The Energy Transition | The Planning and Infrastructure Bill is tabled before UK Parliament

This week we look at the Planning and Infrastructure Bill tabled before Parliament, Ofgem's LDES technical document, the results of the T-4 Capacity Market auction, and more.

The Planning and Infrastructure Bill is tabled before UK Parliament

On 11 March 2025, the government published its Planning and Infrastructure Bill, which has now completed its first reading in the House of Commons and will progress to the second reading on 24 March 2025. The bill forms part of the government's wider policy to "get Britain building" and, in part, prevent the fundamental blockers to nationally significant infrastructure projects and other items of priority.  

The proposed reforms relevant to electricity infrastructure are:  

• Reduction in legal challenges: A reduction in the number of appeals that a party may make to the Court of Appeal on decisions to refuse permission to apply for judicial review – the new limit will be one, rather than the current three (where the claim is deemed "meritless"). This decision is in line with the Lord Banner KC report published last year, which suggested that allowing multiple challenges was extending the duration of reviews by several weeks, if not months in some cases.
• Streamlining electric vehicle (EV) charging infrastructure: The bill proposes streamlining the approvals for installation of EV charging infrastructure by using permits and replacing the need for street work licences. These  permits will be able to be applied for online and will, where the works should take less than 10 days, be approved within two to five days. The government hopes this will expedite the process and encourage the building of EV infrastructure.
• A new scheme to unlock investment into long duration electricity storage (LDES): The bill will look to encourage investment in the LDES cap and floor scheme  that aims to create a cheaper and more efficient energy system. Analysis by the Department for Energy Security and Net Zero (DESNZ) has found that 20GW or 24-hour duration LDES could save £24bn of electricity system costs between 2030 and 2050.
• Removal of the right in Scotland to trigger inquiries into energy projects: The bill removes the automatic trigger for a public inquiry if a local authority objects to an application. Instead, a "reporter" will be appointed to examine the application and propose a procedure of redress (with options up to and including public inquiry). Overall, it is intended that this should speed up the concerning process. It also proposes that the statutory right of appeal process that currently applies to offshore consenting will be extended to onshore. This will standardise the challenge process across offshore and onshore assets in Scotland and provide greater certainty to developers.
• Extended commissioning period for offshore electricity transmission system: The period for which an asset is allowed to transmit electricity under the Electricity Act 1989 without holding a generation licence is proposed to be extended by nine months (up to 27 months from 18 months) for offshore assets. The government recognises that as offshore assets are becoming increasingly larger and more complex, the previous 18-month period is no longer sufficient. This proposed reform is intended to reduce the number of offshore wind farms needing to apply for exemptions, and or having to shut down due to non-compliance with the Electricity Act.
• Allowing forestry authorities to use forestry land for the development of renewable energy: The bill will enable forestry authorities to permit forestry land to be used for the generation, storage, transmission or supply of renewable energy.
• Offering financial benefits to those local to energy infrastructure developments: The government will be empowered to offer bill discounts to communities that are situated close to new electricity infrastructure. Those living up to 500 metres from new and significantly upgraded electricity transmission infrastructure may receive bill discounts of up to £2,500 spread across 10 years.

Ofgem and DESNZ publish technical document for LDES

Ofgem has published its UK's technical decision document (TDD) for LDES, which confirms key details of the "cap and floor" scheme. It sets out how the scheme will operate when application windows will open, how much capacity will be procured, and what projects will be eligible to apply. 

The TDD builds upon DESNZ's October 2024 consultation response, which confirmed the cap and floor as the government's preferred policy approach. 

The LDES scheme sets a maximum and a minimum revenue for projects. If a project earns more than the cap, a larger portion of the extra revenue is returned to consumers. If it earns less than the floor, consumers cover all the shortfall, provided the project meets its minimum availability threshold.

The cap and floor scheme is modelled on the interconnector regime, with certain differences. The cap will be set to allow recovery of invested capital (equity and, unlike the interconnector regime, debt) and to provide a return on investment if the assets perform well in the market. The floor will be set to allow recovery of invested capital (again debt and equity), along with a rate of return that is comparable to the cost of debt. In setting the cap and floor in this way, subject to compliance with their licence obligations, LDES developers will be able to recover all economic and efficient capital and operational costs through the scheme.

The first application window opens in April 2025, with a two-stage assessment process. Stage one evaluates project eligibility (over the second to the third quarter of 2025), and stage two conducts a cost-benefit analysis (from the second quarter of 2025 to the end of the first quarter of 2026) to determine revenue thresholds. By the end of the second quarter of 2026, decisions on these assessments will be finalised.

The TDD confirms the intention that the scheme will add between 2.7 and 7.7 GW of capacity by 2035, with subsequent windows addressing capacity gaps for 2035 and 2050. These targets have been informed by the National Energy System Operator's assessments of future energy scenarios.

Ofgem will assess all projects with 2030 and 2033 start dates in parallel but may use a "twin track'" approach if needed: track one for projects deliverable by 2030 and track two for those by 2033.

The TDD confirms the eligibility criteria projects must satisfy and by which projects will be assessed. These include:

• Revenue term: Ofgem and DESNZ expect revenue terms to be 25 years, but Ofgem will also consider applications for longer or shorter terms, provided that the latter would be for no less than 20 years.
• Capacity: Projects applying for track one must have a minimum capacity of 100 MW; whereas projects applying for track two must have a minimum capacity of 50 MW. The TD explains that these thresholds have been set to strike a balance between accessibility for developers and manageability for Ofgem.
• Duration: Projects must be able to discharge continuously at full power for at least eight hours and maintain this capacity over the full revenue term duration (that is, 25 years). The TDD acknowledges the issue of degradation, given that a project’s operational asset life could be less than this term. However, the TDD also provides that the cost of new capacity from an asset refurbishment would be supported by the cap-and-floor scheme.
• Technology readiness level: Projects applying for track one must be at a "technology readiness level (TRL) 9". The TDD notes that TRL 9 is generally defined as a marketable product proven in repeated use, being sold in market. In the LDES context, this is likely to mean that at least two assets of at least 100MW (that is, the minimum size for track one) are in working operation in GB or internationally. Projects applying for track two must be at TRL 8, which is generally defined as a technology in which development is complete, final design and features are set, may have limited release to clients, and all fulfilment procedures are trialled and documented. The TDD notes that, for the purposes of LDES, this is likely to require having an installed, working example that is technologically identical or near identical to the proposed development of at least 1MW in size.
• Deliverability: The government and Ofgem will require suitably mature cost estimates; evidence that grid connection application has been submitted and planning consent to be in place by the start of the project assessment phase.

The TDD also provides further detail on setting cap and floor levels via cost-benefit analysis, post-construction revenue reconciliation, and special licensing conditions for operators. Additionally, the scheme features debt funding competitions to promote competitive lending rates.

Next steps

The government will now legislate for Ofgem to deliver the LDES scheme. The details of the scheme for projects that are granted a cap and floor regime will be set out in the licences held by LDES operators, with special conditions covering the operation of the cap and floor regime. Ofgem also expects to make separate changes to wider industry frameworks to support the cap and floor regime, including specifically the use of network charging. The government will legislate for this via the Planning and Infrastructure Bill.

Great Britain's first grid-forming battery site goes live in Scotland

The National Energy System Operator (NESO) has confirmed that the first two projects involved in its Stability Phase 2 Pathfinder scheme have now gone live. One of these is Great Britain's first grid-forming battery site: the Zenobē site in Blackhillock, Scotland.

The scheme aims to improve the operational resilience and stability of Great Britain's electricity system while producing lower carbon emissions and reducing costs for consumers.

NESO awarded 10 contracts in the scheme (worth £323 million overall), seeking to secure 11.55 giga volt ampere (GVA) of "short circuit level" in Scotland and  6.75 GVA seconds of inertia for Great Britain through the use of five synchronous condensers and five grid-forming batteries.

The five grid-forming battery sites (including Blackhillock) are "first of a kind", as they are designed to provide both short circuit level and inertia to Great Britain's electricity system (in contrast to more conventional grid-following designs, which are unable to do this). In doing so, the grid-forming inverters enable renewable technologies to mimic some of the helpful behaviours of traditional power generators (for example, gas power stations), which can help to stabilise the voltage and frequency of the electricity network.

This will allow NESO to procure the short circuit level and inertia required from cleaner generation sources, supporting the integration of more renewable energy technologies. By increasing the capacity for renewable energy generation, the grid-forming batteries will reduce carbon emissions and secure the future resilience of the electricity network.

Zenobē estimates that the Blackhillock grid-forming battery site alone will lower consumer bills by over £170 million over 15 years. Blackhillock is located between Inverness and Aberdeen and is well placed to mitigate grid congestion from the Viking (443 MW), Moray East (950 MW) and Beatrice (588 MW) offshore wind farms and to put the advantages of grid-forming technology to good use.

NESO estimates that the cost-saving benefits over the 10-year contracts under the pathfinder scheme are around £500 million. The scheme will help deliver NESO's target to operate a zero-carbon electricity network in Great Britain by 2025 and will also contribute to the government's aim to deliver clean power by 2030.

Matt Magill, the director of engineering and customer solutions at NESO, commented: "These projects will help to accelerate progress towards the transition to a sustainable future by securing network resilience for consumers in Scotland and Great Britain. These sites will support network stability during disturbances and lower the cost of maintaining inertia on the system."

Government responds to consultation on electricity infrastructure consenting in Scotland

On 10 March 2025, the government responded to its consultation on electricity infrastructure consenting in Scotland. The consultation process, which ran between October and November 2024,  proposed reforms and sought views on how to develop a robust, timely, and proportionate consenting process involving local communities and authorities to support Scotland's growing renewable electricity sector.

The consultation set out a package of proposals for reforms that cover the entire consenting process in Scotland under the Electricity Act 1989.

• Pre-application requirements: introducing pre-application consultation, notification and publication of planning applications, as well as certain costs recovery mechanisms.
• Applications: encouraging collaboration with the relevant statutory consultees (including NatureScot and Historic Environment Scotland)
• Public inquiries: reducing the number of objections by supporting better-formulated applications at early stages.
• Variations: implementing a prescribed process for varying consents to network projects granted under section 37 of the Electricity Act 1989 (and to give the Scottish government power to revoke or suspend consents under specific circumstances).
• Necessary "wayleaves": the ability to charge network operator fees for applications for necessary wayleaves.
• Statutory appeals and judicial proceedings: aligning the deadline for challenging consents to six weeks (currently the deadline is either three months for onshore infrastructure or six weeks for offshore infrastructure).

The government received 545 consultation responses and based on these, it intends to proceed with the package of reforms proposed to make the electricity consenting process in Scotland more efficient and to ensure that local communities are consulted at an early stage. A number of the proposals have also been adapted in line with the consultation responses, including:

• streamlining and strengthening pre-application requirements, aligning with existing systems where possible;
• setting time limits for statutory consultees and the Scottish Government; and
• refining the new examination process for when a relevant planning authority objects.

The reforms are expected to be taken forward imminently, including by legislation through the upcoming Planning and Infrastructure Bill, which is discussed above. The government will work closely with the Scottish government to deliver these reforms.

While the proposed changes aim to create a more streamlined consenting process, it is also likely that they will increase the administrative and cost burden on applications, particularly in the early-stage processes. Applicants will need to comply with new pre-application requirements and consult more closely with statutory consultees and may incur additional costs for pre-application activities and necessary wayleaves.

There is, however, a clear intention to create a comprehensive, efficient and fair consenting process. Frontloading the process will hopefully lead to more predictable outcomes delivered within a reasonable timeframe, which will allow developers and applicants to plan projects and budget risk more accurately.

Provisional report for 2024 T-4 Capacity Market Auction

The NESO has published the provisional auction report for the 2024 Four Year Ahead Capacity Auction (T-4) for the delivery year 2028/29 on 11 March 2025. This comes after the T-1 preliminary auction results.

Whereas the T-1 auction is run by NESO to ensure electricity supply security one year ahead of the delivery, the T-4 auction procures supply four years ahead of the delivery. This year's T-1 auction procured just over 7.9GW of de-rated capacity, surpassing its target of 7.5GW. In contrast, the T-4 auction aimed to secure a larger capacity of 43,700 MW, with 43,055.073 MW successfully procured.

This years' T-4 auction results show a higher clearing price (£60.00 per kW per year) compared to the T-1 auction's record low clearing price of £20.00 per kW per year.

Key results:

• Total capacity procured: 43,055.073 MW across 669 capacity market units (CMUs).
• Clearing price: £60.00 per kW per year.
• Target capacity: 43,700 MW.
• Capacity entering auction: 44,656.226 MW (96.41% awarded an agreement).

Breakdown by CMU type:

• Existing generating CMU: 68.30% of awarded capacity.
• Existing interconnector CMU: 15.24%.
• Newbuild generating CMU: 4.92%.
• Newbuild Interconnector CMU: 0.63%.
• Proven DSR CMU: 0.72%.
• Refurbishing generating CMU: 6.80%.
• Unproven DSR CMU: 3.39%.

Breakdown by primary fuel type:

• Gas: 63.34% of awarded capacity.
• Interconnector: 15.87%.
• Storage battery: 4.14%.
• DSR: 4.11%.
• Hydro: 2.94%.
• Nuclear: 2.16%.
• Waste: 1.74%.
• Other types: Smaller percentages.

This article was written with the assistance of Adam Budd, Ellie Smyk, Imogen Drummond, trainee solicitors, Sumaiya Hafiza, solicitor apprentice, and Tomi Agbonifo, paralegal.