Two-track strategic network plan proposed

The Future System Operator should create two versions of the Centralised Strategic Network Plan – a shorter-term version to firmly establish the need for specific grid upgrades and a longer-term version to provide visibility over the likely scale of future investment.

The Energy Systems Catapult says both should be informed by a Strategic Spatial Energy Plan that maps outs government targets across the country.

The need for a Centralised Strategic Network Plan (CSNP) was identified by Ofgem as part of its review of its Electricity Transmission Network Planning Review. In November 2022, the regulator confirmed that the development of the plan should be led by the independent Future System Operator (FSO) due to be established by 2024.

Ofgem said it should cover all load-related investment in the onshore and offshore electricity transmission networks to cope with additional generation and demand.

The first full iteration of the CSNP is due to be delivered in 2024/25. The Holistic Network Design, which sets out the grid upgrades that will be needed to achieve the government’s target of deploying 50GW of offshore wind by 2030 and was released by the Electricity System Operator in July last year, forms part of the first transitional CSNP. The ESO’s follow up exercise for the Holistic Network Design, which is due to be published this year, will constitute the second transitional plan.

Last week, electricity networks commissioner Nick Winser outlined his proposals for how to accelerate the delivery of electricity transmission infrastructure in a letter to energy secretary Grant Shapps. The long list of recommendations includes the creation of a Strategic Spatial Energy Plan (SSEP) by the FSO.

In the accompanying report, the Energy Systems Catapult (ESC) says the SSEP should “bridge the gap” between government policy and network development plans, mapping out government targets across Great Britain.

The FSO would produce the SSEP in close collaboration with the Department for Energy Security and Net Zero. Where there are gaps in policy or decisions need to be made, the FSO could highlight these to the department so it can take action.

The ESC says the SSEP would provide an “overarching reference” for many energy network plans, including the CSNP, of which there should be two different versions.

The first would be a shorter-term plan that would cover a ten-year period and would be refreshed on an annual basis. The projects identified in the shorter-term plan should become the “baseline” and should not be revisited in subsequent annual iterations. This would provide certainty over the need for these projects and support engagement with the supply chain.

The ESC says the CSNP should be informed by a Marine Environmental Assessment for offshore projects and a Strategic Environmental Assessment for onshore projects. These assessments would enable the plan to be endorsed by the government through revisions to the National Policy Framework and the National Policy Statements.

Meanwhile, Ofgem’s endorsement and oversight of the plan would enable the removal of needs case assessments from the regulatory approval process, creating time savings of six months each for the initial and final needs case assessments currently conducted by the regulator.

The ESC there should also be a longer-term CSNP that would cover a period of at least 25 years and would be refreshed every five years. In the near term, the body says there may be the need for more frequent updates due to changes in government policy, initial learnings from the development process and the growing pace of decarbonisation.

Transmission owners should use the plan to provide evidence to the supply chain of the scale of investment that will be needed over a longer period. This would enable the supply chain to invest in additional capacity as they will be able to see a long-term order book.

If lead times for some equipment continue to increase, the plan could be used as the basis for bulk purchases before requirements for specific projects are identified in the shorter-term plans.

It would also enable the industry to work with the Department for Education to identify training courses and university places that will be needed to meet the skills requirements. This work should also include activities to attract people these courses, from school years through to the retaining of experienced workers.

The plans would additionally enable transmission owners to understand the impact on investment in future price control periods and agree funding levels with Ofgem.

The ESC report comes shortly after Ofgem issued a new consultation on the development of the CSNP by the FSO, which similarly proposed the creation of both a longer-term plan as well as an annual update.

The regulator said the first longer-term plan is expected to be delivered in 2026. It said the plan will identify onshore, offshore and cross-border electricity network needs out to 2050 and will be updated every three years.

This plan will establish a “funnel” of potential projects that would be needed in different future pathways. Over time, the range of potential projects will narrow as forecast system needs become more certain, eventually enabling the FSO to recommend that they move into the delivery pipeline.

Ofgem said there will also be annual update looking out over a period of up to 12 years. This update will signal if there are opportunities for transmission owners or third parties to address residual network constraints. It could result in in short-term solutions being taken forward whilst projects are being delivered or indicate if existing solutions need to be enhanced.

The annual update will recommend if projects should be moved into the delivery pipeline. It will also review projects that are already in the pipeline but only if there are significant changes to their parameters such as delivery date, cost, capacity or needs case.

Ofgem said it is still considering how the FSO’s recommendations to move projects into the delivery pipeline will be approved and linked to regulatory funding decisions as part of its Future System and Network Regulation project. A decision on the regulatory framework for networks is expected to be published in the autumn.

Nick Winser is one of the speakers at Utility Week Forum, which takes place in London on 4 – 5 October. For more information and to see the full programme, click here.