilst no one is anticipating DNOs to deliberately manipulate the costing of options in their favour at an institutional level, there will clearly be a temptation to offer new connections to higher voltage levels than is necessary. This will need careful assessment of connection solutions provided in offers, with a need to sometimes challenge the DNOs.