The Energy Transition | Ofgem Supports Transitional Arrangements for Grid Connections Reform
Published on 20th Jan 2025
Welcome to our top picks of the latest energy regulatory and market developments in the UK's transition to net zero
This week we look at Ofgem's support for Transitional Arrangements for Grid Connections Reform, the AI Opportunities Action Plan, £410 million of public funding towards nuclear fusion, and more.
Ofgem supports grid connections pause
On 15 January 2025, Ofgem announced its decision to support the National Energy System Operator (NESO) and each GB Transmission Owner (TO) in implementing transitional arrangements for the electricity connections process. This decision was taken after NESO and the TOs sent a letter to Ofgem outlining these proposals.
The most significant aspect of these arrangements is Ofgem's sanction of a "pause" in the acceptance and processing of new applications for connections for transmission-connected generation projects from 29 January 2025 until the earliest of:
- the implementation of the TMO4+ code modifications;
- a decision by Ofgem not to proceed with the reforms; or
- 31 May 2025.
The pause was proposed by NESO and the TOs, in order to smooth the transition to the new connections process.
Exempted from Ofgem's decision are demand projects, which have been deemed necessary to grow the economy. Distribution Network Operators (DNOs) will continue to accept and process applications for smaller-scale and local projects, enabling these projects to progress without delay.
Ofgem's decision highlights the importance of the Connections Action Plan (CAP), which was published in November 2023 in conjunction with the Department for Energy Security and Net Zero (which we have previously covered). The CAP foresees a reformed connections process aligned with future strategic network build and spatial energy planning. The CAP, along with the TMO4+ Connections Reform, aims to accelerate the marrying of strategic planning and connections in time for the first Strategic Spatial Energy Plan.
Ofgem has justified its decision by stating its hopes that this will provide greater clarity to those applying, ensuring that applications are processed in a timely way and that new applications can benefit from the reforms being proposed. It also notes that this decision should manage the resource pressure being placed on TOs and NESO to ensure they can effectively process offers.
AI Opportunities Action Plan for Energy
The government has published the AI Opportunities Action Plan together with its response accepting all 50 of its recommendations. The plan aims to position the UK as a leader in AI while tackling energy consumption challenges, thereby ensuring that the infrastructure necessary for AI development is sustainable and efficient. It is a strategic framework for the UK which aims to harness the potential of AI to drive economic growth, enhance public services and promote sustainable energy. Central to this initiative are three energy-related components, being the establishment of AI Growth Zones (AIGZs), expansion of data centres, and the formation of the AI Energy Council.
The plan recognises that as data centres' electricity demand rises, integrating AI with sustainable energy solutions is essential. It encourages collaboration among government, industry, and tech firms to foster economic growth and environmental sustainability, vital for a digital future and the UK's net-zero targets.
In particular, it is hoped that AIGZs will help address the energy demands that data centres place on the UK's energy system. The government intends to streamline the planning process in these areas, with the intention of accelerating the provision of clean power to fuel data centres. Areas flagged as being most suitable are areas with existing energy capacity, such as post-industrial towns and coastal Scotland.
The government also plans to establish an AI Energy Council, co-chaired by the Secretary of State for Science, Innovation and Technology and the Energy Secretary. The council will work to address the energy demands of AI infrastructure and support initiatives to achieve the UK's ambition of becoming a clean energy superpower. (For more detail on the plan, see our Insight.)
UK leading fusion industry Plan for Change to deliver jobs and growth in UK
The UK government is stepping up its efforts to become a global leader in nuclear fusion energy by investing £410 million into the technology.
This funding for nuclear fusion technology is part of the government’s "Plan for Change" to, among other things, stimulate economic growth and establish the UK as a "clean energy superpower".
The investment will support research and development initiatives, and the technical skills training necessary for scientists, engineers and programme managers to effectively contribute to the development of the technology and the planned nuclear fusion programmes.
Funding will also be allocated to the "Spherical Tokamak for Energy Production", which is the procurement process for nuclear fusion plants, and the repurposing of the old fusion plant, known as JET, located in Culham, Oxfordshire.
The prototype plant is set to be built on the site of a former coal power station in Nottinghamshire, which closed in 2024. The government hopes that its investment in nuclear fusion will lead to significant employment growth as advancements continue, especially in Nottinghamshire, by retraining those with mining experience and expertise.
The Energy Secretary, Ed Miliband, emphasised the significance of this development, stating, “After scientists first theorised over 70 years ago that it could be possible, we are now within grasping distance of unlocking the power of the sun and providing families with secure, clean, unlimited energy.”
Call for evidence published on the energy grid and grid connections
The UK Parliament’s Industry and Regulators Committee has initiated an inquiry into the "regulatory, planning, and funding barriers to delivering energy infrastructure" and the government's proposals for grid upgrades and development.
As previously reported, the government is preparing a significant grid and connections upgrade: targeting construction of twice as much transmission infrastructure by 2030 as has been built in the last decade.
The committee’s inquiry seeks stakeholder engagement on the viability of its proposals, via twelve questions, which include questions on:
- key obstacles in the planning process;
- roles, responsibilities and coordination of the various regulatory bodies; and
- strategic planning and the location of generation and transmission assets.
The committee hopes the resulting recommendations will facilitate a more efficient and effective upgrade.
Baroness Taylor of Bolton, chair of the committee, highlighted the importance of energy network infrastructure in meeting the government’s clean energy targets, stating “our inquiry provides an opportunity to assess the detail and feasibility of the Government’s plans to update and reform the grid, and to propose recommendations for refining and executing these plans.”
This article was written with the assistance of Harry Warren, trainee solicitor, Tomi Agbonifo, paralegal, and Sumaiya Hafiza, solicitor apprentice.