How much we pay for connecting to the distribution electricity network is changing.

And there could be some significant positives for net zero from 2023.

The much delayed Ofgem minded-to decision on distribution electricity network access, was released yesterday for consultation.

A key area is the intention that new electricity demand – particularly that anticipated in net zero such as electric vehicle chargers, heat pumps and electrification of processes – will see the liability to pay for network reinforcement costs ‘triggered’ by their projects removed from April 2023.

For renewable generators there is also some good news, their connection charges are going down, but not by as much as demand. There are some important caveats and other issues which are outlined in my longer Regen blog.

Ofgem struggled throughout the review to find evidence of the barrier that these reinforcement rules were causing to new connections, growth and net zero. Evidence tended to be anecdotal, many projects were not officially quoted for, instead new customers were put off by the equivalent of a sharp intake of breath by the DNO and muttering ‘it’ll cost you’.

So, the jury is out on how much this has stifled in investment and growth across the UK. but it looks we may find out in 2023. It is very possible that, if this change goes ahead, DNO’s may be faced with a flood of pent up demand.

As well as potentially unlocking individual projects, the really interesting part of this is that it should allow the networks to use these changes to strategically invest in the distribution network, where previously there were obliged to only upgrade to support the needs of each individual project.

The review specifically notes: “The current arrangements…. contribute to DNOs taking an incremental and reactive approach to reinforcement as the means of facilitating new connections, rather than investing in light of anticipated wider network needs.” (p.32)

There is less good news for flexibility and storage, as Ofgem have decided to only announce proposals in the three areas they are comfortable with, and doing more work on areas that have proven tricker, namely how to use annual network charges to influence behaviour and their relationship with flexibility markets.

In some cases, flexibility rather than new network could be a cheaper way to connect more generation and demand. The difficulty is understanding where, and how this can be signalled.

And for that Regen are engaging with Ofgem’s Full Chain Flexibility work.?