The Energy Transition | NESO lays out ambitions for UK clean power by 2030

This week we look at NESO's publication of its Clean Power 2030 report, a potential new path for tidal energy in the UK, the successful trial of battery technology for emergency supply and more.

NESO publishes its Clean Power 2030 Report

The National Energy System Operator (NESO) has published its Clean Power 2030 (CP30) report, commissioned by the government to provide an independent analysis of how the UK can achieve its 2030 clean power ambitions. It is NESO's first report in its capacity as strategic advisor to the government and Ofgem.

NESO's definition of a clean power system is one where "by 2030, clean sources produce at least as much power as Great Britain consumes in total and unabated gas should provide less than 5% of Great Britain’s generation in a typical weather year".

The report sets out two main pathways to achieve clean power by 2030. The "further flex and renewables" pathway envisions the construction of 50 GW of offshore wind by 2030, but no new dispatchable power from hydrogen or gas with carbon capture and storage. The "new dispatch" pathway envisions 2.7GW of new dispatchable plants, but a lower level of growth in renewables.

Offshore wind will be the "bedrock" in both pathways, providing roughly half of the UK's generation, with onshore wind providing a further 29% (doubling in capacity from 14GW in 2023 to 27GW in 2030) and solar capacity nearly tripling to around 50GW. Both pathways also require "early electrification of heat, transport and industry", the report states.

The report highlights the challenges in achieving clean power by 2030, as each pathway requires supply-side technologies to deploy more on average each year until 2030 than has been achieved in a single year previously. The report also states that £60 billion of cumulative network investment will be needed until and beyond 2030, with nearly double the amount of network infrastructure needed over the next five years than has been built in the last 10 years.

Furthermore, NESO has concluded that to meet these aims, 80 transmission projects will need to be delivered by 2030 in order to avoid constraints. Currently, 68 of these are on track, nine are already built and NESO have specified that the critical Norwich to Tilbury and Sea-Link (SCD1) projects will need to be accelerated.

To retain energy security, most existing gas generators will need to remain active, although their use will decrease dramatically. Under the new dispatch pathway, the UK could still remain vulnerable to volatile international gas prices, as gas would still be used in 47% of periods, compared to around 15% in the further flex and renewables pathway. The report is clear that unabated gas must account for less than 5% of the generation mix. 

NESO's report assumes a reduction in the UK's nuclear capacity from 6.1GW (2023 level) to 3.5-4.1GW in 2030, but with scope for more to be built beyond this. The report states that if small modular reactors can be built by 2030, they will potentially compensate for an under-delivery elsewhere in the system.

The report also highlights the importance of flexibility in both demand and supply in order to manage the energy system and keep costs low.

The government will use the NESO report to develop its clean power action plan later this year.

NESO publishes consultations on grid connections reform

Alongside the publication of the CP30 Report, NESO has also published consultation documents in relation to its Connections Reform project, which Ofgem data released this August indicated would cut connection queues.

The consultations cover "Gate 2" Criteria Methodology, Connections Network Design Methodology, Project Designation Methodology, and the Financial Instrument Proposal.

The Gate 2 Criteria Methodology consultation proposes new criteria, "readiness" and "strategic alignment" and processes to reduce and reorder the grid connections queue.

"Readiness" requires the project to demonstrate it has acquired the minimum necessary land rights or planning. "Strategic alignment" requires the project to align with the CP30 plan, in relation to its technology, capacity and location at both transmission and distribution level.

The Connections Network Design Methodology consultation outlines the process (followed by NESO, Transmission Operators and Distribution Network Operators) of organising projects once they have met "Gate 1" or Gate 2 Readiness criteria.

For Gate 1, this includes NESO's approach to indicative connection dates and points of connection; for Gate 2 Readiness, this includes the approach to providing connection dates and points of connection, and the requirement for any reinforcement works. These factors will be assessed in the context of strategic alignment and coordination between the transmission and distribution networks.

The Project Designation Methodology explains the reasons for, and ways in which, projects will be prioritised as they are "most likely to provide significant additional consumer, net zero and/or wider economic and/or societal benefits". Criteria proposed include "critical to security of supply", "critical to system operation", and "materially reduce system and/or network constraints". There is also a route for new technologies, or highly innovative projects, which were not considered at the time of the CP30 Report.

NESO is also calling for input on a proposal to introduce a financial instrument, which aims to prevent dormant or speculative projects from holding places in the queue ahead of ready and committed projects.

The Connections Delivery Board has considered that additional fees, charges or securities for projects in the queue could be appropriate. The initial proposal is an amendment to "Section 15: User Commitment" of the Connections and Use of Systems Code to introduce a Capacity Commitment Fee (CCF) of £20,000/MW.

This CCF would require developers to post a security against the CCF when accepting a gate 2 contract until the project achieves "Milestone 7 (Project Commitment)", the point at which the project can demonstrate it has the financial backing for it to proceed. Developers would be liable to pay the CCF in the event of termination of the Gate 2 contract or reduction in capacity prior to Milestone 7 being achieved.

NESO hopes that the CCF will require project developers to demonstrate commitment to delivering the connection and contracted capacity and that the introduction of the fee will "avoid connection delays, wasted resources and inefficient allocation of scarce network capacity".

The consultations on these reforms is open until 2 December 2024.

Tidal power can offer energy solutions for Scottish coastal communities

The European Marine Energy Centre (EMEC) has published its report into offtake routes for tidal energy projects located in Scotland. Commissioned by the Crown Estate Scotland, Scottish Enterprise and Islands Enterprise to explore the potential for growth in tidal energy in the UK, the report suggests that by directly connecting to industry in Scottish coastal communities, tidal energy can play an increasingly important role in the UK's energy supply and security of supply. Direct connection would alleviate the most prominent barrier to the growth of tidal energy in the UK: the cost of connection to the national grid.

In particular, the report highlights the potential benefits of tidal projects to power the production of green hydrogen in Scotland which can then be used to produce synthetic fuels. This would provide a stable energy source, reducing reliance on the grid and increasing energy security in remote areas which have historically relied on diesel and oil.

EMEC's report also makes several recommendations for addressing market barriers to the introduction of tidal energy into the broader UK energy mix. These include an increase in the tidal Contracts for Difference ringfenced budget to £30m, support for "final mile" cabling to remove a prohibitive cost associated with smaller scale projects, and the establishment of a public guarantor entity to underwrite improbable but high-value risks to project development.

The UK Marine Energy Council, a trade association representing the UK's tidal stream and wave energy industries, has proposed that the government sets a deployment target for tidal energy of 1GW by 2035. The recommendation is for Scotland to provide 700MW of this capacity considering it is where the majority of eligible tidal sites are located. Current plans indicate 82MW of tidal stream projects will be deployed in Scotland by 2029.

Scottish and Southern Electricity Network trials batteries for emergency supply

Scottish and Southern Electricity Networks (SSEN) has conducted a successful trial testing whether localised battery energy storage systems can be deployed during extended periods of supply interruption.

The trial aimed to determine whether SSEN's current array of fossil-fuelled generators could be replaced by battery technologies. The test was carried out on the local network in Slough, where a large battery pack was connected to the network via an existing substation. SSEN will carry out further trials over the coming months in order to assess the performance, efficiency and durability of various battery technologies, including hydrogen-powered batteries.

SSEN hopes that a switch to battery generators from existing diesel generators will help it to achieve the target of reducing its carbon intensity by 80% before 2030, as well as ensuring that customers do not face any interruption in supply. In addition to reducing emissions, an added advantage of battery generators over traditional diesel generators is that they can run silently, making them much more suitable for rural or residential areas.

Richard Gough, SSEN's head of region for Thames Valley, stated that SSEN has "a deep, enduring commitment to help deliver net zero, and [SSEN is] always looking for viable solutions to get us there quicker, expanding our experience and knowledge as we go. That’s why we’re leading the way in these extensive trials of alternatives to fuel-powered generators."

Ofgem consults on electricity distribution price control framework

Ofgem has launched a consultation on proposed changes to the framework for electricity distribution price control for the ED3 price control period which will begin on 1 April 2028.

The price control framework forms part of Ofgem's system of regulating companies which own and operate the electricity distribution network, and the price control process is used to review and amend the framework. In its press release accompanying the launch of the consultation, Ofgem stated that the ED3 price control period "will have a critical role in delivering the energy system transformation required to enable increased electrification of demand and the integration of more renewable generation into the electricity system."

Ofgem aims to collect feedback from stakeholders with an interest in using the distribution network including consumers, investors, regulators and distribution network operators. Ofgem will use the responses received to shape the framework to allow for the electricity distribution network to deliver its role in the transition to net zero, while also protecting consumer interests.

The consultation seeks feedback on the framework's overarching objectives, regulatory models, consumer outcomes, and measures which seek to address the likely challenges and opportunities the electricity distribution sector will face. The consultation sets out Ofgem's belief that "a progressive regulatory approach, taking a long-term view and providing greater certainty to supply chain and investors will be in consumers’ interest", while emphasising the need to "test these principles with consumers and wider stakeholders."

The consultation is now open and responses can be submitted until 15 January 2025.

This article was written with the assistance of James Harnett and Joe Sandom, trainee solicitors, and Anita Ikpea, paralegal, at Osborne Clarke.