Select Committee on Innovation, Universities, Science and Skills Fifth Report



155. Much of today's transmission system was constructed in the 1950's and 1960's to transport and distribute electricity generated from coal power stations. As a result, the UK 'Grid' is designed for the distribution of electricity from a small number of large power stations, rather than a large number of relatively small renewable installations. If the UK is to deploy sufficient resource to generate 35-40 per cent of electricity from renewables by 2020, it is essential the transmission system be reconfigured to support its supply and distribution.

Electricity transmission

156. The transmission system for England and Wales is owned and managed by National Grid Electricity Transmission plc (NGET), whilst the transmission system in Scotland is owned and managed by SP Transmission Ltd and Scottish Hydro Electricity Transmission Ltd (SHETL). Although the ownership of the Britain's transmission system is split between different companies, National Grid is responsible for overseeing and managing the flow of electricity across the whole of the GB transmission network. In this role, the National Grid is known as the GB System Operator (GBSO).

157. Most electricity generated by power stations is connected to and transmitted by the high voltage transmission network (400kV or 275kV). Electricity from the transmission network is then distributed to homes and businesses via 14 distribution networks, which are owned by seven different operators.[165] To transmit electricity along the distribution system, the voltage has to be reduced through various voltage levels: 132kV, 33kV, 11kV and finally 400/230V.

158. The Distribution Network Operators (DNOs) do not sell electricity to consumers; this is carried out by 'suppliers' who make use of the distribution networks. At present, the electricity supply market is dominated by the 'big six' supply companies (E.ON, Centrica, EDF Energy, Scottish and Southern Energy, RWE npower and Scottish Power).


159. The EU Directive on the promotion of electricity produced from renewable energy sources in the internal electricity market (2001/77/EC) states that:

160. This Directive is not currently enforced in the UK. Currently, generators wishing to connect to the UK's high voltage transmission system enter into an agreement with National Grid (in its role as GBSO). National Grid, however, is under no legal obligation to connect renewable installations to the Grid network. When we asked the Minister whether the Government intended to implement the Directive, he told us that they were "discussing" the matter.[166]

161. In Germany, renewables legislation (EEG; Box 1) requires that grid operators guarantee the connection of renewable installations to the transmission system, and purchase and transmit all electricity generated as a priority. We asked Steve Smith, Ofgem, whether he thought this should also be the case in the UK. However, he was unable to comment on this matter as the issue is currently sub judice:

    We have a proposal from the [wind] industry on which we will have to take a decision as to whether we should prioritise renewables access. We are shortly to publish an impact assessment which will set out our assessment of that. That assessment basically will look at what the carbon benefits of doing that would be, how much renewables you could get and how much faster and weigh that against some of the risks associated with prioritising renewables over other low carbon forms of generation. We will need to do that within our existing statutory system.[167]

We put the same question to the Minister, who told us that the Government is:

    […] reflecting on the issue about priority access; I do not think we are convinced by that. We need to look at that very carefully. It sounds attractive but […] I do not think we are going to commit ourselves at this stage to saying that is the right approach.[168]

162. The Government is currently considering reforms to grid access arrangements as part of the Transmission Access Review being conducted by BERR and Ofgem. The findings of the review will be published in May 2008. Speaking on the issue of priority access, however, the Minister has advanced the view that "from the perspective of a reasonable developer, connection in a reasonable time consistent with the development programme for their project timetable is likely to be more important than whether they have been treated more favourable than other technologies".[169]

163. If the UK is to generate 35-40 per cent of its electricity from renewables by 2020, it is essential that steps are taken to facilitate the connection of renewable generators to the transmission system. We believe that, in line with the EU Directive, renewable electricity generators should be guaranteed connection to the UK transmission system. In addition, we believe that electricity generated from renewables should be transmitted as a priority.


164. The GB Queue describes the queue of projects, largely in Scotland, that are waiting to be connected to the transmission system. The queue arose from an unprecedented number of applications for connection to, or use of, the transmission system submitted before the introduction of the British Electricity Trading and Transmission Arrangements (BETTA) in 2005. Projects in the GB queue are offered connection to the grid by date of application rather than project status. Consequently, some projects in Scotland now have connection offers despite not having applied for planning consent, whereas other projects have consent but do not have a connection offer. There are now some 9.3 GW of wind energy applications awaiting connection.[170]

165. We find it frustrating that, on the one hand, the Government is encouraging the deployment of renewable technologies, but that, on the other, these technologies are unable to commence electricity generation due to a poorly conceived transmission access regime. This frustration is compounded by the knowledge that Ofgem attempted to pilot transmission access reform in 1999 and 2000 but, under threats of legal action, was unable to proceed.[171]

166. Ofgem, together with BERR, are now conducting a Transmission Access Review. In an Interim Report published in January 2008, they concluded:

    National Grid […] should make sure that available capacity is allocated to projects in the connection queue that are able to use it. In practice, this means prioritising projects with consents and financing in place. This should be supported by appropriate information on generation projects wishing to connect so that decisions on where to connect can be taken in full knowledge of what the relevant issues are.[172]

167. Since the publication of the Transmission Access Review's report, National Grid has published new guidelines for managing project connections. The guidelines state that "where National Grid is aware of a "queue" for connection then advancement within that queue will be done in a manner that facilitates projects that are ready, able and willing to connect first".[173] However, Ofgem have questioned whether National Grid is able to do this in practice:

    […] it is very difficult for National Grid to determine whether one particular development is more likely to be able to connect faster than another development. National Grid themselves have acknowledged this […] So although some improvements have been made, in Ofgem's view the current arrangements are in practice still largely on the basis of "first come, first served".[174]

168. We agree with the interim conclusion of the Transmission Access Review that those projects in the GB queue that are able to use grid capacity be connected as a priority. If the electricity industry does not set up formal arrangements to resolve this problem, we recommend that the Government bring forward legislation to make it do so.


169. Built to support conventional electricity-generators, the transmission system is heavily reinforced in former coal-mining regions but has limited capacity in many areas suitable for renewable electricity generation. For example, there are no high voltage transmission lines in locations in North West Scotland where wind speeds are high.[175] As current Security and Quality Supply Standards (SQSS) require that the capacity of all generating stations cannot exceed the capacity of the grid infrastructure, the limited capacity of the Scottish transmission system has resulted in the GB queue.

170. In order to increase transmission capacity there are two large infrastructure projects in the pipeline. First, in Scotland, there are plans to construct a high voltage transmission line between Beauly, west of Inverness, and Denny, west of Falkirk. A public inquiry into the construction of the Beauly-Denny line was launched in 2007, and it is hoped that the outcome of the inquiry will be submitted to Ministers for consideration during 2008. The second project is the upgrade of the North-South transmission system. This system supports the movement of large power flows between Scotland and the North of England (net flow is from north to south). Currently, flow from Scotland to England is limited to 2.2 GW.

171. Although the Beauly-Denny line is already in public inquiry, the project is unlikely to be completed for some years. The last major transmission upgrade, the 96km North Yorkshire transmission line, applied for planning permission in 1991 but was not completed until 2003. When we asked Mr Whittaker, National Grid, whether we should expect a similar timescale for the construction of the Beauly-Denny line he replied "we must fear that it is that sort of delay".[176]

172. Given that additional transmission capacity is unlikely to be available in the short term, it is our opinion that alternative means of connecting renewable electricity generators to the Grid be explored as a priority. Steve Smith, Ofgem, explained that it is currently possible to accommodate the GB queue within the current transmission network:

    If they [conventional generators] share that capacity, there is already enough capacity in Scotland to accommodate that level of renewables [the 9.3GW GB queue]. What you need to do for that is to unlock the existing rights and say to the existing gas, coal and other stations up there that these renewables are going to have to come on and share those rights.[177]

173. The ability for existing generators to share grid capacity with renewables is reflected by the Transmission Access Review's conclusion that "the growth in intermittent generation should enable the SO [National Grid] to connect more generating capacity for a given amount of transmission capacity".[178]

174. We agree that, at least until new transmission capacity is constructed, it will be increasingly necessary for generators to share grid capacity. We believe that the Government should act immediately to ensure that current capacity is shared with renewable generation.


175. The energy produced by renewables is often intermittent in nature; solar power is dependent on cloud cover and wave energy on distance of wave travel. Intermittent generation has the potential to affect the operation of the grid network, for example, by affecting the reliability of electricity supply or increasing the work needed to balance supply with demand. It is not the case, however, that intermittency is synonymous with unpredictability. Tidal power can be accurately estimated and, although not particularly predictable day-to-day, wind is predictable hour-to-hour.[179]

176. One way to mitigate the impact of intermittent electricity generation is to exploit the full range of renewable electricity-generation technologies available. By combining sources of renewable electricity, troughs in wind power, for example, can be smoothed out using tidal, wave or bioenergy.[180] Further, by encouraging widespread geographical deployment of individual technologies it is possible to reduce adverse effects on the Grid - it is highly unlikely the wind will not be blowing anywhere in the UK during any one time-period.[181]

177. In reviewing over 200 international studies on the costs and impacts of intermittent electricity generation, the UK Energy Research Centre (UKERC) found that intermittency need not compromise the reliability of the UK electricity system, a view shared by, amongst others, BWEA.[182] However, UKERC's review considered increased electricity-generation from renewables up to 20 per cent of supply, and we now know that we will need to generate approximately double that amount if the UK is to meet the proposed EC Mandated Target for renewable energy.

178. Asked whether generating 30-40 per cent of electricity from renewables would raise management problems for the electricity network, Philip Wolfe, Renewable Energy Association, told us that the impact of wind power on the Grid's stability is "an issue that needs serious consideration and […] we should not underestimate the need to prepare for it appropriately"[183], and John Loughhead, UKERC, was of the opinion that the issue "deserves further consideration".[184]

179. We asked Ofgem and National Grid whether there was a threshold for intermittent generation which, if breached, would put the surety of electricity supply at risk. Steve Smith, Ofgem, told us that "anything is feasible and do-able and there is not a percentage",[185] and National Grid were of the opinion that the challenge of managing increased renewable electricity generation could be met.[186] These opinions did not appear to be evidence-based, however, as National Grid told us that they were currently in the process of undertaking research to ascertain "what the impacts of coping with that [30-40 per cent renewable electricity] is".[187]

180. We were dismayed by the complacent attitudes of Ofgem and National Grid with regard to the potential demands that generating 30-40 per cent of electricity from renewables might place on the evolution and management of the transmission system. We recommend that detailed research into the implications of sourcing 30-40 per cent of electricity from renewables be supported as a priority. Further, we believe it is essential this work be completed by early 2009, such that it can inform the Government's revised Renewable Energy Strategy.


181. The Energy Act 2004 provides for the Secretary of State to put in place new arrangements for the offshore transmission system. When the offshore transmission regime is introduced, there will be new offshore transmission operators (OFTOs) with specific responsibility for constructing, owning and maintaining individual offshore transmission networks. Ofgem will grant OFTO licences after a process of competitive tender.

182. The process of competitive tender for individual OFTO licences will result in the creation of a number of 'point-to-point' transmission systems, rather than a network of connected installations or national offshore grid. While the construction of point-to-point networks may have been appropriate when the UK was to deploy 8 GW of offshore wind, there have been large policy shifts since the decision was originally taken. For example, the Government has proposed the development of an additional 25 GW of offshore wind by 2020. We are therefore concerned that a point-to-point transmission system may no longer be optimal.

183. Doubts over the suitability of the point-to-point networks were raised by RWE Innogy and the Renewable Energy Association, the latter highlighting two additional benefits of an offshore grid.[188] First, a wider offshore network would provide a flexible means to connect future, perhaps as yet unplanned, projects to the UK transmission system. Second, it would enable the UK to connect to the Grids of other countries thereby improving security of electricity supply.[189]

184. To counter criticism of the proposed point-to-point transmission networks, we received evidence in support of the arrangements. E.ON UK stated that "the case for the development of a wider offshore transmission network has not been made"[190], and Ofgem held the view that the point-to-point system is the best way to meet the needs of both generators and developers.[191]

185. There are also concerns regarding the regulatory approach of the OFTO system. National Grid, offshore GBSO designate, told us that:

    We do not believe the proposed regulatory regime for offshore transmission can deliver the Government's aspiration for around 30 GW of offshore renewables by 2020. The proposed regime is overly complex with many areas of the regulatory regime still uncertain and undecided. Further, we do not share the Ofgem/BERR view on the consumer benefits in terms of cost this regime will produce.[192]

National Grid went on to advocate the extension of the regulated onshore transmission franchises to cover offshore transmission for renewables.[193]

186. Given that targets for the deployment of offshore wind have almost tripled since the Government consulted on the form of the offshore transmission system, and as the renewables industry has mixed views on the technical and regulatory suitability of the proposed offshore transmission arrangements, we believe it is essential that further consideration be given to this matter.

187. We are concerned that the proposed offshore transmission arrangements are not appropriate for the UK's target of 33GW of offshore wind by 2020. We urge the Government to reconsider the development of an offshore grid.

A grid for the future


188. The challenges associated with connecting renewable electricity-generators to the transmission system require investment in the system's infrastructure. In addition to the construction of additional transmission capacity—such as the Beauly-Denny and North-South transmission lines—much of the current infrastructure is reaching the end of its 50 year lifetime and will need to be replaced or upgraded.[194]

189. In their 2007-2012 transmission price control review, Ofgem commit nearly £5 billion to renewing Britain's electricity and gas infrastructure to meet new demands from gas imports and renewables connections. National Grid will spend upwards of £4 billion on electricity transmission investment over the next five years.[195] Both organisations expressed confidence that this investment would be sufficient to provide a Grid with the ability to support 40 per cent renewable electricity by 2020.[196]

Intelligent grid management

190. Intelligent grid management is "a generic term applied to innovations that coordinate and manage generation and network resources".[197] The UK has a strong research base in this area, with a number of SMEs and academic institutions involved, such as Ecconect, Universities of Manchester, Strathclyde, and Imperial College London. First generation products are already commercially available and are expected to have reached a stage of partial maturity by 2020.[198]

191. Intelligent management of the Grid will become increasingly important with further deployment of microgeneration technologies. In the current system, Distribution Network Operators (DNOs) are passive players as the flow of power is unidirectional. The connection of microgenerators to the distribution network will fundamentally change the nature of the relationship between the consumers and the DNOs, however, as these devices draw power from, and contribute power to, the grid network raising both integration and grid management issues.

Research and development

192. In developing the grid, it will be necessary to invest in R&D for transmission and grid management technologies. In setting the electricity distribution price control for 2005-2010, Ofgem initiated three new incentives (Distributed Generation Incentive, Registered Power Zones and the Innovation Funding Incentive) to reward generation connections, principally renewables, and to encourage innovation in network development.

193. Paul Whittaker, National Grid, told us that National Grid currently spends 0.5 per cent of turnover, or £5 million per year, on R&D in this sector.[199] Given that the Government has an ambition to increase UK R&D investment to 2.5 per cent of national income by 2014 (up from 1.9 per cent in 2004),[200] and that the UK engineering sector spends an average of 4.5 per cent of revenue on R&D[201], National Grid's expenditure in this area appears to be particularly low.

194. We are concerned that the level of investment in R&D by National Grid is insufficient to identify and respond effectively to the challenges that face transmission and grid management technologies.

Demand-side management

195. The pattern of electricity use in UK households leads to peaks and troughs in overall electricity demand. It may be possible to use demand-side management tools to achieve a better balance between consumer demand and the electricity generated by renewable technologies, for example by smoothing local or national demand profiles. The use of demand flexibility does not have to be centrally managed, and could evolve through the autonomous actions of individual consumers.

196. One way in which this may be possible is through the use of 'smart' meters which facilitate two-way communication between the consumer's meter and the distribution network. Capable of recognising energy demand at different times of the day, smart meters can display real time price and electricity consumption information. By developing a tariff that was sensitive to demand, and by rewarding consumers for using electricity 'off-peak', the use of smart meters could act to reduce peak electricity need.

197. Professor MacKerron informed us that research undertaken by Science and Technology Policy Research Unit, University of Sussex (SPRU) concluded that smart metering should not be "a matter of individual consumer choice, but as a matter of infrastructure development that should be treated at a national and policy level generically".[202] However, smart meters are currently designed for the commercial sector, rather than the domestic one.[203]

198. We believe that demand-side management will be increasingly important as the deployment of microgeneration technologies gathers pace. We recommend that the Government support the development, and roll-out to domestic consumers, of smart meters which are compatible with electricity microgeneration devices.

165   Scottish and Southern Energy, Scottish Power Energy Networks, United Utilities, EDF Energy Networks, CE Electric UK, E.on Central Networks, and Western Power Distribution.  Back

166   Q 421 Back

167   Q 298 Back

168   Q 420 Back

169   HC Deb, 30 Apr 2008, col 386 [Westminster Hall] Back

170   Sustainable Development Commission, Lost in transmission: the role of Ofgem in a changing climate (2007) Back

171   Q 306 Back

172   Ofgem & BERR, Transmission Access Review: Interim Report, January 2008, p 5 Back

173   National Grid, GB Queue Management Methodology, February 2008 Back

174   Ev 286 Back

175   Ev 303 Back

176   Q 313 Back

177   Q 306 Back

178   Ofgem & BERR, Transmission Access Review: Interim Report, January 2008, p 41 Back

179   Q 325 Back

180   The costs and impacts of intermittency: an assessment of the evidence on the costs and impacts of intermittent generation on the British electricity network, UKERC, 2006; Variability of wind power and other renewables: management options and strategies. International Energy Agency, June 2005. Back

181   The costs and impacts of intermittency: an assessment of the evidence on the costs and impacts of intermittent generation on the British electricity network, UKERC, 2006; Variability of wind power and other renewables: management options and strategies. International Energy Agency, June 2005. Back

182   Q 51; and The costs and impacts of intermittency: an assessment of the evidence on the costs and impacts of intermittent generation on the British electricity network, UKERC, 2006 Back

183   Q 52 Back

184   Q 53 Back

185   Q 327 Back

186   Q 325 Back

187   Q325 Back

188   Ev 384, 387 Back

189   Ev 184 Back

190   Ev 380 Back

191   Ibid. Back

192   Ev 381 Back

193   Ibid. Back

194   Ev 179, 300, 312, 345 Back

195   Q 292 Back

196   Qq 341-342 Back

197   Ev 274 Back

198   Ibid. Back

199   Q 336 Back

200   HM Treasury, DTI, DfES, Science and innovation investment framework 2004-2014, July 2004, p 1 Back

201   Lord Sainsbury of Turville, The Race to the Top: A Review of Government's Science and Innovation Policies, October 2007, p 27 Back

202   Q 285 Back

203   Q 265 Back

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