All change: Are you ready for connections reform?

By Mark Sneddon, Delivery Director at Aurora Utilities

CMP434 and changes to the Gate 2 criteria could be a game-changer for developers who are serious about moving forward with their projects and have the right support. 

Bigger isn’t always better. In its drive towards net zero, the government can’t complain about a lack of enthusiasm. The commitment to decarbonise, along with the scaling up of projects following the end of subsidies in 2017, has seen an explosion in connection applications to the grid. 

According to the National Energy Systems Operator (NESO, previously ESO), the transmission connections queue grew by 20GW a month last year. By the end of 2024, it estimates it will have topped 800GW. Unfortunately, that’s more than four times the installed capacity needed to hit net zero. 

As a result, developers have discovered that you can have too much of a good thing. The queue length has ballooned, not just in size but also in length. The difference between requested dates and connection offers is five and a half years. Ironically, these delays could prove a barrier to meeting net zero targets. 

Who’s to blame?

Renewables and storage projects dominate the queue, but developers of all types and applications for both generation and demand have contributed to the troubles. To be blunt, there has been sandbagging to capture capacity, with developers putting in applications with unrealistically high import and export capacities or without any realistic prospect of connecting in the foreseeable future. 

While the costs were limited, and the risks of waiting grew along with the queue, it was an understandable strategy. But it’s not one that will work in the future. 

The problems haven’t gone unnoticed by the government and regulators. NESO started planning Connections Reform in 2022 and launched its first public consultation in 2023. Its proposals (CMP434) for a new process and criteria for formulating indicative and full connection offers at Gates 1 and 2 were published in April. They are due to be implemented at the start of the year – although we’ll have to wait and see whether that deadline is met. The actual Gate 2 criteria are defined in a separate Methodology document.

Coming – ready or not: The new regime

The proposals are worth studying in detail, but the broad brush is easy enough to understand: Pay to play.

The new regime will see a radical overhaul in how projects’ viability is assessed. Fleshing out NESO’s “First Ready, First Connected” approach launched in 2023, the reforms will require developers to clearly and practically demonstrate projects are ready to progress and keep to a timetable for key milestones, or justify why they aren’t moving toward. 

This will mean that developers must consider land options and planning much earlier in the application process, as well as look at early-stage design to allow development and capacity to be utilised more effectively. They will also need realistic proposals for both construction and the ramping profile. Applications using the maximum megawattage from day one are unlikely to succeed. 

Winners and losers: Snakes and ladders

The new rules undoubtedly put significant pressure on developers to get their ducks in a row before they apply. This will bring forward, if not necessarily increase, the costs of connection. Applications were previously a way to open developers’ options; they now commit them to concrete action. Perhaps most strikingly, until land rights are secured, applications aren’t going anywhere.

It is not simply a case of getting the application right, either. Failure to hit milestones or communicate issues with the regulator could cause developers to lose their place in the queue or be removed entirely. The days of developers making land grabs, securing connection dates, and selling them are probably over. 

On the other hand, the new regime should favour developers who are serious about advancing projects. Removing unviable, unrealistic, or insincere applications opens opportunities for well-planned projects to move forward faster. It won’t solve all the issues or eradicate the queue overnight, but for well-managed projects, it should bring the finish line closer. 

The risks of the new regime are significant, but so are the potential rewards.

The case for an IDNO

Using an independent distribution network operator like Aurora will help smooth and derisk the process. We can help engage and manage the design process and oversee the connections process through queue management, boundary changes and looking at site design.

With a letter of authority we can engage with the transmission system operator (TSO) and Distribution Network Operator (DNO) to and actively manage the application: Ensuring the readiness criteria are met at the outset (including potentially taking full design responsibility to ensure a design to the DNO standards) and updating and keeping to the milestones as agreed. That also means handling any bumps in the road. 

In some respects, the new rules allow for greater flexibility that an IDNO can take advantage of. Previously, for example, red-line boundary changes were classified as major changes. An IDNO can now make those changes to keep applications moving forward. 

In other cases, an IDNO can help where the rules are now more rigid. To help with balancing the network, the new rules are less tolerant of technology changes for accepted or sites under progression. Developers can’t simply swap from solar to batteries because prices have changed, for instance. An IDNO, though, can develop a design strategy or amendment to satisfy both the developers needs and network’s requirements. It can also look at collocating assets and the best use of sites for decarbonising.

As a new IDNO, Aurora helps to power growth by getting new developments on the grid quicker. We are the last mile to net zero. It remains to be seen whether the reforms put forward by NESO will get us there. Handled right, though, they look to be a good first step.