Repurposing Transmission Connections

00:00:26 – Kyle Murchie
Hello everyone and welcome to the podcast. Today, we are talking about the repurposing of transmission connections. I’m Kyle Murchie and I’m joined with Philip Bale and Catherine Cleary.

00:00:38 – Catherine Cleary
Hi Kyle.

00:00:39 – Philip Bale
Hi.

00:00:40 – Kyle Murchie
So, there’s a lot of change happening often in the industry, as we know, and as our other podcasts cover. So, with that in mind, what we wanted to do is just give a bit of an update on where things are and some considerations if you have projects now, and are looking to maybe make some changes either now or once, the new, TMO4+ process comes into play; as we said, that will change, but this gives you a bit of a good just kind of starting point.
So, who wants to kick off?

00:01:09 – Philip Bale
I think I’ll kick off if you want.

I think probably just for setting the scene, so if we go back ten years maybe, maybe even less, traditionally transmission connections, we’re talking about very big generators, we’re thinking about really big industrial commercial customers often what we classify as dirty demand in terms of big manufacturing sites of steelworks, aluminium smelters, those sorts of things.

And now we’ve got a variety of different connections. We’ve got people that have got generation projects for renewables, for the solar, for batteries, we’ve got far more people for hydrogen looking at connections, that have got connections, we’re seeing far more in the data centre space and other connections looking at transmission. And one of the things that people are often starting to ask us, is around repurposing those connections; either people that have got existing transmission connections or people that’ve got connection offers for schemes and obviously think this is a chance, isn’t it, for all of us to go through, as there aren’t an awful lot of rules at the moment – there’s unwritten rules, I think we’re going to get rules that coming out very shortly, and what will be allowable and what isn’t. And then at which point we can go through and talk about what we think they’re going to be and what’s good practice and what’s not, specifically focusing on final demand and non-final demand and generation sites.

00:02:20 – Catherine Cleary
Yeah. So, I suppose I completely agree Philip, that I mean even not going back as far as ten years, but just, you know, really up until the very recent sort of, you know, last 6 months, 12 months, there’s been a huge amount of flexibility. And effectively, it’s always been a kind of bilateral conversation with the ESO to say, you know, I’ve got this contracted scheme, I’m thinking of making this change, you know, what’s the best way to do that? Traditionally it’s been a Mod App, but whereas in the distribution space, there has been this concept of allowable changes and material changes, you know, the idea being an allowable change, something you can submit in your application, but you don’t go to the back of the queue, you just get a reoffer based on that sort of slight change. Versus a material change where again, it’s the same process – you’re still physically submitting the same form, but very importantly, you are taken out of the existing queue, everyone beneath you is considered and you are kind of added back into the bottom of it when the DNO restudies that connection, and that concept, I think, you know, was really lacking at transmission. So what used to happen, you’d submit a Mod App, and, you know, you would, if you were going from, you know, a wind farm to a wind farm plus solar or something like that, you know, you would be sort of, you know, taken out of the queue, as it were, and then put back in, in your existing position and restudied.

So, if you weren’t changing your TEC, you know, you could be fairly kind of confident that things like your connection date, your enabling works weren’t going to change. And I suppose, you know, there are two things that have happened. I think one is the industry awareness of this fact has increased, and people have said, that’s not really fair. And also people have been trying to do it an awful lot more; so I think the number of Mod Apps that we’ve seen, which have included technology change, technology additions, and I think now in the last recent months, people were trying to do some pretty weird and wacky things. You know – hi, I’ve got a battery, but could it maybe be a data centre? You know, like they’re starting to be less plausible conversations, aren’t they; I think so, so we’re really supportive of the need for, the formalization of a policy at transmission level that talks about what is an allowable change. But they’re going to use slightly different terminology, is that right Kyle?

00:04:24 – Kyle Murchie
Yeah. So they’re looking at using, basically defining what significant and what’s minor in terms of level change and because of the new process; so originally if you’ve looked at the annexe that came out as part of the CMP434 consultation.

00:04:39 – Catherine Cleary
Who hasn’t?
I have not looked at all of the annexes!

00:04:44 – Philip Bale
A great read.

00:04:45 – Kyle Murchie
A great read, yeah.

Well actually, majority of the table needs to be redrafted now anyway because it talked about, you know, making a change between your initial Gate One position to Gate Two. Then if you were between Gate One and Gate Two and then once you were, you know, had achieved Gate Two and making further changes. Then with the whole Gate One concept now no longer mandatory, that will have to be altered.

Just a note that while the term ‘significant’ is being used it has been challenged. It might not be the legal wording that ends up being used as part of the legal text. But that’s what you’ll see at the moment.

To help, the ESO did provide some initial draft of guidance and some examples, but the examples I would say were pretty simplistic starting point, really important starting point; but they were pretty simple looking at offers that were single stage, single technology, moving to another technology, or a coal plant, for example, looking to make a change to a solar farm, and really, they’re just highlighting well, in those cases, it’d be significant because…

00:05:54 – Catherine Cleary
Because they need to restudy it.

00:05:56 – Kyle Murchie
Yes.

Because it’s a completely different technology type, it can be dispatched a different way. What we didn’t really get into is what if you were, you know, had a two-stage project and you were looking at solar and battery and you were now looking to change the battery into a longer duration variant, for example, or as you mentioned around using that demand for something else, whether it was hydrogen or datacentre, etc. And that’s the sort of detail that probably most projects are looking at. But at this moment in time, it’s the founding principles that are there, and once they get updated again with the new reformed process, as that gets defined, then the next step will be that important guidance.

But I suppose the important bit there is, it is still going to be guidance. So even in the initial drafts it might give example scenarios, but it will come down to some level of rational conversation because they can’t cover everything.

00:06:52 – Philip Bale
No, which I think makes sense, and that’s what we tend to see in the distribution world, is that broadly, there is agreement on what’s allowable and what’s not. I wouldn’t say it’s 100% followed, all of the time – there’s every so often some rogue agreements that come out that look like they’re a little bit of different to the guidance.

But I think it does make sense, at least has a really clear starting ground.

00:07:11 – Catherine Cleary
Yeah.

00:07:13 – Philip Bale
And also hopefully for existing transmission customers, they can then make much more informed decisions as to how they want to leave their assets, what’s the boundary, what things they could consider and couldn’t consider, and then make well informed decisions. It’s in the interest of GB PLC.

00:07:27 – Catherine Cleary
I guess, is it worth us talking about the fact, perhaps like the reason why we’re doing this podcast, because we’re sort of telling you that we don’t know yet what the future, exact policy will say. But there are a number of potential changes that people, I would say on repeat, have kind of come to us to ask about, and there is beginning to be a bit of, agreement about those.

So I guess I was just going to throw one example out there, which is, battery connection, so customers who’ve had offers accepted that were studied, you know, perhaps a couple of years ago, and they’ve got a storage connection, so they have import and export and they are looking to change the import capacity element of that. They’re saying, right, well, you know, if I had perhaps battery and solar, could this now be solar and some form of final demand, and the kind of rationale that often the customer’s thinking is – well, you told me that you studied my battery, as you know, potentially continuously importing or continuously exporting, so presumably that means whatever I change it to, you know, as long as I don’t change my TEC and my demand capacity, I should be good, right, a restudy shouldn’t change it?

And I think that we’ve kind of had to go back to challenge that assumption, to say, actually, there are two things that definitely potentially do risk your connection date and enabling works there. One is the fact that we have changed, the ESO and TOs have changed the way they study batteries. So everyone, even if your connection was originally studied as being a kind of, you know, 100% capacity factor type, simplistic battery arrangement, it has since been restudied, and all of the good work that’s being done on the transmission works review, you know, takes into account those winds, so that capacity has effectively already been reallocated, and you can’t now change your technology type and dispatch at different time and expect there to be no impact – that’s definitely my view. And the other point, is moving from battery demand to final demand.

00:09:19 – Philip Bale
A hundred percent, yeah.

It’s also around the level of security supply that people weren’t expecting there to be multiple bays, but we have had people coming and saying, well, if I have two battery projects at the same project, can I reutilize both of those bays and add them together? And yeah, I mean, it’s regulatory as much as anything in terms of going through and doing it. And there again, common sense on the distribution model is designed to stop people doing what people are arguably trying to do, which is coming in having an option, fairly grey option, developing it to a certain degree, reserving their position, then transitioning to something completely different whilst retaining their queue position.

I think that’s ultimately where we are with transmission now, of rightly so, people saying if you can’t develop what you applied for, you can reapply, but it is at the back of the queue, you relinquish your position, the assets that you were reserving – and it does make sense.

00:10:11 – Catherine Cleary

And I think it also helps counteract the trend that we see for people associating a queue position with a kind of effectively monetary value of the project. So saying well, I bagsied my place in the queue and therefore this has value, even if it’s for a battery project, and I don’t think that, you know, perhaps the market is not going to sort of support that level of battery projects in the future, but that’s fine, I’ll just sell my grid offer basically, and I’ll make back some money off that. And that kind of assumption perpetuates the behaviour where people want to get in the grid queue because they think, you know, this, this has a value and a space. I suppose, you know, we want the message to be really clear from the ESO to come back and say, no, actually, your queue position has a value for the specific project, the specific technology that you applied for, it doesn’t have a value. You can’t, you know, you can’t just flip it to someone to build something else out, otherwise we might as well basically start just auctioning off grid capacity.

00:11:04 – Philip Bale
Yeah. And I think there is a slight difference, though, between people who have, applied and got a contractual position versus also people who have got physical assets that are currently there. And I think that’s one of the things that also is going to need some guidance in terms of what can be done, what can’t be done, and also the slight differences that we see at the different TOs across the border is obviously, if you apply for a final demand connection in England and Wales at the moment, you will get a 132, 33, 66 connection point. You won’t have a 400 kV bay, whereas if you do it north of the border up in Scotland, we are seeing for some of the final demand sites where you are getting 400 kV bays, and I think there again, I suspect we probably won’t get some consistency there because they are different TOs. But I think that’s one of the things that will be interesting to see, especially for England and Wales, and especially people that have 400 kV bay connections at the moment; another reason why they don’t end up with final demand sites as well.

00:11:58 – Kyle Murchie
I think one of the differences there around the kind of Scottish arrangement that’s being offered is that, yeah you get 400 kV bay, but that 400 kV bay is built at your site, you’re not owning any other transmission assets in terms of circuits, etc. So, I think there’s a slight variation there, but it’s a really good point that we’ve also arrived at that scenario via individual TOs doing those assessments.

We are aware that certainly TOs are looking at demand strategies, and that will also flow into this discussion around what would be a allowable change. As we said earlier, if you’ve got a power station or, you know, like a power station contract or directly connected power station contract, then to try to move that final demand, you’re now actually changing your BCA type rather than simply altering the TEC or the capacity within that agreement.

00:12:49 – Catherine Cleary
I think that’s a really important point. I don’t know to what degree, the wider industry is really aware of that because perhaps people, you know, who have been really familiar with the generation world probably never really seen those kinds of types of agreements. But yeah, a BCA, you know, your connection agreement with National Grid, you know, most parties will be familiar with, you know, the front page which says this is a directly connected power station, irrespective of what every kind of generator connected has, and actually, a demand customer, like a data centre would be classed as what’s called a non-embedded customer, you know, so that kind of format of the legal agreement itself is different.

And I have had some discussions where recently the ESO has come out to individual customers and said quite clearly, if you want to change, you know, your battery to, you know, a data centre, yeah firstly, we’re going to need to restudy it, obviously, we’re going to need to look at the assets that are required, you know, it might need two bays for example in the substation. So it might really fundamentally change your connection date and your works. But more importantly – you are going to need to reapply to us, this cannot be done through a Mod App, and I think I kind of support that because that’s quite consistent with what we’ve always said in the past; if you are changing agreement types, it’s a new application, kind of makes sense. And I think from their perspective, from a process point. But it’s really important, you know, in today’s context, you know, where as of kind of yesterday’s announcement, new applications will be given, you know, only kind of these indicative, stage one offers, whereas a Mod App, you know, can carry on getting a full offer. It’s really important, you know, is it a Mod App or is it a new application, even if both of them go to sort of, you know, the back of the queue, as it were, there’s still a difference for customers.

00:14:21 – Philip Bale
Another thing that I’ve had is, I had a conversation with someone that was looking at a site that had a non-embedded final demand site with the view of, well, let’s just make this connection four times bigger and then turn around saying, well, actually, I’m not sure you’d end up with the same technical solution. And you have to consider everything else in terms of wider, bigger picture of actually, if you’ve got a site and it’s going to become significantly different, the connection may look completely different; so I think there is an element of anyone that’s going through and looking at a connection, whether it already be final demand, or an existing sort or thermal power station or a contracted position for a battery, to really consider what they’re trying to do and what the most likely outcomes are going to be even before we end up getting the formal guidance.

00:15:05 – Catherine Cleary
Yeah, do you mean like, outcome in terms of the physical electrical design solution and how many bays, how many circuits back to it? Yep.

00:15:13 – Philip Bale
And where you’re connecting to it, it may not be the same geographical location that you previously had a connection at, if that site is already full and it’s not appropriate to amend it.

00:15:20 – Catherine Cleary
I mean, I think basically it’s probably pretty true to say that it turns out in a grid that is this oversubscribed, accommodating final demand connections in an SQSS compliant way, is really quite challenging.

00:15:32 – Philip Bale
Yeah. I think it often depends on, and there again of it all depends on the assumptions that have been made around battery storage and whether again, are they a help or a hindrance and what are they doing. And we may find a scenario that if we do end up with as much intermittent generation and as much storage that we expect to be there, and when they are charging, when are they discharging, the pinch points may end up being very different. I mean, if you think about a off gas electricity network, sometimes the peak demand can be at 3 o’clock in the morning when electric heating, storage heating kicks in. And that’s the design that you go through, we may find the transmission network with very different demand flows, and some of the final demand sites we’re looking at, like data centres will, might have an influence on that.

00:16:15 – Kyle Murchie
I think just on that design factor, you know, if there’s people out there thinking, well, I know what a, you know, a 500-megawatt battery would look like, single circuit connected into 400kV bay, you know, that same scale as a final demand, you could be looking at three circuits, or even four circuits. And as I said, a connection in a 132kV with a new, 132kV substation built, which also has an impact as well on what your current bay ownership status is as well.
So I think something that was also really interesting as well on the concept of the two different types of BCA, is that, what as we have discussed it internally and will continue to do so, but what if you’re in a situation where you are a final demand customer now you’ve progressed for the projects like that, but you are, you know, building out a hydrogen or data centre, etc. but you will need to have some sort of generation or storage on site in the either now or in the future.

00:17:09 – Philip Bale
Yeah.

00:17:10 – Kyle Murchie
How would you manage that? You know, is it realistic to have two BCAs for one connection point, as a banked connection, you know, you could see that would be a possible route, but not necessarily the most efficient. But if you did combine it under the current approach and the current rules and the way that those are set out, they’re not designed to cater for, you know, one is not designed to cater for TEC, and the other is not really designed to cater for the final demand.

00:17:37 – Philip Bale
And also considering what application you’re making to what outcome it will have. So there again, if you are applying for a final demand site and you want to have generation, do you do it now knowing it might hinder your application because of a delay around the generation side of things? Do you do it in the future not knowing whether it’s going to be allowable change? It’s quite a grey area, but hopefully we will have some guidance, and that guidance will consider that as well. Obviously, the guidance can’t go into every scenario, but hopefully some common sense will apply. That means that you then can’t do the things, which makes logical sense.

00:18:06 – Catherine Cleary
I think, yeah, on the one hand there does need to be common sense, but I think there is a danger in saying, you know, okay, trying to sort of be the judge and jury and say, well, this scheme feels like it’s majority, you know, demand. So we’re going to give it a demand connection agreement, and I think, you know, the actually issue there is, well, hang on a moment, if you’ve got a customer that’s applied for some TEC, you can’t give them a connection agreement that doesn’t include TEC; you know, that TEC capacity. You say there are some really fundamental kind of legal implications from the CUSC, I think do you need to be considered, and we are seeing a bit of an issue there, that perhaps the ESO has kind of taking a view to say, well, all these customers feel like they’re in this group. And I think it does need to be really clearly tied back to what people applied for, otherwise, we’ve just kind of, you know, written roughshod over CUSC.

00:18:54 – Kyle Murchie
Yeah, because it needs to be sorted out now from a, you know, build-to-build point of view in terms of being able to get the investment required and then making sure the legal text is all robust enough, but then even thinking ahead towards then end compliance would be extremely difficult if you actually have TEC and a generator on site, but your final demand, your following final demand guidance, that would be.

00:19:15 – Catherine Cleary
Yeah, very problematic.

00:19:16 – Kyle Murchie
At the moment, they don’t, they don’t align.

00:19:18 – Catherine Cleary
I mean, I think in terms of sort of strategy it probably is in everyone’s interests, i.e. both the connecting applicant and the ESO and TO’s interests for sort of all elements of the project to be defined as early as possible at the application stage? Because you mentioned Kyle, I was quite interested, you know, that the kind of guidance that the ESO has come out with so far in terms of what would be significant changes, or sort of, you know, permitted changes. They are quite simple examples and they don’t include things like staged connections, you know, whereas from the work we’ve done, you know, a lot of the customers we work with, you know, they do have staged connections because they’ve, you know, they’ve gone in for perhaps battery, which they can deliver first, and then there’s some solar that comes on, there might be some wind that’s kind of further down the line, and so you’ve got kind of stage one, stage two, stage three of this connection; some of them might be non-firm.

And I think now we’re seeing the challenges associated with the fact that maybe when that offer was issued, there wasn’t a huge degree of scrutiny to say okay well here’s your TEC at each of these three phases and here are your restrictions on availability. But they didn’t actually ask what are you building, you know, so seeing like is your TEC you know, you see your sort of installed capacity effectively, is that well defined per stage, if it’s wind and solar and storage have you defined how much of that is each one of the, you know, really kind of basic things, I guess we sort of think, well, that’s there should be a single line diagram that goes with that. But then looking back and seeing that actually people got staged offers without having to provide staged single line diagrams. So the more detail that you can kind of pin in as the baseline, the easier it will be, I think, for everyone to administer these kind of, rules regarding what the kind of future changes are.

00:20:52 – Philip Bale
I mean, I think agree that in terms of the transmission, unprecedented levels of connection applications, which means the connection offers that have come out from being tens a year to multiple hundreds per year in terms of coming through. And obviously that’s had a unintended consequence of the same information isn’t necessarily in there. And I agree with you that now a lot of these applications look far more complex than you would see on a traditional transmission scheme that’s going through. So then, yeah, there probably does need to be a retrospectively of let’s clarify exactly what you’ve got each different stage to go through to make it abundantly clear and re-benchmark.

00:21:27 – Catherine Cleary
I think it’s that clarification, so in my mind, I do see a difference between someone who is saying, you know, this project isn’t going to work for me anymore. I want to kind of try and turn it into something else that I can sell to someone, you know, kind of a bit of a complete U-turn on technologies or so on versus someone who’s saying, look, this is actually what I intended when I applied, we just didn’t do a particularly good job of documenting that; so we want to clarify what is in each stage. And I do really want us to set up an environment that encourages people to do that rather than sort of say, oh no, hang on, maybe if you, you know, your clarification might lead to your project being sent to the back of the queue, so I guess that’s like quite a narrow, delicate line to walk, isn’t it?

00:22:03 – Kyle Murchie
We probably need actually going forward as maybe to split out that term stage because really, as we’ve just been talking there, the stage could mean one thing and one technology connecting to one bay, but stage in terms of TEC actually coming online all the way through to a different technology per stage, potentially a different technology per stage, connecting to a different bay, you know, therefore you’ve got TO implications as well, where do your works actually finish, you know, your works will finish on stage one, or they might finish on stage 3 or 4, which that level of complexity just means that that term stage just probing captures far too many things, making it really difficult even going forward in the near future where you’ve got milestones based on each stage, based on the Gate Two date or Gate Two acceptance date for each stage, actually, that could become quite muddy for certain project types, the more complex ones.

00:22:55 – Philip Bale
And obviously all of this comes at a time when the ESO and TO are busier than ever, and starting to the level projects that transmission level. So it is still going to be very challenging for them to go through and do these level of clarifications. I mean obviously they need it because it makes sense for everyone to know what they can do, what they can’t do, what are the black and white, where are the grey areas, what is clarifications? But also been doing that at a time for lots of projects, when some of them are going through into construction and more of them will be going through into construction, it’s challenging times still.

00:23:28 – Catherine Cleary
Yeah, definitely. I guess, you know, there’s really a precedent that’s been set in the DNO world, isn’t there, in terms of getting, say, I think we know what the format of good allowable changes guidance looks like. So I suppose that helps, but yeah, definitely a bit of work still required.

00:23:41 – Philip Bale
We’ve also definitely seen some of the challenges in the DNO world where that clarity hasn’t been there in terms of taking care of the transmission terms, but levels of install capacity versus export, whether it’s in megawatts or MVA and things like that. We’ve definitely seen the complications on projects that have gone from being high level designs to varied many times with the formal documents not going through. So, I think it’s us taking a lot of the knowledge that we see from schemes that are going through development and build in the DNO world, and then saying, this is what the best practice for transmission should look like in order to try and avoid some of those very awkward conversations at a later stage.

00:24:19 – Kyle Murchie
Perfect, well I think that brings us to a nice close. So thank you very much for joining me today. And yeah, do stay tuned because there will be further updates in the next, and next few, but hopefully the next few months if you don’t hear from us before then, you know, things have been delayed. But, yeah, we look forward to see you in the next one.

00:24:36 – Philip Bale
Brilliant.

00:24:37 – Catherine Cleary
Thanks Kyle.

00:24:38 – Philip Bale
Cheers.