Energy News

New Rules Open Up Competition in Connections

           Energy News
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From 30th October, owners of the local electricity networks face new rules that force them to open up to competition in the electricity connections market. The energy regulator, Ofgem, has brought in a new code of practice to ensure that Distribution Network Operators (DNOs) improve the conditions for competition.

There are fourteen regional electricity networks that connect the consumer to the main transmission network. New connections are required every year for new housing developments, businesses, and energy projects such as combined heat and power (CHP) and renewables. Independent companies can compete against the local distribution network operator, which is fundamental in keeping connection costs competitive and improving the quality of service. However, the DNOs often control some essential parts of the service provision, which limits a competitor’s ability to manage the full delivery of their own service.

The new code will require a DNO to provide the same amount of technical information to a competitor as it would to its own business and to the same timescales, with the independent company deciding where it will connect. Accreditation for engineers must be applicable across the country rather than by region.

Ofgem has also called for DNOs to find innovative ways to connect increasing levels of embedded generation to the distribution network as high demand for local connections means that some areas have reached saturation point. Embedded generation is an electricity plant that is connected directly to the distribution network rather than to the transmission network, such as CHP and renewables. This pattern contrasts with the original design of the UK’s electricity system, which was structured to disperse electricity from large central generators out to the distribution networks.

In some areas, network infrastructure upgrades are required before any more connections can be made. Western Power Distribution, the DNO for Midlands, South West England, and Wales, announced earlier this year that it will not be able to provide any new connections for large renewable projects for up to six years.

The news that the conditions for competition will be improved has been welcomed by the renewables industry, which often faces long connection delays. A spokesperson from Ofgem said they wanted DNOs to “take creative approaches to connecting both generators and demand customers more quickly, while reducing the need to build extra capacity. Where new capacity is needed, we expect the DNOs to look at how investment could be made earlier, to speed up connections. This will bring more immediate benefit to renewable developers.”

A recent report from KPMG called on the government for a decentralised energy strategy that emphasises the part that energy storage has to play in conjunction with solar energy and also made recommendations on tariff structures to incentivise a shift in power consumption to times when solar generation is at its highest. This could be particularly beneficial to industrial customers with large loads that can easily be shifted to different times of the day. Western Power Distribution is currently considering the introduction of a sunshine tariff to encourage consumers to move their demand to the middle of the day as a strategy to cope with soaring levels of intermittent solar power on its network.

As focus on energy storage increases as a means of increasing the flexibility of the network, the Institute of Civil Engineers has also published a report on unlocking the potential of energy storage through regulatory changes. The full report can be found here.

Written By- Nikki Wilson


Alfa Energy Group

We are an international energy and sustainability consultancy that develops relevant strategies for clients in all industries and keeps them running.