The UK’s shift to net zero is obstructed by a long queue of renewable energy projects that have to wait years to connect to the grid, an energy firm has said.
A report from Centrica found that the UK’s existing queue for Transmission Entry Capacity (TEC) – the queue for connecting new projects to the grid – is massively oversubscribed, and the problem has become more severe in the last few years.
Some of the new energy projects are being blocked on the grounds that the developers do not even have land rights yet and haven’t applied for planning consents. The estimated size of these projects is around 62GW, or roughly one-fifth of all power generation in the queue.
Centrica CEO Chris O’Shea argues that these ‘phantom’ projects should have their construction agreements terminated if developers miss key milestones.
“In recent years, energy security has rightly moved up the agenda as countries look to secure supplies and drive the transition to net zero,” O’Shea said.
“That’s why it defies belief that the queue for new, green energy connections is blocked by phantom power projects. Not only do these ‘developers’ not have the money to develop, but many also don’t even have planning permission or land rights – they’re gambling that holding a space in the queue will make them rich.”
The report found that there are currently 371GW of projects in the queue, enough to significantly improve the UK’s energy security. But only around 114GW worth of projects have listed their connection date as before 2029 despite the plan to decarbonise the entire grid by 2035.
Around 62GW of the projects planned are only in the scoping phase, and developers may not even have secured land rights or applied for planning consent, the report said.
The queue was found to be so oversubscribed that it is having a damaging effect on outside investments that could drive the UK’s energy transition.
Ofgem is currently exploring rule changes to address queue issues that would allow the National Grid Electricity System Operator to remove projects from the queue if they miss key milestones. But it is yet to decide whether the rule change should be applied retroactively or just to new projects that are entering the queue.
The report estimates that applying the rule change to projects already in the queue could add an additional 12GW of green power to the system in the short-term, as space is created for those projects that are ready to progress.
This would be particularly beneficial while oil prices are high and energy supplies remain strained.
“The system was created for a different time, when a small number of large projects were connected each year. Our current approach is not fit for purpose and needs urgent reform,” O’Shea added.
“Thankfully Ofgem has now recognised the need for action, but every day we wait for action is costing consumers money. Urgently introducing an industry rule change and applying it to the current queue, so that existing phantom projects lose their place when they miss milestones, would show that Ofgem were helping to reduce costs for consumers, to drive the energy transition and to improve the UK’s energy security.”