Spencer Thompson, CEO – Eclipse Power
An investment platform for networks including Eclipse Power Networks. Eclipse Power Networks is a specialist licensed Independent Distribution Network Operator (IDNO).
Where is the power going to come from to meet the growing demands from the electrification of housing, industry, transport, and heating? And, importantly, will grid connections enable expectations and targets to be met?
The new Labour government has pledged to build 1.5 million homes in five years to address the housing shortage. However, already more and more housing developments are being delayed by getting a connection to the grid. Developers are realising that grid connections are being constrained by the queue, which is running close to the terabyte mark.
The need to supply power to more housing developments, coupled with the exponential rise in EV charge point installations is adding significantly to the queue. A new development of a few thousand homes is usually a ‘five-year plus’ programme that is built and connected in batches of 100-500. Even getting the first connection can be a challenge.
The upcoming modifications to ‘Connections Reform’ which are due to go live in January 2025 could have a big impact. They include switching the connection queue from ‘first come, first served’ to ‘first ready, first connected’. This is good news for developers who have carefully planned their connection projects. Especially forward-thinking developers who are exploring smarter approaches to connections in response to grid constraints, for example looking to utilise microgrid technology behind the meter.
Assets assemble – bring on the microgrid
Microgrids are self-contained power networks that connect to the power network at a local or regional level and can run in parallel with the national grid. They usually comprise interconnected loads and distributed energy resources (solar panels, wind turbines, battery storage, and generators) within a defined boundary that work together to meet the site’s needs, with least possible interaction with the grid. Importantly, microgrids can be integrated with other smart grid technologies to further optimise energy use and enhance grid stability.
Another viable option could be building out and developing a private network (which could include microgrid technology) resulting in a development which needs less import/export capacity from the grid. So, when the developer submits their application for a grid connection, they may be more likely to secure a closer connection date for the project as they will require less capacity. Optimising electricity consumption behind the meter and balancing with exporting/importing to/from the grid is the trick here. The concept has been around the industry for a long time but hasn’t really taken off with the networks and customers. Given the current constraints on the grid, now is the perfect time to deliver innovation as we strive for net zero.
What does this look like?
Recently, a development of around 4000 homes that needed a 20MVA supply from a local DNO was told that the connection would be delayed by six years because of transmission reinforcement upstream. Using a microgrid could turn a 20MVA demand into a 5-10MVA connection, reducing the cost to connect to the grid and, more importantly, the lead time.
Another benefit of microgrids is the revenue model they can enable behind the scenes. They can be developer owned, owned by a network company like Eclipse Power, community owned by local residents, or a combination of the three.
Powering parks and campuses
Outside of the housing demand, there could be even bigger grid benefits from microgrids powering commercial and industrial parks and campuses. Large energy companies have tended to move towards energy parks, rather than single assets, with solar and battery providing several valuable revenue streams. Developers are beginning to work with data centres and even green hydrogen balanced behind the meter in a microgrid. These options have the potential to have a major impact on unblocking the connection queue over the next five to 10 years.
Intelligent planning to benefit the network
More joined up thinking and actively building solar, battery, hydrogen and data centres around the country to map to the network would help reduce constraints in certain areas. At the moment, the rules are that you can connect anywhere. So, all we’re doing is creating this hugely inefficient network. By introducing reasonable rules to control the location of new generation and storage assets, we could provide more benefit to the network while keeping some flexibility around where the technologies connect.
Microgrids represent a smart network future that has been in the background of government and industry thinking for a long time. There are a few barriers still to pass. Some are around governance, especially in the residential sector, where there are regulatory restrictions around how much a microgrid or private network is possible. The regulator, together with various distribution code changes, will be the key to unlocking this.
For more information, please visit Eclipse Power
This article appeared in the September 2024 issue of Energy Manager magazine. Subscribe here.