The Energy Transition | NESO awards mid-term stability market contracts

This week we look at NESO awarding inertia contracts, the mixed reception to the COP29 climate finance deal, transmission operators adopting common information management standards, and more.

NESO announce first mid-term stability market contracts

The National Energy System Operator (NESO) has announced the first five successful bidders under the Mid-Term (Y-1) Stability Market programme to provide inertia to the UK grid. The projects chosen include two open cycle gas turbine rapid response power plants, two traditional gas plants (including one that has been decommissioned and repurposed to specifically provide inertia), and a pumped storage hydro station.

Inertia is residue kinetic energy stored in the spinning parts of electricity generating infrastructure. Ensuring that these parts will continue spinning during periods of outage enables NESO to smoothen any sudden drops in frequency, thereby helping to balance out the provision of electricity across the network. The provision of effective inertia is especially important as the UK transitions to output from intermittent assets (such as wind and solar), which provide for less stable and reliable power than that from baseload thermal generation.

The reason that the majority of the awards have gone to gas-powered stations is twofold. Most importantly, as this programme focuses on projects than can be operational within a year, these projects combat the difficulties of creating inertia from renewable sources. Wind and solar generators, for example, are not currently capable of combining with existing grid infrastructure to provide inertia due to the frequency their spinning parts rotate at. Second, as periods of low inertia are currently more frequent due to the increase in renewables as a proportion of the energy mix, immediate action is required to ensure the stability of grid inertia and the wider efficacy of the grid.

Alongside the mid-term programme to ensure grid stability, NESO is also operating a short-term programme for projects that can be operational on day one, and has started the initial consultation phases of developing a long-term programme that will focus on projects that can be operational after four years.

Mixed reception to COP29 climate finance deal

The COP29 Climate Summit has come to a close in Baku, with last minute negotiations to finalise a climate finance deal leaving some parties disappointed with the outcome. Parties agreed to a goal of providing at least $300 billion a year in climate finance by 2035, with an overarching goal of enabling $1.3 trillion of climate finance in developing countries.

The final deal has been called "too little too late" and a "paltry sum" by African and Indian representatives respectively. Conversely, although conceding that "it is not everything we or others wanted", secretary of state for Energy Security and Net Zero, Ed Milliband, has said the deal is in the UK's national interest and will help to drive the clean energy transition forwards, creating "huge opportunities for businesses and jobs" in the process.

Despite the disappointment with the climate finance deal, key sideline deals involving the UK were agreed. A large number of parties endorsed targets to install 1,500GW of energy storage by 2030 and develop or upgrade 25 million kilometres of grid infrastructure. Additionally, pledges were made to develop green energy zones and corridors to increase regional and internation cooperation on renewable energy deployment. Furthermore, a new coalition to advance nuclear deployment and the UK-led clean power alliance (on which we reported here) were formed.

Despite the mixed reception, executive secretary of UN Climate Change, Simon Stiell, said that if climate finance promises are kept, the deal "will keep the clean energy boom growing, helping all countries to share in its huge benefits: more jobs, stronger growth, cheaper and cleaner energy for all."

Transmission owners launch a new partnering initiative, IM4Power

Great Britain's transmission operators (TOs) have launched a new initiative named IM4Power to increase efficiencies in infrastructure delivery by adopting common information management standards.

This initiative was announced at the Utility Week Forum and involves National Grid Electricity Transmission, SP Transmission, and SSEN Transmission, along with supply chain partners such as Hitachi Energy, Siemens and Balfour Beatty.

IM4Power will aim to create best practice networks for information management. It will encourage the adoption of common naming standards and protocols for information exchange. Through these practices, the initiative seeks to streamline design and construction processes, with the ultimate goal being to accelerate project delivery and support net zero targets.

Commenting in the launch of IM4Power, Alex Stuart, head of data management at SSEN Transmission said: “Faster and more efficient data and information sharing means we can accelerate project delivery, supporting the delivery of Scotland and the UK’s net zero targets and helping deliver on the Clean Power 2030 Mission.”

Ofgem chair warns of potential legal challenges to connections queue reforms

Mark McAllister, the Ofgem chair, has expressed concern that legislative protections may be needed to fend off legal challenges against the proposed connections queue reform (on which we have recently reported here and here).

The proposals for grid connection reform are intended to overhaul the current system for connections. The changes are likely to have retrospective effect and remove from their position in the connections queue those projects which are not ready to connect or not needed (that is, in respect of the technology type and location).

Retrospective changes in law are rare, and the scale and impact of the reforms are unprecedented. Given the complexity of designing and implementing these reforms in the very limited timetable available, there may be parties who consider that the reforms have unfairly prejudiced particular projects or categories. Such concerns could well give rise to legal challenge.

Speaking at the Utility Week forum, Mr McAllister stated that work was needed to reduce the risk of successful legal challenges, and said: "if it comes to it, it may require some legislation to help us but we hope we can do it without legislation".

UK Power Networks and National Grid Electricity Distribution have also expressed their concerns about the legal risk. Both distribution network operators have called for clarity on the legal ramifications of reordering the existing connections queue. They expressed their view that understanding these implications is crucial to the success of the proposals to address the backlog of projects.

This article was written with the assistance of Joe Sandom, James Harnett and Alexander Eaton, trainee solicitors.