The Energy Transition | Great British Energy to partner with The Crown Estate

This week we look at Great British Energy's partnership with The Crown Estate, the ESO's consultations on code modification proposals for grid connection reform, the UK government's response to a recent Capacity Market consultation, and the government's new Onshore Wind Industry Taskforce.

Great British Energy launches partnership with The Crown Estate

The government has announced a new partnership between Great British Energy (GB Energy) and The Crown Estate, a public company that runs the British monarchy’s legacy portfolio of land and seabed holdings, to accelerate the investment in and development of renewable energy projects in the UK. The government has also introduced The Great British Energy Bill and The Crown Estate Bill into Parliament, with the former setting GB Energy's key objectives and the latter broadening The Crown Estate's investment powers and removing historic restrictions which would have interfered with the objectives of the partnership. Former Siemens CEO Juergen Maier has also recently been appointed as Chair of GB Energy, which is quickly taking shape as the "heart of the government’s mission to make Britain a clean energy superpower".

The partnership will support the development of projects across a range of technologies, including offshore wind and newer technologies such as carbon capture and hydrogen. This support will include the partnership undertaking early development work for offshore wind projects which will de-risk those projects for developers and enable projects to build out faster. The Crown Estate estimates that the partnership will lead to up to 20-30GW of new offshore wind developments reaching seabed lease stage by 2030.

The government has said that GB Energy will receive over £8 billion in funding over the course of this Parliament. Through the partnership, the government hopes to leverage up to £60 billion in additional private investment.

Energy Security and Net Zero Secretary, Ed Miliband, stated that, "the agreement with The Crown Estate will lead to more investment, cleaner power, more energy security, and is a statement of intent that it will be a permanent and transformative institution for our country."

ESO opens consultations on code modification proposals for grid connections reform

The National Grid Electricity System Operator (the ESO) has recently published two consultations regarding key modification proposals to the Connection and Use of System Code which are aimed at giving effect to the ongoing reforms of the grid connections. The proposed reforms move away from a "first come, first served" approach to capacity allocation and reallocation to a "first ready, first connected" approach, by introducing an annual application window and a two tiered gated approach. As such, in-scope project developers would only be able to submit new and modified connection applications in the relevant application windows. Once a project meets the Gate 2 criteria, the developer would be able to apply to the relevant network operator to be provided with a confirmed connection point and connection date.

The CMP434 (Implementing Connections Reform) and CMP435 (Application of Gate 2 criteria to existing contracted background) consultations opened on 25 July and will close on 6 August 2024. The consultation documents summarise the proposed modifications for both CMP434 and CMP435, and emphasise that these modifications are expected to have a significant impact on transmission owners, interconnectors, generators (including embedded generators), demand, distribution network operators, independent distribution network operators and the ESO.

CMP434 introduces the new connections reform process, breaking down the ESO's proposal into 18 elements on which the industry is invited to comment and/or agree or disagree. CMP435 seeks to retrospectively apply Gate 2 to contracted parties currently in the connections queue, which would result in those projects being "transitioned" to a Gate 1 stage agreement if they have not yet met the Gate 2 criteria, and their current queue position becoming void. The ESO proposals invite developers to comment on those elements that overlap with CMP434, and comment on the retrospective elements specific to the CMP435 proposal.

Project developers who wish to comment on the proposals are encouraged to respond as soon as possible, ahead of submission of the final modification report to Ofgem.

We have previously reported on the ongoing connections reform process in more detail here and here.

Government publishes Capacity Market consultation response

The UK government has published its response to last year's Capacity Market (CM) consultation, which was concerned with improving security of energy supply and aligning the functioning of the CM scheme with the government's net zero goals.

The initial consultation, which was separated into three parts, dealt with:

• Part 1A - proposals to strengthen security of supply and align the CM with the government's net zero goals.
• Part 1B - a call for evidence for a review of the CM.
• Part 2 – proposed amendments to the Capacity Market Rules 2014 (the Rules), to support auction liquidity.

The published response deals with Part 1A and Part 2, but not Part 1B.

In responding to Part 1A of the consultation, the government outlined its proposals to improve security of supply by supporting battery participation in the CM.

The government recognised in the consultation that, historically, battery and other storage Capacity Market Units (CMUs) have struggled to meet Extended Performance Testing (EPT) obligations. This is due to a natural decline in battery capacity due to degradation and the difficulty of analysing and predicting that decline, especially where battery assets participate in various secondary trading markets and services, such as frequency regulation and the Balancing Mechanism.

In addressing these concerns, the government has confirmed that it will amend the Rules to introduce a new definition of "Permitted Augmentation" in respect of battery storage sites, to enable qualifying CMUs to replace and/or add batteries at an existing CMU site in order to maintain the level of capacity needed to meet EPT requirements. The government has also committed to enabling the EPT required for qualifying sites to be reduced when secondary trading occurs, for capacity obligations from 2024 onwards and for all future agreements.

In addition to amendments focussed on improving access for batteries, the government also intends to make permanent the temporary amendment which allows 'mothballed' plants to prequalify for CM auctions.

In Part 2 of the response, the government intends to amend the Rules to streamline the operation of the CM emissions verification process, to remove or minimise risks ahead of the 2024 prequalification window. This aims to support liquidity in future CM auctions and to ensure that applicants secure verification in time for the relevant window.

The government will amend the verification system in five key ways, which include the following:

• CM applicants will be able to have their emissions verified after the deadline for submitting applications to prequalify for the CM to safeguard the CM against security of supply risks should applicants be unable to secure a verification slot in time.
• Some CMUs will be allowed to use a Combined Heat and Power Quality Assurance Programme certificate which evidences their emissions for a given calendar year, to better align with the definition of an ‘Emissions Year’ in the Rules.
• Applicants relying on previously verified Fossil Fuel Emissions Declarations will be required to resubmit the relevant document in their applications. A separate amendment would also allow older versions of such Declarations to be accepted at prequalification to speed up the verification process.

In the response, the government emphasises the role of these reforms in helping to secure the UK's energy system by ensuring a resilient and reliable supply.

Government announces Onshore Wind Industry Taskforce to double onshore wind capacity by 2030

The government has recently announced the launch of an Onshore Wind Industry Taskforce aimed at delivering Labour's manifesto commitment to double the UK's onshore wind capacity to around 30GW by 2030.

Led by Energy Security and Net Zero Security, Ed Miliband, and Matthie Hue, CEO of EDF Renewables, the Taskforce has been established to identify and accelerate deployment of variable renewable energy generation technology by 2030. In line with its core objectives, the taskforce will aim to:

• Unlock the barriers to deployment of onshore wind through identifying and addressing financial, regulatory or policy changes that prevent the construction and operation of onshore wind projects in an efficient and cost-effective manner.
• Ensure sustainability by considering the impact of onshore wind projects on the broader electricity system.
• Capture the benefits of onshore wind by identifying opportunities to facilitate investment into UK supply chains and jobs, and continue cost reductions.
• Commit to action by bringing together relevant industry bodies to agree the steps needed to remove barriers, establish consensus and ensure stability.

The Taskforce will meet regularly throughout the remainder of this year and will shortly issue a formal policy statement, setting out its roadmap to 2030 and beyond, before transitioning to an overarching body to keep track of progress of agreed-upon actions.

Dan McGrail, a member of the taskforce and chief executive of RenewableUK, has stated that onshore wind "has a key role in bringing secure, low-cost power to the whole country", and remarks that "delivering 30GW of onshore wind by the end of the decade would boost the economy by £45 billion and create 27,000 jobs".

The launch of the Taskforce is expected to be accompanied by re-activation of the UK's Solar Taskforce, as part of a series of plans to also speed up deployment of solar energy across the country.

This article was written with the assistance of and Khushal Thobhani, Jessica Sawford, Hannah Bradley, Charlotte D'Arcy and Luke Hopper, Trainee Solicitors.