The Secretary of State for Business, Energy & Industrial Strategy (BEIS) confirmed this week the latest energy statutory instrument which will allow Distribution Network Operators (DNOs) to start charging for processing electricity grid connection offers.
The Electricity (Connection Offer Expenses) Regulations 2018, which come into force on 6 April 2018 require the applicant to pay the reasonable expenses relating to a grid connection application that have been reasonably incurred by the electricity distributor, the DNO. To date this instrument has not been available to DNOs with the result being that developers, speculators and promotors of energy infrastructure development have effectively locked up grid capacity for up to 12mths whilst the offer is kept open, often stopping other more viable schemes coming forward. In 2016/17 Western Power Distribution had almost 8GW of generators waiting to connect schemes to their network resulting in connection offers not being made or if they were being conditional or time constrained.
Under the new regulation, DNOs will be able to recover reasonable costs incurred in assessing impacts on the distribution and transmission systems, designing the connection and processing the application itself. DNOs will however be required to justify the charge, provide notice to the applicant of the charge and specify when and how payment must be made.
The question is will this pricing mechanism result in market forces unlocking latent grid capacity for new energy development to come forward.