Electricity networks get green light for £17.9bn of investment

Electricity transmission networks have welcomed the approval of £17.9 billion of investment across 54 major projects as part of the latest annual Networks Options Assessment from National Grid Electricity System Operator (ESO).

The ESO said the majority of the projects, which are not covered by baseline spending allowances under the RIIO T2 price controls and are still subject to regulatory approval by Ofgem, will be delivered by 2031.

National Grid Electricity Transmission (NGET) has received the green light for around £10 billion of investments, all of them in England after no new projects were approved in Wales. Meanwhile, £7.9 billion of investments have been given the go-ahead in Scotland – almost £5.7 billion by Scottish and Southern Electricity Networks (SSEN) and more than £2.2 billion by SP Energy Networks (SPEN).

The Scottish transmission owners said the projects will help to deliver the large increase in transmission capacity needed to transport power from renewable generators in the north of the UK down to demand centres in the south.

Scotland has already installed around 8GW of onshore wind capacity over the last 25 years.

They said the Scottish government is consulting on proposals to deploy another 8-12GW of onshore wind by 2030, whilst almost 25GW of offshore wind projects were recently awarded seabed right in Crown Estate Scotland’s ScotWind leasing round, meaning up to 37GW of new renewable generation could be installed in the country over the next decade or so.

They therefore asked to be involved at the earliest possible stage in the strategic planning of new and extended renewable developments to ensure they are able to provide suitable and cost-effective connections when needed.

The projects recommended to proceed in the Network Options Assessment (NOA) for 2021/22 include four subsea high-voltage direct current (HVDC) links connecting Scotland and England. The first two of these projects recently received preliminary approval from Ofgem following an initial needs case assessment.

SPEN and NGET have proposed to install a 2GW link connecting Torness in Scotland to Hawthorn Pit in England that would be energised in 2027 and cost £1.3 billion. SSEN and NGET have also proposed 2GW link connecting Peterhead in Scotland with Drax in England that would be energised in 2029 and cost £2.1 billion. Final needs cases for the projects were submitted to Ofgem in December.

The approved projects additionally include two new onshore cross-border connections and another subsea HVDC link within Scotland from Peterhead to Caithness.

Rob McDonald, managing director of SSEN Transmission, said: “This year’s NOA report fires the starting gun for over £7 billion of investment in grid infrastructure in Scotland which is critical to enable the growth of renewable electricity and delivering net zero, including the first step in unlocking the vast increase in offshore wind expected following the recently announced outcome of the ScotWind leasing round.

“These investments will unlock huge economic opportunities for Scotland and throughout Great Britain, supporting hundreds of skilled jobs in the development and construction phases.  Due to the scale of investment required in grid infrastructure, we believe there is a clear opportunity for governments and industry to work together to encourage inward investment in UK supply chain manufacturing and skills development.

He continued: “In enabling the connection of indigenous, clean renewable electricity generation, these investments will also be crucial in reducing the UK’s dependence on volatile global wholesale gas markets.

“We now look forward to working constructively with government, Ofgem, the wider industry and our stakeholders to provide the timely, coordinated and efficient investment in grid infrastructure that is key to our collective net zero ambitions.”

Scot Mathieson, network planning and regulation director at SP Energy Networks, said: “The most recent NOA recognises the key role we and other transmission operators will play in supporting Scotland to achieve its net zero ambition.

“In order to realise this and to benefit from the economic opportunity this will bring we need an innovative and joined up approach across industry, government and the regulator to ensure opportunities to deploy crucial renewable energy projects are not missed but accelerated.

He said: “In 2019, the Electricity System Operator’s Future Energy Scenarios modelling predicted 15GW of electricity would need to be transferred between Scotland and England in 2035. In just two years, this modelling has now doubled this estimate to approximately 30GW in 2035 – a five-fold increase on existing transfer capability and double the 2019 predictions. Our strategic network investments must support projects in development and those not yet realised.

“With the right support, we stand ready to develop and deliver the electricity infrastructure – offshore subsea cables and onshore overhead lines, pylons, cables and substations – that will provide the backbone of a net zero energy system for years to come.”

Lydia Ogilvie, director of network strategy and operations at National Grid Electricity Transmission said: “We welcome the recommendations made by National Grid Electricity System Operator in their Network Options Assessment as we continue to build the critical infrastructure needed to support the UK’s journey to net zero.

“The recommendations include support for a set of major projects we are developing to upgrade the transmission system in order to help the government achieve its ambition of 40GW of offshore wind generation by 2030. These include proposals in the Humber, Lincolnshire, East Midlands, North of England, Yorkshire, North Kent, four in East Anglia (one of which is a proposed offshore link between Suffolk and Kent) and two proposed offshore electricity connections between Scotland and northern England.

“To deliver this infrastructure will require potentially over £10 billion of investment over the next ten years, essential to achieving the governments offshore wind and net zero targets, long-term security of energy supplies for UK consumers and creating jobs and economic growth.”

The ESO noted that its NOA for 2021/22 will be affected by the outcome of the ongoing Offshore Transmission Network Review led by the Department for Business, Energy and Industrial Strategy as well as its work to develop a Holistic Network Design (HND). It said a refreshed version of the NOA will therefore be published alongside its HND in June.