Farm Power: How to get a fair deal for green grid connection

• Farmer challenges
• Sticking points
• Possible solutions

See also: The Farm Power project

“Clarity is needed on the amount of renewable energy generation wanted by government for distribution in the UK by 2030,” says Dr Jonathan Scurlock, chief renewables adviser at the NFU.

“For many farmers with small-scale renewables projects, the grid connection process appears to be getting ‘slower and less effective’ rather than quicker and more efficient,” says Dr Scurlock.

“The government has failed to anticipate the volume of land-based renewable energy generation. We are concerned that this will stifle investment in those land-based renewables that support a profitable farming sector,” he says.

The National Trust is one of the UK’s biggest landowners and is facing an uphill battle. “Grid should facilitate, not determine the location of renewable energy schemes,” says James Lloyd, external affairs adviser at the trust.

“Due to the high costs we are being quoted for grid connections we have to resubmit applications for a lower capacity to keep costs down. Quotes we receive vary hugely from around £480/kW to £3,083/kW.

This makes it very hard to predict project costs.

“It takes three months to receive a quote from the DNO [District Network Operating company]. When this quote comes back too high, beyond our budgeted project costs, we have to resubmit another application for a smaller capacity. Often we have to then wait a further three months for a new quote. 

“We’re now designing most schemes to have a maximum output of 100kW to try and ensure a connection, but we’re missing the opportunity to optimise the amount of power available.”

Developers rule

Mr Lloyd says the largest commercial developers have monopolised the grid.”In mid-Wales a 29MW wind farm has paid a small deposit to secure all the remaining grid capacity in this area,” he says.

“This has effectively closed large parts of mid-Wales to any further distributed generation over 3.7kW per phase.

“The ‘price signal’ [a mechanism to drive connections where there is spare capacity on the network] has meant that large parts of the distribution network in the UK are now effectively full, and has enabled the monopolisation of the grid by the largest commercial developers.”

Time for change

The UK power network is out of date – a fact that all parties acknowledge, but no-one has come up with an appropriate solution.

The reason for this is that reforming national power distribution networks will come at a substantial cost.

As with all difficult problems it takes a shock to the system before anything happens to solve it.

That shock came when Western Power announced in March that there would be no new grid connections available in the South West for the next six years.

The real limits of an ancient and creaking power infrastructure suddenly became apparent.

Ofgem is now seeking views on how to provide quicker and more efficient connections to generators.

Crucially it is asking who pays for upgrade work – generators or consumers?

Who pays?

The power networks are managed by nine district network operators (DNOs).

These companies are required by law to connect anyone who asks, on a first come, first served basis with no discrimination between projects.

If a project requires investment to increase grid capacity, then the connecting generator will pay for the infrastructure upgrades that they alone will use and a share of the costs of any further grid reinforcement they may have triggered.

The rest of the costs will be recovered from consumer energy bills.

This system of cost recovery has so far financed 500,000 connections from renewable energy generators since 2010.  However, farmers are increasingly finding that this system does not work for them.

A more strategic response to grid investment is needed says Nicky Conway, manager of the Farm Power project at Forum for the Future.

“We need a more proactive, predict-and-provide approach to grid reinforcement,” she says.

“The current costs are unsustainable for independent generators. Government needs to look at the long-term benefits of distributed generation and move away from the short-term political goal of protecting consumer energy bills.

“The infrastructure needed to generate energy from sustainable sources badly needs investment.”

“The fairest solution in terms of who pays is the current system where costs are split between generators and consumers, but the system needs to work quicker and more efficiently,” says Tom Beeley, renewable energy adviser at the CLA.

One solution being proposed by Ofgem is the full socialisation of costs, where a DNO will invest in infrastructure improvements ahead of demand and all the costs are picked up through consumer energy bills.

“We don’t support the full socialisation of grid improvement costs into consumer bills,” says Mr Beeley. “Generators should always pay a fair share of the cost.”

“The number one priority should be to make best use of existing grid capacity by freeing up the capacity on the network currently earmarked by speculative applications.

“We’ve got to address the queue management by DNOs. It’s got to the stage where it’s a big problem.

“The complexity of the application process is driving a lot of farm capacity into the hands of developers,” he says.

Dr Scurlock says that some of NFU farmer and grower members want to see full socialisation of reinforcement costs, including anticipatory reinforcement.

“Therefore, we’d like to see DNOs investing strategically in network reinforcement and recover these costs from consumer bills.”

For Mr Lloyd, finding a fair way to split the cost between developers is the preferred solution.

“We’d like to see a more transparent and collaborative approach, with DNOs acting as brokers for different developers, allowing costs to be shared.”

“Finding a more efficient way to discover the connection options available and their cost implications is probably the most pressing requirement though.” 

Louisa Coursey of RenewableUK, which represents the wind power sector, believes generators should always pay their fair share of the cost but says “no individual project should be faced with bearing the full reinforcement cost of a constrained network once it reaches its tipping point”.

Farmers face a unique set of challenges that the current energy system does not cater for because they:

1. Cannot move to areas where the grid is not constrained to take advantage of cheaper connections and spare capacity
2. Cannot spread risk across a portfolio of projects
3. Are less likely to have significant finance available for the early stages of project development to pay what can be substantial grid costs upfront
4. Are less likely to have expertise in grid connections
5. In the case of community energy generation groups, use structures which mean that projects typically take longer to develop and may, therefore, find it difficult to respond as quickly as commercial developers when capacity becomes available.

1. Costs – Getting a grid connection is a postcode lottery, but the cost is increasingly prohibitive. Costs can range from £10,000-£5.7m
2. Delays and  abandonment – Two- to six-year delays in getting a grid connection are increasingly common and many good schemes end up never being built
3. Unmet potential – There are numerous reports of generation capacity being curtailed, often by half its potential in order to get a connection
4. Queue management – Due to the competition for connections, capacity is getting clogged up by speculative applications with no guarantee the project will go ahead
5. Alternative connections – The flexible connection offers (where the amount of power you can export to the grid is restricted at peak times), currently touted by DNOs in areas close to capacity, can dramatically affect project performance with no guarantee on when your connection will be curtailed and for how long.

1. Link grid reinforcement to planning for the transmission network to match areas of future energy load to supply from distributed generation
2. Queue management – introduce assessment and design fees for grid connection applications, whereby an applicant pays in advance for the work required to provide a quote. This should reduce the volume of speculative applications clogging up the system, because the requesting a quote is free
3. Queue management – DNOs could introduce time-limited connection offers. This should free-up capacity by removing non-viable projects from the queue
4. Queue management – DNOs provide a sliding scale of quotes for varying capacity to save time in the application process and reduce volume of applications they need to process
5. Stagger connection costs – allow generators to pay the cost of reinforcement in instalments over a set period rather than as lump sum up front
6. Incentives for time-constrained alternative connections and energy storage that can help DNOs manage local networks. These could take the form of, for example, enhanced capital allowances and tax reliefs rather than grants or subsidies.