ESO sets sights on 144 zombie projects as connection reforms approved

As many as 144 stalled projects could be forced out of the connections queue, after Ofgem approved reforms suggested by National Grid Electricity System Operator (ESO).

The new rules will allow the ESO to remove projects from the connections queue if they fail to meet a number of milestone agreements.

The queue management milestones will be implemented from 27 November and will apply to both existing and future grid connection agreements.

The ESO has already identified 144 “high risk” projects which are now at risk of having their grid connection agreements terminated as early as next year.

In a letter to industry, ESO executive director Fintan Slye revealed that engineering consultancy DNV has been brought in to inspect the 144 projects, “to provide an independent view of their ability to meet their contracted connection date”.

Currently, there are 232 projects accounting for around 45GW of capacity that are due to connect by the end of 2025. The 144 projects at risk of being removed account for around 29GW of capacity.

“If these projects cannot demonstrate that they are progressing and that they will be ready to connect in time, we will seek to push them back or, where necessary, terminate them, so that more viable businesses can connect in,” Slye’s letter states.

“This approach, alongside the package of additional reforms expected to be announced this winter to the connections process and building of the electricity networks, shows that government, the regulator and the ESO are resolute in our determination to ensure GB’s electricity networks support the needs of the industry and the wider economy.”

He adds: “I want to be clear; we will be uncompromising in our approach to driving out and pushing back projects that cannot meet their connection date, paving the way for more viable projects that have a real chance of plugging into the grid, energising the UK economy.”

The ESO said that it will publish guidance on 27 November on how it will use its powers, with the first terminations likely to happen as early as 2024.

Milestones will be set for both pre-construction activities and during the construction phase of a project. They will be calculated by working backwards from the agreed connection date (see table below for milestone breakdown).

Eleanor Warburton, Ofgem’s deputy director for institutions for net zero energy systems management and security, said: “The transition to net zero demands urgent changes to the electricity connections system – or we cannot unlock investment, speed up network build and accelerate new technology.

“This is a big step towards phasing out the first-come first-served queuing system. We want new power on the grid as quickly as possible, so if you’re ready, you can connect sooner. If you’re not ready and are blocking the progress of others, you’ll be removed – you can’t sit on the queue with no consequences.”

The ESO has estimated that Britain needs between 164GW-186GW of transmission connected generation by 2035, with 83GW already plugged in.

The total transmission grid connections queue, including projects with a connection date beyond 2025, has reached 400GW with a further 100GW waiting to connect at distribution level.

ESO figures show that only 30-40% of projects within the connections queue currently go onto plug into the grid.

Last week, National Grid revealed that its Transmission Entry Capacity amnesty has “run its course” after clearing 5GW of stalled projects from the connections queue.

Speaking to Utility Week National Grid’s chief financial officer Andy Agg said it will be up to the Future System Operator (FSO), Ofgem or the government to decide whether to hold any further amnesties.

Last week, National Grid also announced that it had brought forward the connection dates for 10GW of batteries under a new approach that allows them to plug into the transmission network before non-essential upgrades are completed.