Is growth in network capacity impacting our ability to deliver our offshore wind ambitions?

What we need from network infrastructure.

Is the electricity system in GB still able to do its job? At times, the grid does not have the capacity to transport all of the electricity which could be generated.

Britain has a huge opportunity to deploy offshore wind. Failing to provide the supporting infrastructure to maximise the potential benefits from our environmental resources may impact our ability to deliver on this potential. In this blog we explore the potential routes to delivering the necessary capacity to avoid constraining growth in offshore generation.

What is the issue?

The history of the transmission network goes back to the end of the Second World War when the advances in technology helped reduce the overall cost of electricity transmission. It became cheaper to move the electricity than the fuel source (coal).

As the cost of renewable energy has reduced, and in response to Government policy, generation sources are now connected in new locations. We have seen rapid growth in onshore (c.14GW) and offshore (c.14GW) wind capacity – this is almost exclusively situated away from demand centres and from the location of fossil fuel generation.

Increasingly, the National Grid Electricity System Operator (NGESO) needs to pay generators to turn down supply (curtailment) when there are network constraints, and to use other generators to provide the necessary capacity near demand centres.  

Figure 1 - National Grid Future Energy Scenario 2022 – Regional flows on the electricity transmission network in Leading the Way

Wind generation curtailment cost consumers £299m in 2020 and £507m in 2021, with 3.5 TWh of wind generation curtailed in 2020, and 2.3 TWh curtailed in 2021. Based on analysis by the NGESO, constraint costs could hit £2.5bn per year over the next decade as the generation mix continues to change rapidly, and generation output more frequently exceeds network capacity.

In the main, this is happening because generation is situated in Scotland whereas demand is located in the Southeast of England - 82% of constraint costs in 2020 and 2021 were from curtailing wind in Scotland.

We also have problems connecting new generation to the system: “For those looking for a connection to the electricity transmission system, the queue currently comprises nearly 240 GW of new generation and interconnector schemes (compared with 82GW of connected capacity today), made up of over 600 projects and extending 11 years into the future.”

There is a risk of it all getting worse as we build more offshore wind and the likelihood of removing the moratorium on new-build onshore wind increases. Our aspiration is to grow from the current c.14 GW of connected offshore wind to 50 GW by 2030. Much of this is likely to be connected in areas which already have supply surpluses – potentially increasing the need to curtail generation to avoid greater network issues.

So what is happening?

This is a well-understood challenge, and there is no shortage of work going on across the industry to identify approaches to alleviate constraints.

As the entity responsible for managing the network, NGESO has a significant role to play. In its Holistic Network Design, NGESO sets out its view of how the system can best balance the costs of investing in new network capacity vs. the costs associated with increasing constraint payments. The document provides a refreshing level of transparency on the investments that will be required, where they will be situated, and what they are intended to achieve.

“To meet the 2030 ambitions, 94 onshore reinforcement projects totalling £21.7 billion are required to be delivered by the end of the decade”.

At the same time, National Grid Electricity Transmission (NGET) and NGESO are working to speed up the connection process. This is largely focused on enabling more mature projects to connect to the network at the expense of those which are not progressing as intended.

Equally, Ofgem is not sitting on its hands. It has released its decision on accelerating onshore electricity transmission investment. The decision acknowledges the issues being faced and goes some way to help speed up investments by streamlining the regulatory approval and funding process to enable the Transmission Operators (TOs) to get earlier access to project funding for relevant projects.

But Ofgem knows there is more to do:

“The changes to the regulatory framework detailed in this decision document alone will not be sufficient to ensure the connection of the offshore generation to the electricity network by 2030 without adjustments to both the current planning regime and the TOs delivery models”.

This view is echoed by others, such as the Chief Executive of Solar Energy UK, Chris Hewett who observed: “The restrictions on the grid are a drag on economic growth across the whole country”.

Given the importance of getting this right, what more do we want to see?

Work to explore further network investment. Industry commentators suggest that the current approach is not expected to be enough to meet the level of investment required. There needs to be clear direction on the likely extent of planned investment. In addition, targeting the removal of barriers to connection and network growth may facilitate the connection of additional renewables without significantly increasing the investment requirements. As part of this, we would expect to see the Government and the Department for Energy Security and Net Zero taking greater control over the strategic decisions – most likely through the Future System Operator (FSO), once it has been established.

Change the location of generation investments. The work indicated by the ongoing Review of Electricity Market Arrangements has focused on the increasing use of locational signals to encourage investment in new generation in areas with available capacity. Unfortunately, given the timing of these potential changes, it is unlikely that we will see significant alterations to the offshore wind geographical pipeline. This is perhaps a missed opportunity.[1]

Do more to co-locate demand near generation sites. With the right incentives, it may be possible to make better use of the constrained energy by attracting demand to locations with excess generation. For example, through the use of batteries such as Zenobe’s transmission-connected batteries at Wishaw, or the recently announced Local Constraint Market in Scotland using Piclo’s Flex Platform. In the future, such electricity could be used to make hydrogen (although we note there will be a need to ensure electrolysers can operate efficiently with variable electricity input).

There are also other actions which may be necessary if we are to achieve our offshore wind potential. These include:

• Reconsidering the value of curtailed generation so that generators are paid less and have to take greater control over their output.

• Seeing our offshore wind industry through the lens of a North Sea Grid rather than just a domestic grid.

• When it is established, pushing the FSO to do more to prioritise the use of green energy.

Britain has a huge opportunity, and a need, to move away from our reliance on imported fossil fuels through the deployment of new offshore wind farms. Failing to provide the supporting infrastructure to maximise the potential benefits from our environmental resources may impact our ability to deliver on this potential.

As the CEO of SSE acknowledged “If the UK doesn’t act quickly, others will.”

[1] Regen “Go West!” report, October 2022

Want to find out more? We’d love to discuss how you can play a key role in the future of offshore wind. Please get in touch at hello@complete-strategy.com

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