There are positive changes coming as the UK’s energy systems transition to net zero by 2050. As the future of low carbon leads the way for a more efficient and dynamic energy system, Ofgem are bringing forward proposals to remove barriers to connection and protect current and future consumers.
With new technologies such as EV charging/heat pumps and the need for more generation such as wind and solar for storage, the final decision released by Ofgem on their Access Significant Code Review is intended to support the UK’s energy systems.
The Electricity Networks Access Significant Code Review will propose and implement changes, from April 2023, to the way our customers access and pay to connect to networks. Where connections require reinforcement (upgrades to existing network infrastructure) to facilitate them, Distributors currently charge a proportion for the assets that require reinforcing. This makes the cost of electricity connections for some commercial and housing developments expensive and in some cases prohibiting them from even getting started.
Demand connections will see a significant decrease to charges, with the reinforcement associated with providing the connections no longer being charged. Generation connections will also receive a reduced connection cost with their contribution to the reinforcement associated with their connection limited to the voltage at which their connection is provided. This may open up the opportunity for the efficient and economic connection of new developments, especially where EV Charging and Heat Pumps increase capacity required.
In some exceptional circumstances both demand and generation customers will be required to contribute to the cost of reinforcement. One such circumstance is where sites are deemed as ‘Speculative Developments’. These sites will be required to pay in full for the reinforcement triggered by the requested capacity; in addition to ongoing operations and maintenance costs. We are working to ensure that the consistency and wording of Speculative Developments will be amended to better clarify and provide consistency across DNO’s.
Ofgem are also seeking to introduce a high-cost cap for demand connections in relation to the cost of reinforcement. In practice this will limit the distributor’s contribution to the reinforcement at £1,720/kVA for demand connections and £200/kW for generation connections. This calculation will be based on reinforcement assets provided at the same voltage of connection or the voltage above the connection.
Overall, these changes mean that the energy industry will be geared towards investing in networks and distributors can begin to plan and fund reinforcement based on future expansion, meaning customers are able to connect more easily and plan with clear timescales.
We will be monitoring the proposals and implementing the changes as they are made and communicating to our customers the best practices and how to benefit from the latest changes. If you have any questions then please get in touch with our Regulation team, who are fully engaged with the development and implementation of these changes, on Regulatory@gtc-uk.co.uk