Friday, July 19, 2024

Grid connections crisis: How can UK businesses overcome grid constraints on the path to decarbonisation?

Dan Moore

Daniel Moore, Head of Utility Services – SMS Plc

Britain’s energy transition has become fraught with well-publicised delays in obtaining crucial grid connections, leading to stalled investments and imperilling emissions reduction targets. Amidst this challenge, a range of strategic solutions have emerged as vital lifelines to help organisations navigate grid constraints and propel decarbonisation efforts forward.

As the urgency to combat climate change intensifies, businesses across the United Kingdom are increasingly looking towards electrification as a key strategy to reduce greenhouse gas emissions. However, a significant obstacle stands in their path: grid constraints.

The challenge of grid constraints not only hampers the efforts of businesses to transition to cleaner energy sources but also poses risks of delayed investments and lost opportunities.

What are grid constraints?

Grid constraints arise when there is insufficient capacity within the electricity grid to accommodate increasing power demand and/or integration of new renewable energy sources. This bottleneck in the grid infrastructure poses a formidable challenge for businesses embarking on decarbonisation and electrification initiatives.

For many large commercial or industrial energy users, it is an unfortunate reality that transitioning to cleaner energy sources requires (often costly) new or upgraded grid connections from their site(s).

Electrification of processes previously reliant on fossil fuels (such as adoption of efficient heat pumps in place of gas-fired heating or installing electric vehicle infrastructure to facilitate low-carbon transport) as well as integrating onsite electricity generation like solar PV, typically necessitates establishing a larger grid import / export capacity to and from the site.

However, with the huge increase in demand for new or upgraded grid connections from UK businesses looking to kickstart their electrification journey in recent years, there now exists a huge backlog of connections requests. Currently, businesses face delays ranging from 2 to 12 years for grid connections depending on how much capacity they require, with some reported to be waiting well into the 2030s.

How do grid connection delays affect business decarbonisation plans?

The impact of grid constraints on decarbonisation plans is profound. These delays not only escalate costs but also jeopardise critical investments and emission reduction targets. The implications extend beyond individual businesses, affecting downstream sectors in the supply chain and impeding the broader transition to a low-carbon economy.

Moreover, businesses encountering grid limitations are forced to explore alternative, often suboptimal, decarbonisation routes. This can often compromise long-term emission reduction efforts and undermine the economic viability of renewable energy projects if businesses are not advised sensibly and strategically by genuine experts on their best possible alternative options.

What is Government doing to address grid constraints?

Following mounting pressure from industry, media, and the public, in November 2023 the UK Government released its Connections Action Plan, which outlines reforms to the process of grid connections including raising entry requirements, removing stalled projects, better utilising existing network capacity, improving data and processes, and developing longer-term connection process models. The goal is to significantly reduce connection timescales, ensuring viable projects can connect faster to support the transition to a net-zero power system.

The plan involves collaboration between government, regulatory bodies, energy companies, and customers to ensure timely implementation and accountability. Benefits are expected for all types of connection customers, from large-scale renewable projects to individual consumers installing home appliances like heat pumps.

In April 2024, Ofgem also endorsed the National Grid Electricity System Operator’s (ESO) own ambitious proposals to revamp the grid connections process, which aims to prioritise viable projects and potentially halve the connections queue. Whilst the regulator acknowledged the proposal’s potential to significantly contribute to the overall vision of the Connections Action Plan (CAP), it highlighted the need for continued progress on other CAP actions.

Delivering this action plan and its proposed benefits is itself expected to take a number of years to implement fully. This is time that many businesses wishing to decarbonise can ill afford to lose if they are to make good on their sustainability and net zero targets, which in many cases have been publicly declared.

How energy infrastructure experts can help businesses mitigate the risks of grid constraints

Amidst the challenges posed by grid constraints, strategic partnerships with energy infrastructure experts and carbon reduction partners have emerged as indispensable assets for businesses navigating the transition to cleaner energy sources. These partners, equipped with expertise in grid infrastructure and decarbonisation strategies, play a pivotal role in guiding organisations through the complexities of grid limitations.

One such solution lies in collaborating with ‘power partners’, such as SMS, who offer tailored support in value engineering grid connections. Such energy infrastructure experts specialise in facilitating seamless grid connections, managing critical responsibilities, and offering tailored solutions to address businesses’ unique energy needs.

Experienced partners like SMS also bring specialised expertise in grid integration and DNO management, enabling businesses to navigate regulatory frameworks, technical requirements, and capacity constraints effectively, helping avoid longer delays than necessary, mitigate risks, and maximise efficiency of planned electrification projects.

Alternative approaches to overcoming grid constraints

Besides tackling grid connections head on, businesses can also explore alternative approaches to circumvent grid constraints and accelerate decarbonisation efforts.

Microgrids (self-sufficient energy systems serving specific sites) offer a decentralised solution to energy needs. By incorporating distributed energy sources and energy storage, microgrids enhance resilience and minimise reliance on the central grid, particularly in areas with constrained infrastructure.

Onsite energy storage solutions, such as long-duration battery systems in particular, provide an ideal avenue for businesses to manage local demand and generation effectively. By optimising energy usage and reducing transmission losses, these storage solutions offer a cost-effective alternative to grid upgrades and enhance the integration of renewable energy resources.

While addressing grid constraints is essential for decarbonisation efforts, businesses can also enhance resilience and mitigate risks by diversifying their energy sources and adopting a multi-faceted approach to energy management.

Working with a Net Zero partner

When embarking on alternative approaches to overcome grid constraints and accelerate decarbonisation efforts, organisations should engage with expert energy consultants to navigate and implement such complex solutions exampled above, ultimately advising you on the most viable route forward for your business.

strategic net zero partner like SMS can guide the establishment of microgrids, for instance, ensuring they are designed to optimally balance load and generation while enhancing resilience against grid instability. SMS can also aid in integrating onsite energy storage systems to manage energy flows and optimise usage in line with the business’s operational demands and sustainability goals.

Furthermore, by leveraging expertise in renewable energy technologies, carbon reduction experts like us can help businesses diversify their energy sources creating a robust, multifaceted energy management strategy that reduces grid dependence, shields against price volatility, and boosts energy security.

Overall, our role is pivotal in crafting a tailored, strategic approach that not only addresses grid constraints but also positions your business’ long-term energy efficiency and cost savings.

Looking ahead: Clearing the path to resilient, sustainable energy

As businesses chart their course towards decarbonisation and electrification, overcoming grid constraints has emerged as a critical imperative.

By forging strategic partnerships and leveraging alternative energy solutions, businesses can surmount the challenges posed by grid limitations and accelerate the transition to a resilient, sustainable energy future.

This article appeared in the June 2024 issue of Energy Manager magazine. Subscribe here.

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