The National Grid Electricity System Operator (ESO) has announced a significant restructuring aimed at addressing the backlog of projects awaiting connection to the UK’s electricity grid. This follows an earlier proposal detailing plans for streamlining project connections.
After a consultation earlier this year, the government has decided to acquire the ESO, transitioning it into public ownership. From 1 October 2024, the entity will be rebranded as the National Energy System Operator (NESO) and will assume responsibility for the comprehensive planning of Britain’s gas and electricity networks. Under the Energy Act 2023, NESO will be designated as the Independent System Operator and Planner (ISOP), taking on all existing functions of the ESO and expanding its remit to include gas and hydrogen.
This long-anticipated change is expected to enhance the development of new energy infrastructure and improve coordination across the energy sector. The government aims for NESO to make a significant impact on the current connections queue, which has been a bottleneck for many projects.
In an open letter published by Ofgem on 16 September 2024, it was noted that NESO’s scope will be expanded to give it greater control over the connections process. This change aligns with the government’s ambition to achieve a clean power system by 2030 (CP2030). The Energy Act 2023 enshrines NESO’s responsibilities to support net zero goals while ensuring energy security and economic efficiency within the gas and electricity sectors. The increased authority for NESO to determine project connections is viewed as a potentially transformative development for the connections process.
Ofgem has expressed optimism about the establishment of NESO, describing it as an opportunity to align project connections with the CP2030 objectives more effectively. The connections process is crucial for delivering the necessary generation, storage, and interconnections to meet anticipated energy demands. A key task for NESO will be the development of a Strategic Spatial Energy Plan (SSEP), outlining its approach to achieving these goals.
The urgency of this transition is reflected in Ofgem’s letter, which emphasises the need for effective coordination between project connections and strategic energy system planning. Such targeted connections reform is expected to provide increased certainty for investors, facilitating the necessary scale and pace of network adaptation and development. Although current projects in the queue may experience some uncertainty during this transition to centralised connections planning, clarity is expected to emerge with the publication of the SSEP and further government guidance on CP2030.
To facilitate the establishment of NESO and empower it to fulfil its duties, various modifications to the Balancing System Code and existing ESO licences will be implemented, as outlined in previous consultation documents. These changes are set to take effect from 1 October 2024.
As Ofgem stated in its open letter: “Greater certainty in the projects that will be connected will provide increased certainty for network owners to invest in and build the requisite network.”
Notes to Editors:
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- This article is written by Jules Daly, Marketing and Communications Manager at Powersystems.
- Email jules.daly@powersystemsuk.com Telephone 01454 318000
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