Spencer Thompson, CEO at Eclipse Power
Rapidly transitioning our energy systems is fundamental to achieving the government’s Clean Power 30 initiative and boosting economic growth. But with up to 1,000 gigawatts of capacity seeking to connect to the grid – which needs only 200 gigawatts to support the energy transition – the race to connect has become a high stakes battle of the fittest, with only the most strategic and well-connected developers likely to emerge victorious.
It is hardly news that developer applications to the UK’s electricity distribution and transmission networks have experienced a period of stasis for some time, with lengthy queues of projects waiting for connections. For some projects, it is estimated that delays could be up to 10-15 years resulting in uncertainty around final costs due to significant market volatility in both capital costs, funding costs and wholesale energy prices. Such severe delays are putting developments at risk as investors reconsider projects that may not secure connections for many years.
The National Energy System Operator (NESO) has recognised that a ‘first-in-the-queue, first served’ policy with out-dated processes over joining the connections queue, is a major problem. Through its Connections Reform process it has been inviting consultations and running working groups to find solutions to break the gridlock. However, concern is mounting that the problem is not solely a first-in-the-queue issue, but also one of only the very large, very well-funded companies having a realistic opportunity to secure their place in that queue.
The UK’s race to connect renewable energy projects to the grid has become a high-stakes battle of the fittest, with only the most strategic and well-connected developers likely to emerge victorious.
These “fittest” players are accelerating planning approvals, locking in supply chain agreements, and aggressively lobbying government and regulators to tip the scales in their favour. Meanwhile, smaller, independent developers with strong technical expertise are at risk of being left behind. Without the same resources for ongoing finance and high-level lobbying, they may see their shovel-ready projects passed over in favour of the industry giants. One developer confided they’ve poured millions into developing projects, only to see over half now at risk due to the grid connection bottleneck.
The stakes couldn’t be higher. The UK needs hundreds of billions in investment to deliver the energy transition and meet net-zero goals. But if too many projects fall by the wayside, that vital capital could dry up, with investors taking their money elsewhere in Europe or globally.
It is developers with the deepest pockets and strongest industry connections that will reap the rewards in the current landscape. The rest face an uncertain future, their green energy plans at risk of being crowded out by the industry giants.
But could a more flexible approach to capacity help alleviate not only project inertia but improve opportunities for smaller developers? Currently, once a connection offer has been accepted, it is considered contracted generation, even when the developer is not actually ready to generate electricity. NESO analysis shows that only 30% to 40% of projects in the queue are completed. This can hold back those that are more readily able to proceed – often smaller, more agile developers.
With energy resources mainly located where there is very little demand, and demand where there is little resource, power transmission is increasingly required over greater distances, putting huge pressure on delivery of new infrastructure. Moving to regional or zonal solutions will help the GB grid.
Added to the greater distances required for power to be connected, developers can also be faced with high use of system charges due to increasingly out-of-date charging methodologies, resulting in a system that penalises investors trying to deliver a renewable energy development in a location where actual energy generation can take place.
A general absence of transparent dynamic modelling also means the grid system is frequently over-engineered for assets connected to it whilst, at the same time, limiting further connections based on a very narrow band of potential peak generation that does not always match a real-world situation. In short, contracted generation isn’t necessarily aligning with actual generation.
NESO is already pursuing improvements in queue management (offering Transmission Equivalent Capacity amnesties allowing energy generators to terminate or reduce their TEC without penalty), as well as better enforcement of connection agreement milestones. The CP30 criteria for renewables on a zonal basis will help a great deal but there will be winners and losers here, and it is important that post 2030 is considered quickly also.
However, an additional flexible approach that could see significant benefits for all developers – including smaller, more innovative companies – could be for partial capacity to be awarded that would enable developers to fast-track their projects (with additional capacity granted as the project develops and grid allows). Such an approach could free up a lot of projects in a congested marketplace, rather than the current stringent either/or approach that is leaving many developers and investors in limbo.
This article appeared in the May 2025 issue of Energy Manager magazine. Subscribe here.