NESO's Clean Power 2030 plan and what this means for grid reform

On 5 November 2024, the UK's National Energy System Operator (NESO) published its independent analysis on how the Department for Energy Security and Net Zero (DESNZ) can achieve its ambitious Clean Power 2030 (CP2030) goal. In this report, NESO published updated proposals on grid connection reforms, alongside the Methodologies for public consultation.

 

What is CP2030?

According to NESO's description, CP2030 is a goal that requires clean sources of power generation – primarily renewables – to be capable of producing at least as much power as Great Britain consumes by 2030. In addition, the use of unabated (i.e. no carbon capture and storage) gas-powered generation must be reduced to the minimum required to ensure security of supply.

For the purpose of CP2030, NESO defines clean power sources as:

• renewables (including biomass);
• nuclear;
• generating plants using carbon capture and storage (CCS); and
• hydrogen produced from low-carbon methods, such as electrolysis or with CCS.

NESO's clean power pathways predict a four-to-fivefold increase in demand flexibility, an increase in grid connected battery storage from 5 GW to between 23 and 27 GW, more pumped storage, and major expansions in onshore wind (from 14 GW to 27 GW) and solar (from 15 GW to 47 GW) along with nuclear plant life extensions. In particular, NESO highlights that whilst the pathway for batteries represents a major scale-up in build rates, there are already many more projects in the pipeline. Batteries, in fact, are one of the most oversubscribed technology types in the connections queue.

NESO has identified two primary clean power pathways:

• Pathway 1: this pathway successfully builds 50 GW of offshore wind by 2030; and

• Pathway 2: this pathway delivers new dispatchable plants (totalling 2.7 GW) and 43 GW offshore wind.

NESO concludes that a decarbonised grid by 2030 is achievable, but success depends on prioritising 'pace over perfection'. While achieving CP2030 presents a significant challenge, NESO believes it is possible, with clean energy sources capable of meeting or even exceeding Great Britain’s energy needs by 2030.

NESO emphasises the importance of cross-sector collaboration between the energy industry, government and Ofgem to deliver a clean power system that benefits everyone. The government will incorporate NESO's advice in developing its Clean Power Action Plan, which is expected to be published by DESNZ before the end of 2024.

Key points include:

NESO have developed two primary pathways that meet NESO's clean power description:

• New Dispatch: Growth in renewables, but at a lower level compared to Further Flex and Renewables and deployment of new low carbon dispatchable power (CCS and hydrogen) alongside highest nuclear capacity.

• Further Flex and Renewables: Highest levels of societal engagement, with higher residential and industrial demand flexibility and more storage and fast deployment of renewables (50 GW offshore wind), but no new dispatchable power.

NESO notes that the connections queue is currently oversubscribed, and delivering clean power will require reforming the connections queue, resolving planning issues, and ensuring the market structures provide the right revenue opportunities.

The CP2030 report highlights that delivering of a clean power system by 2030 will require "an installed generation and storage capacity of around 210-220 GW and significant levels of new demand connections to the electricity network across transmission and distribution". It is therefore crucial that the connections process is reformed to ensure that the right technology is deployed in the right location, at the right time, and that these efforts align with broader strategic plans that support the CP2030 objectives.

The report included spatial maps showing the capacity and technology needed to align with NESO's Further Flex and Renewables and New Dispatch pathways.

 

Grid reform

NESO has published the latest set of connection reform consultation documents, which focuses on three core Methodologies:

• Gate 2 Criteria;
• Connections Network Design Methodology; and
• Project Designation.

These Methodologies will play a crucial role in identifying which projects are both 'ready' and 'needed' for CP2030. NESO proposes implementing these reforms under a new licence condition, which would provide the necessary flexibility to adapt to the evolving policy decisions.

On 5 November 2024, NESO also launched a consultation on the Methodologies for grid connections reform. The consultation proposes specific criteria and processes for reducing and reordering the connections queue. It marks a shift from the current “first come, first served” approach to grid connections, to prioritising those projects which are ready to proceed, and which align to the locational and technological mix needed for the future energy system, as proposed by the CP2030 report.

To be considered "project ready", a project must meet the Gate 2 Readiness Criteria as detailed in the Gate 2 Criteria Methodology. This Methodology requires either (1) land: securing necessary land rights, provision of original red line boundary and meeting the minimum acreage requirements, or (2) planning: submitting an application for planning consents for projects following the DCO process. Projects must also meet one of the following Gate 2 Strategic Alignment Criteria:

• be aligned with the pathways within the Government’s CP2030 Plan; or
• be a designated project under the Project Designation Methodology; or
• be a transmission connected demand project not in the scope of the pathways within the CP2030 Plan.

The Connections Network Design Methodology then sets out the process for reassessing the existing connections queue, called "the Gate 2 to Whole Queue exercise". The existing connections queue is GB-wide and each contracted project has a queue position based on the date their agreement was countersigned by NESO. By way of summary, NESO propose to reassess the queue as follows:

• The Gate 2 Readiness Criteria will be applied to all projects. Only those projects which have met the "Gate 2 Readiness Criteria" will progress to the next assessment stage. All other projects which have not met Gate 2 Readiness Criteria will be removed from the queue.

• The remaining projects will be “bunched up” to close the gaps in the queue. At this stage, these projects will retain their relative queue position i.e. projects will not skip over one another.

• Sub-queues will be formed for each technology in each zone.

• Projects will be removed from the queue with existing connection dates after 2030 that have not requested advancement to 2030 or earlier and added to Phase 2. At this point the queue is split into Phase 1 (addressing undersupply to 2030) and Phase 2 (addressing undersupply to 2035).

• The planning status of the remaining projects will be determined and the queue will be ordered based on such (i.e. planning obtained, planning submitted and land rights). Note: The planning status of projects will also influence which projects align to the 2030 pathway(s).

• Projects will be sorted by planning status to determine alignment to the CP2030 Plan, and then reordered in their original relative queue positions before being restudied. Note: NESO believes it is not reasonable to use planning status as a readiness metric for the 2031-2035 period, as some of these projects will not be connecting for several years and therefore should not be expected to have already obtained planning.

• Determine point where 2030 pathway(s) reached. Add projects exceeding the pathway(s) to Phase 2.

• Relevant TO/DNO identify any network limitations preventing advancement (prior to detailed network study).

• Return Phase 1 projects to original relative queue positions.

• Determine point in Phase 2 queue where 2035 pathway reached. Any exceeding the pathway will not receive a Gate 2 offer.

NESO have confirmed that they will ensure that projects which have met the Gate 2 criteria and are already under construction and due to commission in 2026 or earlier will not be adversely impacted by aligning the queue to the CP2030 Plan.

The consultation will close on 2 December 2024, and Ofgem is expected to make decisions on the necessary changes to codes and licences, including approval of the methodologies, by the end of Q1 2025. If the changes are approved, the methodologies are likely to take effect from Q2 2025. NESO also expects that network companies will work at pace to ensure that they are in a position to begin issuing improved offers in April 2025.

Please do reach out if you'd like to discuss this further.