The Energy Transition | Octopus' call for grid reform and Ofgem's consultation on consumer standards

This week we look at further calls from the industry to reduce grid connection delays, Ofgem's report and subsequent consultation on consumer standards following news of non-complying suppliers, and more.

Octopus Energy proposes five-point plan to tackle grid connection delays in the UK

UK-based retailer Octopus Energy has developed a five-point plan in which it proposes various initiatives, such as the creation of  dedicated renewable energy zones, to tackle grid connection delays.  The retailer argues that a live database that maps substation capacity “could make connecting to the grid less opaque and more transparent". The company’s plan also calls for additional measures, such as greater competition, proactive queue jumping, enforceable sunset clauses on fossil fuel projects, and collaboration between developers to share and reduce connection costs. Zoisa North-Bond, CEO of Octopus Energy Generation, said: "[the] single biggest blocker to renewables is waiting to connect to the grid, so we’ve identified quick wins that can genuinely make a difference today and connect wind and solar farms at pace." 

Last week also saw the submission by National Grid of an application to the Planning Inspectorate for grid reinforcement. The Bramford to Twinstead Reinforcement project, if approved, will remove 25 km of existing 132kV overhead lines between the two sub-stations, replacing it with new 400kV overhead lines and underground cables. The project, which is predicted to take four years to complete, does not however address the more immediate need to speed up grid connections, which has been a long standing concern of both industry and regulatory stakeholders. Octopus' release of its five-point plan follows the publication of both the Energy Networks Association Action plan and the National Grid's "Great Grid Upgrade", which we previously reported on.

Ofgem report reveals incidents of non-compliance by energy suppliers

Ofgem has released a Supplier Performance Report which reviews supplier incidents of non-compliance between 1 July and 31 December 2022. The report highlighted incidents of non-compliance by energy suppliers of their obligations in respect of environmental, energy efficiency and social programmes. There a number of schemes covered by the report including the Energy Company Obligation, Feed-in Tariffs, the Renewables Obligation, the Warm Home Discount and many more. Ofgem warns that the increases in costs of delivering and administering schemes due to non-compliance may be passed on to consumers through energy bills.

Overall, 293 incidents were added in the six month reporting period, with the most common issues being on the Central FIT Register which accounted for 75% of administrative incidents. Where administrative errors are being made, additional resources are required to investigate and resolve such errors. This can lead to delays in generators receiving support under the scheme.

As a result of the report and evidence of a decrease in customer satisfaction, Ofgem is proposing "reputational incentives" for suppliers. Ofgem has launched a new consultation seeking views on developing and implementing reforms to improve customer service and create a framework for consumer standards. One of its proposals includes a requirement for energy retailers to clearly display details of its customer service performance from a specified third party organisation such as Citizens Advice.

Within its consultation paper, Ofgem provides evidence that consumers are finding it difficult to contact suppliers to obtain information, advice and support. To overcome this issue, Ofgem proposes to introduce a dedicated free phoneline for vulnerable customers and provide free alternative contact methods such as an email address for customers to use. Additionally, Ofgem is proposing to introduce requirements to offer "tailored repayment plans at the earliest opportunity" for those customers who are at risk of struggling to pay their bills.

The consultation on a framework for consumer standards and policy options to address priority customer service issues closes on 31 May 2023.

Ofgem resumes review of Distribution Use of System Charges after winter resource reallocation

Ofgem announced on 27 April 2023 that it is resuming work on the review of Distribution Use of System charges (DUoS). The DUoS review was previously paused in November 2022 due to the UK government deciding to reallocate resources to help tackle the energy crisis over the winter months. 

The announcement sets out Ofgem's involvement in transmission charging reform, in particular the Review of Electricity Market Arrangements. It also provides updates on electricity connections reform and the co-ordination of its charging and electricity workstreams. 

One of the work streams mentioned in the announcement is the significant code review (SCR) of DUoS charges which will consider the methodology underpinning DUoS charges and how it can support the efficient use and development of the network while accounting for competition, decarbonisation, and the differences between transmission and distribution systems. Ofgem will first conduct a brief review of recent developments that could affect the scope of the SCR, with timelines and further details of planned industry engagement to be set out by summer 2024.

Larks Green solar farm connects directly to National Grid substation: a "UK first"

The first solar generation project in the UK to connect directly to a National Grid substation has been announced by Cero Generation and Enso Energy. The project saw the installation of new switchgear and a high voltage cable between the substation and solar farm in collaboration with National Grid, enabling the successful grid connection.

The solar farm, known as Larks Green Solar Farm, is expected to generate enough power for over 17,300 homes and aims to displace 20,500 tons of CO2 each year compared to traditional energy production. Due to the solar farms design and link to the battery energy storage system, the project's developers have reported that it will produce a net biodiversity gain.

The solar farm will be co-located with a battery energy storage system which stores energy during peak power generation and exports it back onto the grid when demand is high. This system aims to maximise efficiency and allow an increased output of green energy. 

Following the announcement, Roisin Quinn, Director of Customer Connections at National Grid, stated that: “Solar power has a critical role to play in the clean energy transition, so connecting the first PV array to our high voltage transmission network represents a key step on that journey, and a great achievement by Cero, Enso and our engineering teams." Quinn further added that, "we want to connect more, and faster, and are working with government, Ofgem and industry to reform the connections process to accelerate Britain’s transition to a cleaner, more secure and affordable energy system.”

This article was written with the assistance of Amy Lewis and Sophie Myatt, trainee solicitors.