Grid capacity in Wales

This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.

First Report of Session 2022–23

Author: Welsh Affairs Committee

Related inquiry: Grid capacity in Wales

Date Published: 21 October 2022

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Contents

1 Introduction

1. In July 2021 we published a report on Renewable Energy in Wales.1 One of the key conclusions of the report was that developers of renewable energy were encountering problems with grid capacity and connecting to the electricity grid in Wales.2

2. We recommended that the Government recognise that increasing renewable energy generation in Wales may be significantly hindered by grid constraints if action is not taken. To mitigate this risk, we recommended that the Government work in collaboration with Ofgem and other stakeholders to plan anticipatory investment in the grid in Wales.3

3. In its response to the report, the Government stated that it was working with Ofgem “to help ensure that network companies play a full role in meeting our net zero objectives” and that it “support[ed] Ofgem’s work to enable a regulatory environment where network companies can invest ahead of need, where the need is sufficiently certain to justify this”.4 It further highlighted that Ofgem’s next transmission price control period for high voltage electricity transmission networks, RIIO-T2 (running from 2021—2026), would provide £30 billion for network reinforcement across Great Britain; £1.3 billion had already been allocated to Western Power Distribution (WPD)5 for the South and mid-Wales networks, and £2 billion to Scottish Power to cover the North Wales and Merseyside network area. The Government stated that Ofgem was taking steps to encourage investment that would be required to support net zero including providing clearer guidance on when and how companies should undertake anticipatory investment.6 On offshore wind, the Government cited the Offshore Transmission Network Review to “develop a new plan-led approach that seeks to bring together onshore and offshore network planning in a more holistic way and facilitate more anticipatory investment in the required grid infrastructure”.7

4. We launched this inquiry to follow up the questions raised in the Renewable Energy report, to take evidence on grid capacity in Wales and to consider present and future issues which will determine whether the grid is an enabler or barrier to achieving the Government’s net zero targets.

5. We launched the inquiry on 1 February 2022, with the following terms of reference:

  • What are the current capacity issues facing the National Grid?
  • How are the constraints on Wales’ grid likely to be exacerbated as demand for renewable energy surges?
  • How can Wales unlock the grid and ensure that it is ready for future demand?
  • What can be done to incentivise investment in grid flexibility, in particular vehicle to grid technology and ‘smart’ charging?
  • What should be done to ensure that the grid, particularly in rural areas, can cope with the extra demand that will be generated from the transition to electric vehicles?
  • What level of anticipatory investment in grid capacity is required by the UK Government to ensure that Wales can deliver its decarbonisation roadmap?
  • How can the UK Government, the Welsh Government and Ofgem work together to improve grid capacity?

6. We received and published 31 pieces of written evidence. We held six oral evidence sessions with: RWE and EDF, the biggest energy companies producing renewable energy in Wales and the UK; representatives of community energy generation projects; representatives of renewable energy developers and industry; Ofgem; National Grid Electricity Systems Operator (ESO); The Crown Estate; the two Distribution Network Operators (DNOs) operating in Wales, Scottish Power Energy Networks (SPEN) and Western Power Distribution (WPD) and National Grid Electricity Transmission (NGET); Julie James MS, Minister for Climate Change, Welsh Government; and Rt Hon Greg Hands MP, Minister of State and Paul Van Heyningen, Deputy Director, Net Zero Electricity Networks, Department for Business, Energy & Industrial Strategy, UK Government.

7. We received some very detailed, technical evidence to this inquiry but have focussed our deliberations on the broad strategic questions. We also received evidence about community energy generation and supply which were not included in the original terms of reference; we reflect this evidence in our report. We would like to thank all those who contributed to the inquiry. A full list may be found at the back of this report.

8. We have taken note of the report of the Welsh Parliament/Senedd Cymru’s Climate Change, Environment and Infrastructure Committee on Renewable Energy in Wales, published in May. It found that:

Wales’ grid infrastructure is not fit for purpose. It is holding back renewable energy development. It requires investment, reinforcement and upgrading.8

Our inquiry

9. After giving an overview of the grid system and the opportunities for new renewable generation in Wales, we explain the challenges facing the electricity grid in Wales, as presented to us. We discuss constraints on export capability and the connection of new renewable generation, as well as the pressures of an increase in demand for electricity in the future. We consider the cost of connecting to the grid in Wales and the delays caused by securing planning consents for grid infrastructure. We weigh up the role of Ofgem in enabling the net zero transition and explore the particular difficulties faced by households and businesses in rural areas of Wales. We address the concerns of community energy projects and consider the benefits which may be granted to communities that host grid infrastructure. In the last two chapters we outline the evidence we received on anticipatory investment and the arguments for improved strategic planning of the electricity network for the future.

2 Energy in Wales

10. In 2020 Wales supplied 7.5% of the UK’s electricity and accounted for 6.5% of the UK’s total demand for energy. Renewable energy constituted 43.1% of the UK’s total energy generation and 36.1% of Wales’ total in 2020. Wales contributed the least to the UK’s renewable energy generation mix of all four nations in 2020.9

Figure 1: Energy generation in Wales, 2020.10

11. In Wales, fossil fuel generation has decreased by 60% since 2016, largely due to the closure of several coal generation projects and power plants.11 In 2019, the last coal-fired power station in Wales, Aberthaw power station, ceased commercial generation.12 Since the closure of Wylfa nuclear power station in 2015, there has been no nuclear power generation in Wales. Wales remains the UK nation with the highest proportion of gas generation, with this accounting for 55.7% of total energy generation.13

UK Government policy

12. The UK was the first major economy to embrace a legal obligation to achieve net zero carbon emissions by 2050. In its evidence to us the Department for Business, Energy & Industrial Strategy (BEIS) stated that the UK “is a world leader in clean growth” and had cut its emissions by more than 40% since 1990.14 The UK Government has set ambitious goals to achieve net zero targets, which we assume will be continued by the new Prime Minister and Cabinet, including building 50GW of offshore wind by 203015 and ending sales of petrol and diesel cars by 2030.16

13. In the Energy White Paper, published in December 2020, the UK Government committed to creating a fully decarbonised energy system, entailing more, smaller sites of generation across the country as well as large, centralised power stations. The Energy White Paper predicted that electricity could constitute more than 50% of total energy demand in 2050, up from 17% in 2019, due to the electrification of transport and heating.17

14. In October 2021 the UK Government published its Net Zero Strategy in which it committed to reaching net zero carbon emissions by 2050. The Strategy sets out government policies and proposals for how this will be done, a commitment to deliver a decarbonised power system by 2035 and for all new cars and vans to be zero emission by 2035. The Strategy states that to decarbonise fully and maintain security of supply, it will be necessary to increase spending on the grid network. One of the “essential planks” of the Strategy is identified as “planning and infrastructure”.18

15. In July, the Government appointed Nick Winser CBE as the UK’s Electricity Networks Commissioner, a new role “to accelerate the delivery of crucial electricity network infrastructure”.19

Devolved and Reserved Responsibilities

16. Responsibility for regulating the UK oil and gas industry and the electricity industry, including generation, transmission, distribution and supply, is reserved to the UK Government. The Welsh Government has responsibility for the licensing and granting of consent for onshore oil and gas projects, all onshore wind projects, renewable energy projects under 350MW that are developed in the Wales inshore and offshore regions; and the promotion of energy efficiency.

Welsh Government policy

17. The Welsh Government has identified energy and the environment as a “priority sector” for Wales, one of nine priority business sectors judged to be key to the economy of Wales and therefore the focus of government support. Targets have been set for Wales to generate 70% of its electricity consumption from renewable energy by 2030.20

18. The Welsh Government also wants to see local ownership of energy assets, setting further targets for 1GW of renewable electricity capacity in Wales to be locally owned by 2030; and for new renewable energy projects to have at least an element of local ownership by 2020.21

19. The Welsh Government conducted an exercise to identify opportunities to scale up renewable energy in Wales and in the resulting document, the Renewable Energy Deep Dive, published in December 2021, it pledged to step up its involvement with Ofgem to set out Wales’s grid investment needs.22

Opportunities for increased renewable energy generation

20. Wales’ natural resources provide opportunities to generate energy from renewable sources, including by harnessing onshore and offshore wind, solar, wave and tidal energy. Wales has 2,120km of coastline and a marine area of approximately 32,000km2, meaning that offshore wind, tidal and marine renewable energy could play important roles in meeting energy generation and decarbonisation targets in Wales. To be brought to market, the energy generated by these new projects must be connected into the transmission and distribution lines of the electricity grid.

21. The energy companies RWE and EDF told us that the locations for new renewable energy sources in Wales were well known. Jon O’Sullivan, Director of Onshore Wind & Solar at EDF Renewables, stated: “the biggest challenge and opportunity is to optimise the natural resources […] and make Wales a leading exporter of electricity”.23

22. Julie James MS, Minister for Climate Change, Welsh Government, told us that “we [in Wales] absolutely will be net exporters of that energy”.24 When we asked Rt Hon Greg Hands MP, Minister of State at the Department for Business, Energy & Industrial Strategy, about the potential for renewable energy generation in Wales, he told us that:

Our energy markets are a Great British enterprise […] Wales is undoubtedly a fantastic place for producing renewable energy […] I see the benefits to Wales of being a big renewable energy producer and of being able to use renewable energy within Wales, and/or to export it to England or anywhere else, as being a key, powerful gain for Wales.25

23. There are many areas of Wales which constitute an opportunity for renewable energy generation. The two areas on which we received the most evidence as part of this inquiry were North Wales and the Celtic Sea.

North Wales

24. In Future Wales: The National Plan 2040, the Welsh Government pledged to support proposed renewable energy developments associated with the Isle of Anglesey Energy Island Programme, Wylfa Newydd, and Trawsfynydd as a means of creating significant economic benefits and of generating renewable energy.26 The Isle of Anglesey Energy Island Programme, established by Isle of Anglesey County Council, is a collaboration between several stakeholders to promote Anglesey as a growth area in low carbon energy development. The Isle of Anglesey County Council told us:

Significant contracted projects over the next ten years to connect into North Wales include 750MW of interconnector between Great Britain and Ireland, the Awel y Môr offshore project into Bodelwyddan at 576MW, photovoltaic (PV) and battery storage (some 173MW for Wylfa and Bodelwyddan combined), Morlais tidal energy at 180MW and some 435MW of distribution generation.27

The Celtic Sea

25. On 5 July, The Crown Estate announced new “areas of search” for the development of floating offshore wind projects (FLOW) in the Celtic Sea.28 Further consultation will be used to refine these areas of search into development areas and the competitive tender process for these project development areas will be launched in mid-2023. The intended capacity for floating offshore wind in these areas is 4GW by 2035 but the Crown Estate estimates that the Celtic Sea holds the potential for up to an additional 20GW of floating wind capacity by 2045.29

26. Celtic Sea Power30 is the seabed lease holder of the Pembrokeshire Demonstration Zone (PDZ), an area located approximately 15km offshore from the South Pembrokeshire coastline of Wales and comprising a 90km2 area leased from The Crown Estate for a period of 45 years. The purpose of the PDZ was initially intended to be for demonstrating multiple wave & tidal energy technologies but this has since changed to provide for the development of one or two Multi-connection Offshore Substations (MOS). These will be capable of accommodating approximately 1GW of power generated in the Celtic Sea.31

27. The Committee notes that the Welsh Government has called for the responsibility for managing The Crown Estate in Wales to be devolved to the Welsh Government.32 The UK Government does not take this view.33

The grid in Wales

28. The grid refers to the network of powerlines, pylons and interconnectors that transport energy generated to areas of demand. It comprises the transmission grid and the distribution grid. The transmission grid connects high-voltage energy from power stations and substations to smaller, local networks (the distribution system). National Grid Electricity Transmission (NGET) owns the high voltage electricity transmission network in England and Wales.

29. The distribution grid draws from the transmission grid to supply electricity at lower voltages than the transmission grid. Distribution Network Operators (DNOs) manage the supply of power to end users, drawing this power from the National Grid’s transmission system. There are two electricity DNOs in Wales, SPEN and WPD (the latter was acquired by National Grid plc in 2021).34

30. National Grid Electricity Systems Operator (ESO) is the electricity system operator for Great Britain, which became a legally distinct business of National Grid Group in 2019. The role of National Grid ESO is to move electricity around the country to where demand is, at which point it is handed over to the DNOs for distribution to homes and businesses. The Energy Bill, introduced to the House of Lords on 6 July, includes provisions to establish an Independent Systems Operator (also known as the Future Systems Operator) which will absorb the functions of National Grid ESO in managing the electricity grid in real time as well as supporting its future development, with three strategic objectives: net-zero, security of supply and efficiency and economy.35

31. High voltage transmission assets in Wales are principally located along the North and South coasts, where population density and demand are greatest and where fossil-fuel power generation has been located historically. The North Wales circuit was built to accommodate hydroelectric schemes and the Wylfa nuclear power station on Anglesey. The South Wales transmission network hosts several power stations. The transmission network in North and South Wales are considered separate circuits. There is no transmission network in mid-Wales; only the distribution network is in operation.36

32. As the UK transitions away from fossil fuel energy generation towards renewable energy generation and electrification, the grid will need to adapt to accommodate this. Paul Hewett, CEO of Belltown Power,37 told us in our Renewable Energy in Wales inquiry that:

We are going through a transition from the way that we generated and used electricity 20 years ago to the way that we will generate and use electricity 30 years from now. You would not design the grid network in the way it is currently designed for the future scenario.38

Regulation

33. Ofgem is the independent energy regulator for Great Britain. Its primary duty, laid out in statute, is to “protect the interests of existing and future consumers” in relation to gas and electricity distribution.39 Ofgem is responsible for working with government and stakeholders to enable competition and innovation in the sector and protect customers from bad practices and rising prices. It sets the framework under which Distribution Network Operators operate and incentivises electricity network companies to invest in their networks.40 Investment in grid infrastructure by energy network companies is regulated by Ofgem through five-yearly price controls known as RIIO.41 The aim of the RIIO price control is to balance investment in the network against company returns and bills for consumers.42 RIIO-2 is the second set of price controls implemented under the RIIO model and sets the outputs DNOs need to deliver for their consumers and the associated revenues they are allowed to collect for the five-year period from 1 April 2023 to 31 March 2028.43

3 Challenges Facing the Electricity Grid in Wales

34. A consistent theme in the written evidence submitted for this inquiry was that grid capacity in Wales is highly constrained. The evidence we received from National Grid ESO categorised two different types of capacity constraints:

1. Export capability: the ability to transfer electricity across network boundaries without creating constraints or bottlenecks on the network; and

2. The connection of new generation.44

Export capability

35. National Grid ESO, which bears the responsibility for real-time balancing of electricity on Great Britain’s electricity network, stated in evidence that “at the transmission level we do not currently see capacity issues” and “generation connected to Welsh sections of the network are still below the maximum capacity of the network, following the phase-out of older generation sites in the last five years”.45 However, NGET, which owns the transmission system, said that “networks are already constrained”.46

36. Ben Godfrey, Distribution System Operator Manager for WPD, the DNO for the South Wales transmission line, told us that: “[i]n terms of our network, it is very much fit for purpose at the moment and has sufficient capacity to do everything that we need it to do”.47 SPEN, the other DNO operating in Wales, stated that mid-Wales “requires significant strategic infrastructure investments”.48 It further explained that it would “maximise [the] use of our existing network through to the early 2030s” but that accommodating growth beyond this date would “require a larger infrastructure solution”.49

37. EDF Renewables told us that:

There are capacity constraints on the Distribution System networks in Wales (WPD and MANWEB)50 and the Transmission System owned by National Grid Electricity Transmission […] The existing distributed generation installed on the networks has reached a level leading to constraints as spare capacity has been used up. These constraints include thermal, voltage or fault level limits.51

38. Julie James MS, Welsh Minister for Climate Change, told us that Wales does not have the capacity it needs “right now” and “absolutely” needs new grid infrastructure.52 She went on to say that she supported the view of maximising existing infrastructure before building more, but also said that she did not believe that the UK Government fully understood the pressure on existing networks in Wales and the “immediate need to sort that out”.53

39. We put these arguments to the UK Government. Rt Hon Greg Hands MP told us that the UK Government considered the Welsh transmission network to be very strong.54 He echoed National Grid ESO in distinguishing between current and future grid capacity. He stated:

There are two separate questions. Is [the grid] fit for purpose today? Absolutely. Will it be fit for purpose tomorrow? That is what we are working on.55

40. We have heard that there are constraints on both the distribution and transmission grids in Wales. Julie James MS told us Wales does not have the grid capacity it needs “right now”. However, Rt Hon Greg Hands MP told us that the grid is “fit for purpose today”. We are concerned by the difference in understanding between the UK and Welsh Governments over current grid capacity in Wales.

41. We recommend that the Government explain the timescales of “today” and “tomorrow” in the context of grid capacity in Wales. Further to this we recommend that the Government explains the evidence for its statement that the electricity grid in Wales is “fit for purpose today” in light of the evidence we have received on grid constraints in Wales. The UK Government must work with the Welsh Government to produce an agreed assessment of current electricity grid capacity in Wales and set out the agreed timetable for publication.

Demand pressures

42. Witnesses told us that there was current pressure on the grid and that this would be exacerbated in the context of future increases in demand for electricity. Grid reinforcements are required not only for connecting new generation but also to meet the projected increase in demand for electricity with the electrification of heat and transport. The Energy and Power Group, Department of Engineering Science at the University of Oxford, estimated that by 2030 the Electric Vehicles (EVs) of Welsh residences could add up to 1.7 GW of demand to the Welsh electricity network.56 Logistics UK told us that “[s]ubstantial grid reinforcement and power upgrades will be needed over the coming decades to support an increased reliance on electricity to power new commercial vehicles”.57

43. Community Energy Wales told us that car-charging in mid-Wales was “a massive problem” and that in north Wales “there is not even enough capacity on the grid there to install rapid car charging”.58 Energy companies told us they were primed to support the move to electric vehicles and domestic heating but that the grid was a constraint. EDF told us:

We are very keen to enable electric vehicles with the charging infrastructure in homes and in the more communal charging structures […] but, again, difficult without increasing investment in grid.59

44. Community Energy Wales explained that car-charging infrastructure could not be left to the market as “the places that have fewer people, less of a market, will be the last places to get the infrastructure”.60 RWE concurred and said that while the private sector could build the charging infrastructure, “you need a strategic plan, national roll-outs and some coordination of it” by Government.61

45. Chris Williams, Head of Industrial Decarbonisation, Industry Wales62, told us that the challenges faced by supplying demand from manufacturing industries as they move to electrify their operations was even greater:

industry is likely to need three to four times the amount of electricity it does now. In fact, it obliterates how much extra electricity will be needed by EVs.63

46. Chris Williams elaborated that “the risk […] is that if the grid cannot supply industry with the power it needs when it needs it, industry will be forced to leave”.64

47. When we asked the Minister about future demand for electricity, Rt Hon Greg Hands MP referred to an expected “doubling of demand” caused by the electrification of transport, heating and industry.65 We put the concerns about grid capacity to accommodate both new sources of generation and rising demand to the Minister. He recognised that Welsh grid networks needed enhancing to avoid future capacity constraints and elaborated on various areas of policy to address this, which we discuss below in the chapter on Strategic Planning.66

48. To ensure that communities and business in Wales can decarbonise in line with government targets, grid infrastructure must be able to meet the projected increase in demand for electricity. The evidence we received suggested that the grid in Wales will not be suitable to facilitate the decarbonisation of heat and transport across Wales.

49. While we understand that the UK Government must consider the energy and network needs of the UK as a whole, we consider that it would be inequitable if the UK were to benefit from Wales’ natural resources for renewable energy generation while Welsh households, businesses and industry were not adequately connected to the grid.

50. We recommend that the UK Government task the new Electricity Networks Commissioner to determine the grid infrastructure necessary to enable industry, communities and businesses in Wales to decarbonise heat and transport in line with net zero targets.

The connection of new renewable generation

51. The capacity of the grid in Wales to host new connections is a different matter from current export capability. National Grid ESO predicted the growth of renewable generation would lead to “constraints (bottlenecks) on the electricity system, including in Wales”.67 The Energy Saving Trust concurred with National Grid ESO’s prediction of potential bottlenecks caused by more renewable energy generation in Wales.68

Mid-Wales

52. There is no transmission infrastructure in mid-Wales, historically due to a lack of generation assets and to the relatively low level of demand from a sparse rural population.69 National Grid ESO stated in its evidence that there was a “challenge that relates specifically to the mid-Wales area” as there are “no transmission assets in mid-Wales for generators to connect to”.70

53. Peter Bingham, Chief Engineer at Ofgem, told us that the network in mid-Wales would need reinforcing if the potential for renewable energy generation in mid-Wales was to be exploited.71 EDF Renewables stated that transmission architecture was needed because of the “very limited” capacity on the distribution network. It told us that it had a development pipeline of 260MW of generation capacity in mid-Wales, but that the realisation of this generation relies on transmission infrastructure being built. EDF cited its Garn Fach windfarm planning application, the outcome of which is expected in 2023, but which is only targeted by NGET for connection in 2032, nine years later.72

54. RenewableUK Cymru73 explained that developers and National Grid were locked in a “longstanding” situation in mid-Wales which neither could resolve without some change in their respective incentive structures and rules of operation:

National Grid relies on projects being present and in need of a connection, but there are very few active development projects currently, specifically because of the known connectivity issues.74

Beyond mid-Wales

55. We heard that, notwithstanding the specific problem in mid-Wales of a lack of a transmission system, the grid throughout Wales posed problems for new connections to generation projects. EDF Renewables told us that the capacity constraints on both the distribution and transmission networks in Wales prevent further deployment of renewable energy generation in Wales.75 RWE, one of the world’s largest renewable developers which owns and operates around 3GW of electricity generation in Wales, told us that electricity network capacity was the largest single constraint preventing the deployment of renewable energy generation in Wales.76 Community Energy Wales claimed that there would be a lot more renewable energy generation in Wales if the grid were not so severely constrained.77

56. Tom Glover, RWE UK Country Chair, told us his organisation had applied for a grid connection for a 400MW Celtic Sea development and was told by National Grid ESO and NGET that they could not connect to the South Wales transmission line at Pembroke due to lack of capacity; RWE was offered a connection in North Devon instead.78 Ofgem told us that the South Wales transmission line would need to be reinforced in order to support offshore developments in the Celtic Sea.79

57. RenewableUK Cymru, a trade body for renewable energy suppliers, told us that the potential resource for floating offshore wind in Wales was 15–50GW. However, it stated that without significant grid reinforcements in South Wales, it is likely that FLOW projects in the Celtic Sea will connect into southwest England.80 The Celtic Sea Developer Alliance stated that the South Wales transmission network does not have the additional capacity to accommodate the proposed level of floating offshore wind in the Celtic Sea and that this presents a real barrier to the development of this sector.81

58. Julie James MS, Welsh Minister for Climate Change, told us that ensuring grid capacity to support future renewable energy generation in the Celtic Sea was very important for the Welsh Government. She stated that any suggestions that this capacity should be taken via Devon or elsewhere “would be very damaging indeed to the ability of the transmission network to be fit for purpose in Wales”.82

59. In September 2021, the Welsh Government announced that it, the energy network operators in Wales and the regulator Ofgem had agreed to work together to develop a long-term plan for energy networks in Wales. This piece of work will determine what network infrastructure will be needed to support a net zero energy system whilst serving communities and will inform Future Wales, Wales’ National Plan.83

60. In his remarks on grid investment, Rt Hon Greg Hands MP described the grid as an asset of Great Britain, which seemed to indicate a difference of approach from that of Julie James MS. He said:

When it comes to the grid, we are looking really at a Great Britain grid. […] I have to look at it as a Great Britain single electricity market.84

61. We recognise the strengths of an electricity grid that serves the whole of Great Britain. However, we conclude that there are distinct challenges and opportunities relating to grid infrastructure in Wales that require specific focus and intervention from the UK Government.

62. The Committee welcomes that Celtic Sea projects have been included in the list of infrastructure projects in the UK Government’s Growth Plan and notes the recent decision by The Crown Estate to seek to accelerate the leasing process where possible. This appears only to be possible in Wales if improvement to grid infrastructure is also accelerated and we would welcome a clear commitment from the UK Government on this point.

63. We note the work by the Welsh Government to develop a long-term plan for energy networks in Wales and call on the UK Government to explain how it is engaging with this. The UK Government needs to explain how it is taking into account Wales-specific challenges and opportunities when considering grid design and how it is ensuring that Wales is able to benefit from the increased investment and development associated with grid reinforcement.

The cost of connecting to the grid

64. Before energy generation projects can connect to the distribution network, the Distribution Network Operator must check with the National Grid Electricity System Operator that capacity is available on the transmission network to accommodate the energy supply. If National Grid ESO requires network reinforcements before the developer can connect, the developer must commit up-front to funding the reinforcement.85

65. Rhys Wyn Jones, Director of RenewableUK Cymru, explained that National Grid relied on projects “being present and in need of a connection” in order to carry out grid construction and reinforcement works.86 Organisations including Centrica plc, a leading energy services and solutions company, and Celtic Sea Power submitted written evidence which highlighted that up-front costs were often prohibitive and made many renewable energy generation projects economically unviable.87

66. Robert Proctor, Community Energy Wales, told us that upfront connection costs constituted a barrier to establishing small-scale energy generation projects. He gave an example of a 3MW connection for a solar energy project in South Wales that was given an offer by National Grid which included upgrades to the transmission network that made that project unviable.88 He further explained that small energy projects were often reliant on bigger developers coming into an area and paying for the grid upgrades. The smaller projects could then only hope that there would spare capacity to which they might be able to connect.89 Community Energy Wales proposed that initial grid connection costs be deferred over a longer-term payment programme to protect the viability of small projects.90

67. Julie James MS told us that the expectation that developers would pay for connection and upgrade of the grid was a barrier to renewable energy development in Wales.91 She advocated “a planned system of infrastructure… so that we can figure out the best way to pay […] and not just frontload it on which project comes forward first”.92 She believed that the UK Government did not yet fully understand the issue of the first developer having to pay the connection cost.93

68. RenewableUK Cymru explained that there is an incentive to free-ride where prospective developers wait until reinforcement has been triggered by another developer before requesting a connection, known as the ‘chicken and egg’ situation.94 National Grid ESO stated that “a new solution is needed to support the connection of new generation and new transmission assets with the aim of removing the current chicken and egg situation”.95

69. Ofgem has conducted a review of whether connection charging arrangements are in the best interests of consumers, which noted the disadvantages of the current system, including potentially slowing down the roll-out of low carbon technologies across the energy system. In its final decision Ofgem decided to change the connection charging arrangements by reducing the upfront connection charge for generation and removing it completely for demand connections. Ofgem explained that these proposals are to be considered and implemented by 1 April 2023.96

70. Paul Van Heyningen, Deputy Director of Net Zero Electricity Networks at the Department for Business, Energy & Industrial Strategy, told us that the issues of the ‘first mover’ (the first developer) and the upfront costs was a known issue. He stated that that Ofgem was changing its approach so that “some of those additional reinforcement costs will instead be socialised and put on the bill payer in general rather than the connecting customer”.97 Rt Hon Greg Hands MP stated that influencing the investor sequence was a role for those “actually delivering the system” including National Grid ESO, Ofgem and energy companies; whereas the UK Government’s remit was to set the framework and make sure incentives for investment are in place.98

71. In August, BEIS published the Electricity Networks Strategic Framework (ENSF) which we discuss further below in the chapter on Strategic Planning. In it the Government recognises that connection costs can be prohibitively high. The ENSF referred to Ofgem’s decision, published in May, to reduce the burden of costs on connecting customers “by moving more of the reinforcement costs to the network charges paid by all electricity consumers in the area”.99

72. Upfront connection costs can be prohibitive and prevent the development of energy projects. This results in a “chicken and egg” situation whereby developers wait for other developers to commit to the funding of connection costs.

73. We are encouraged that Ofgem is reviewing connection arrangements and we look forward to hearing more about the progress being made in the run up to 1 April 2023. We consider that due to the tight timeframes set by government net zero targets, urgent work should be done to overcome prohibitive upfront costs and the ‘chicken and egg’ situation by incentivising developers to share grid connection and reinforcement costs.

74. Larger companies have a financial advantage linked to scale, whereas smaller energy projects are often reliant on the development of larger projects and the availability of spare capacity once these have been completed.

75. A mechanism should be developed to allow small energy generation projects to defer and spread grid connection payments over time.

76. We are encouraged to see that the UK Government recognises that grid connection costs can be prohibitively high for developers. However, we are concerned by the decision to move more of the reinforcement costs to the network charges paid by “all electricity consumers in the area”.

77. It is not equitable that grid reinforcement costs should be shared by consumers in an area because this would create a higher burden for rural households and businesses and those in areas which historically lack existing grid infrastructure. We ask Ofgem and the UK Government to define what is meant by the phrase “in the area” and to explain how they will ensure that rural or isolated communities will not be unduly burdened.

Delays in planning and construction

78. When new energy infrastructure is needed, several consents and approvals are required from different permitting bodies. The number and type of consents required depended on the type of infrastructure and its location. For example, Nationally Significant Infrastructure Projects require a Development Consent Order (DCO) under the Planning Act 2008 and permits or licences may be required from the Environment Agency or Natural Resource Wales for crossing rivers or working in flood zones.100

79. Witnesses told us that lengthy planning consent processes for grid reinforcements can dissuade developers when they result in significantly extended project timelines. Centrica plc stated in written evidence that one of the main barriers to its plans to invest in grid assets, other than the lack of connection capacity, was the “wait for reinforcement works”.101

80. The development of the grid network in the Southwest Region, including the South Wales transmission line, is contingent upon the locations and capabilities of those offshore wind farms awarded rights to lease the seabed by The Crown Estate, which will not be known until the end of 2023.102 EDF Renewables told us that when trying to connect energy generation projects to the transmission line in South Wales, they have been told that the earliest connection will be in 2029. The renewable energy generation sites themselves could be built three to four years earlier than this connection date.103 National Grid (NGET) told us that the earliest connection dates for developers to the South Wales transmission line is 2028.104

81. Julian Leslie, Head of Networks, National Grid ESO, noted that “transmission infrastructure takes much longer to build than an onshore or offshore wind farm”.105 He explained that it takes 10 to 12 years to build a transmission line, from concept to planning consent and construction.106 Peter Bingham, Chief Engineer at Ofgem, stated that the consent process was the longest stage in bringing energy developments to fruition.107 In its Holistic Network Design, National Grid ESO stated that 11 of the 94 grid reinforcements that are necessary to meet the Government’s 2030 offshore wind target will not be delivered on time under the current regulatory and consenting processes. It recommended UK Government intervention to accelerate these projects.108

82. Rhys Wyn Jones, Director of RenewableUK Cymru, called for reforms to the planning system. He explained that developers must make distinct applications for both their low-carbon generation project and the associated grid infrastructure, which was “very expensive and onerous”.109 He recommended streamlining and focusing the consenting regime to facilitate these projects more quickly in the future.110

83. As well as disincentivising developers, planning delays also create a queue of projects. Julian Leslie explained that approximately 13GW of potential power generation in Wales was reserved to projects which are yet to achieve planning permission, despite already having been awarded commercial contracts to use grid capacity. Mr Leslie explained that National Grid ESO is looking into how the planning standards can be changed to free-up existing capacity. He stated that there were some short term fixes that National Grid ESO could apply, such as terminating existing contracts for those projects that have failed to achieve planning permission several times.111

84. Witnesses cited the review of National Policy Statement for Electricity Networks Infrastructure (EN-5) as a means of reducing long grid connection times. Tom Glover called for the EN-5 to reflect a presumption in favour of development that would help to reach net zero targets, a position also promoted by the Celtic Sea Developer Alliance.112 NGET welcomed the review of the National Policy Statement but stated that it “[did] not currently provide the step change needed to deliver the scale and pace of nationally significant infrastructure development that is required to meet the UK’s net zero ambition”.113

85. The BEIS Committee has reported on EN-5 and recommended that it be updated to reflect the outcome of the Offshore Transmission Network Review (OTNR).114 The Government will respond to the Committee’s report in due course.

86. Julie James MS told us that planning delays in terms of grid connections had “certainly been an issue”.115 She called for more clarity on the proposals in the British Energy Security Strategy to shorten the consenting and licensing process for offshore developments.116 Rt Hon Greg Hands MP agreed that the planning system needs to be streamlined and improved. He stated that part of the Government’s ambition for the NPS review was to improve process times to around fifty per cent faster within a year.117 The remit of the UK’s first Electricity Networks Commissioner, appointed in July, includes accelerating the delivery of electricity network infrastructure and reducing timelines for onshore transmission network infrastructure by around 3 years.118

87. The Pathway to 2030 Holistic Network Design (HND) report, published in July by National Grid ESO, provides a blueprint of routes to connect 23GW of offshore wind to the electricity grid network in order to meet the UK Government’s ambition for 50GW offshore wind capacity in Great Britain by 2030. Several recommendations in the HND relate to Wales, including a North-South Wales grid connection between existing transmission lines, a connection between the North Wales and South Scotland transmission lines, a connection to proposed wind farms in the Celtic Sea and an offshore wind farm to the North Wales transmission line. The next steps include consultation and network design by organisations appointed to fulfil these recommendations, such as NGET.119

88. In the ENSF, published in August, the Government stated that the “planning and consenting processes for the high-voltage network under the Nationally Significant Infrastructure Projects regime will deliver more certainty and better, greener and faster outcomes” as well as reducing barriers for network infrastructure that is not classed as nationally significant. The Government proposes to achieve this by revising the Energy National Policy Statements and reviewing land rights and consent processes for electricity network infrastructure.120

89. There is a multiplicity of different bodies involved in securing planning consent for grid infrastructure and this process needs to be streamlined. We welcome the commitment to cutting processing times by fifty per cent and appreciate the challenge that this constitutes. However, in light of the evidence we received, it is clear that in order to meet government net zero and renewable energy generation targets a reduction in processing times of fifty per cent is the least that needs to happen.

90. We are encouraged to see the new Electricity Networks Commissioner appointed with a remit to reduce timelines and look forward to understanding in more detail how this will be achieved. However, it is not clear that the UK Government appreciates that a step change is necessary to deliver a streamlined planning and consent process that enables the achievement of net zero targets. We call on the UK Government to produce a projected timeline for how it will reduce processing times by fifty per cent within a year.

91. The planning consent process has created a queue of renewable generation projects in Wales to which grid capacity has been reserved before planning permission has been granted.

92. The UK Government should work with National Grid ESO, National Grid Electricity Transmission, the Distribution Network Operators and Ofgem to revise consenting processes to align the allocation of grid capacity with the application for planning permission. National Grid’s work should be expedited on reviewing commercial contracts with developers reserving grid capacity, where those projects have consistently failed to achieve planning permission.

Role of Ofgem

93. We received evidence stating that Ofgem’s remit to protect consumers from price rises associated with grid reinforcement was preventing it from playing an enabling role in building the infrastructure needed to meet net zero targets. RWE told us:

National Grid will say, “We can only justify [spending on grid infrastructure] if there are enough connection requests in that area, up front”. […] if we are doing an offshore wind farm, normally National Grid will not start the onshore investment until we have a CfD [Contract for Difference], which is quite late in the process.121

94. Tom Glover told us that “what we don’t think [Ofgem] are doing properly is asking what the overall lowest cost is to meet net zero”.122 Witnesses, including RWE, Renewable Cymru and National Grid ESO, told us that Ofgem’s duty to protect consumers should be balanced by a duty to assist energy markets to reach net zero targets.123

95. On the other hand, Peter Bingham, told us that Ofgem’s role was “enabling the net zero future and the reinforcement of networks that will be required to get us there”.124 He stated that in terms of determining the extent to which the networks would need to be reinforced was a role for the network companies, rather than Ofgem.125 RWE, however said that “Ofgem has a very minor carbon emissions objective but that seems to be met by reducing every year, which is not, to be honest, very hard to achieve”.126

96. Rt Hon Greg Hands MP said that Ofgem’s obligation to secure best value for the customer could not be ignored and that he was confident that everyone in the sector was aligned on net zero and “how to get there”.127 He stated that a key challenge was striking the correct balance between being able to anticipate where energy generation is going to come from while still protecting consumers.128

97. The Minister cited the Holistic Network Design and an ongoing review into the onshore electricity network as enabling planning consent and Ofgem’s regulatory timescales to be accelerated.129 The Government has also indicated its intention to consult on a Strategy and Policy Statement for Ofgem which will create a framework for Ofgem’s decision making that allows the regulator to protect consumers and achieve net zero.130

98. Ofgem, as the market regulator, must ensure that the regulatory environment enables the decarbonisation of energy markets. Whilst ensuring the best value for consumers is important and should remain one of Ofgem’s primary considerations, this should be balanced against achieving net zero targets.

99. We recommend that the UK Government amend Ofgem’s primary duty to include both ensuring the best value for consumers and achieving net zero targets, by bringing forward government amendments to the Energy Bill. This would provide strong signals to developers and grid infrastructure owners.

Rural Areas

100. We have heard that delays and upfront costs are often greater in rural areas, which lack existing grid infrastructure. The situation is complicated by the fact that there is a higher proportion of energy inefficient, older and off-grid properties across rural Wales.131 Witnesses including Robert Proctor from Community Energy Wales and Tom Glover cited rurality and the historic lack of grid infrastructure as constraints on Wales utilising its potential for renewable energy generation.132

101. Community Energy Wales stated in written evidence that there is a huge disadvantage for rural communities in terms of grid infrastructure in Wales. It explained that the transition towards electrification of transport would be particularly challenging in mid-Wales partly because it is difficult to find sites where the grid is able to accommodate rapid car charging. It also stated that small generation projects were facing costs of more than £100,000 to connect to the grid in rural areas, which was a “major stumbling block for community renewable projects” as the “connection costs simply undermine any business case for small scale renewable schemes”.133 This was a particular issue in areas of low population, which simply cannot support the high costs associated with connecting to the rural grid.134

102. NFU Cymru submitted that the uneven distribution of rural electricity network capacity may constitute a barrier to the investments needed to drive agricultural productivity growth and warned against the development of a “rural-urban divide”.135 Centrica plc stated that targeting government funding may be necessary in rural areas to support investment in grid capacity.136

103. BEIS recognises that connections to the grid in rural areas can be more challenging due to increased distance from substations and limited existing capacity resulting in higher connection costs and greater planning delays.137 However, Rt Hon Greg Hands MP told us that “all areas of the country will face different challenges and costs in connecting to the network and we do not believe it would be appropriate or fair to allow one area of the country to have subsidised connection charges”.138

Laying cables underground

104. In total around 25% of Wales is either in a National Park or Area of Outstanding Natural Beauty (AONBs).139 The majority of new electricity lines are supported by pylons but in National Parks and AONBs the strong starting presumption is that new lines should be put underground, unless the harm of so doing outweighs the visual and other benefits to the landscape.140

105. Roisin Quinn, Director of Customer Connections, NGET, told us that her organisation welcomed this policy. She stated that the presumption in favour of “undergrounding” would reduce the time taken to secure planning permission and gain the support of local communities for the construction of necessary grid infrastructure.141 Ben Godfrey, Western Power Distribution, and Malcolm Bebbington, Scottish Power, concurred.142

106. However, Peter Bingham stated that undergrounding grid infrastructure was expensive and hugely disruptive. He explained that it requires the excavation of a tract of land the width of a dual carriageway.143 Witnesses estimated that constructing underground lines was between 3 and 15 times more expensive than overhead lines.144

107. Julie James MS told us that it was important to involve the local people in decisions about new power lines and to look at each landscape “in its own right” but that the immediate disruption to landscapes involved in laying cables had to be balanced against other priorities.145 She said that further discussion was needed with the UK Government on how to balance those conflicts:

We have to balance the nature and climate emergencies we are facing, the cost-of-living crisis we are facing and the need to get this energy on stream with a variety of landscapes in Wales that are highly protected, very beautiful and support our tourist industry.146

108. Rt Hon Greg Hands MP told us that before undergrounding is considered as an option for constructing transmission or distribution lines, re-routing to avoid AONBs should be considered first.147

109. The policy in favour of laying cables underground in AONBs is welcome. However, due to the significantly higher construction costs it is likely that overhead lines will simply be re-routed around AONBs. This will mean that communities and businesses in those areas will remain isolated from grid infrastructure and face high costs to connect to the grid.

110. The Government should outline the circumstances in which higher grid construction costs, for example due to undergrounding, are justified to enable rural communities to keep pace with the decarbonisation transition.

Community energy

111. The Welsh Government has committed to expanding public body and community enterprise renewable energy generation in Wales by over 100MW between 2021 and 2026.148 This is in the context of the longer-term target of 1GW of renewable energy generation capacity to be locally owned by 2030.149 In the Community Energy in Wales Report, published in 2021, the Welsh Government explained the importance of community energy in achieving net zero by “gaining consent, increasing participation and embedding behaviour change”.150 In the Community Energy Strategy the UK Government highlighted the benefits of community energy including maintaining energy security, tackling climate change and wider social and economic benefits.151

112. Robert Proctor, Community Energy Wales, told us that there is currently between 20MW-25MW of community-owned energy in Wales. He added that community projects struggle to compete with commercial developers for land and access to the grid.152 He called for a certain percentage of grid capacity to be reserved for community energy projects.153

113. Community Energy Wales stated that the participation of communities in the energy market is being restricted by excessive costs and a lack of appropriately tailored regulatory process.154 It explained that most community energy projects operate by selling the energy they generate back to the grid and in that way reduce bills. A few community projects have been set up which sell the energy they generate directly to their communities at a lower than market rate, but “they are not commonplace and are very challenging to develop so most communities are not able to do that”. Moreover, those projects are “very reliant on finding a friendly energy company to work in partnership with”.155

114. The Welsh Government has stated that all new energy generation developments should be at least part-owned by the people and businesses of Wales.156 Julie James MS told us that the Welsh Government works with firms across Wales for collective energy purchase and supply, but that these initiatives were very problematic “because there just is not the capacity for them”.157 The Welsh Government has used the Banc Cambria project to look at ways of enabling communities to raise the fund necessary for grid reinforcement costs. The Welsh Government is working with the Development Bank of Wales to take a stake of the necessary investment on behalf of communities, which can then slowly buy into the cost of connecting.158

115. Rt Hon Greg Hands MP told us that the UK Government was very supportive of community energy and that he did not “recognise there being specific difficulties around the grid when it to comes to community energy”.159

116. We have heard that community energy projects face specific difficulties in connecting to the grid, and that the UK Government is not aware of those difficulties.

117. We recommend that the Government engage directly with community energy projects in Wales to understand the difficulties they face connecting to the grid. The UK Government should lead a working group made up of the Welsh Government, grid infrastructure owners, energy companies and communities to explore how access to the grid for community energy projects can be improved in Wales.

118. We recommend that the UK Government strengthens the legislative framework to support the growth of community energy schemes. The Energy Bill provides a potential opportunity to do this.

Community benefits from commercial generation projects

119. Multiple witnesses highlighted the importance of communities receiving benefits from hosting grid infrastructure. It was suggested that benefits could be direct, such as through reduced energy bills, or indirect, for example through a community fund.

120. National Grid Electricity Transmission (NGET) stated that it was essential that the journey to net zero had minimal impact on and delivered maximum benefits to communities which are hosting grid infrastructure. It stated that the UK and Welsh governments have an opportunity to set out clearly in policy the appropriate approach to community benefits.160

121. We heard about various ways in which communities can benefit from hosting grid infrastructure. RWE explained that it has provided benefits to communities consisting of “£10 million in 10 years” in independent funds managed by communities in Wales.161 It highlighted the importance of consulting directly communities which host grid infrastructure on the benefits they would like to see.162

122. There are also examples of opportunities for communities to invest in commercial projects. RWE told us that their latest two windfarms incorporated Memoranda of Understanding about options for local councils and the communities to invest.163

123. Julie James MS told us that to gain support for the infrastructure that will be necessary to achieve net zero, communities need to see the benefits of them. She stressed that these benefits must be “real” and not just philanthropic.164

124. The British Energy Security Strategy (BESS) states that local energy partnerships could have the ability to deliver lower local pricing.165 Rt Hon Greg Hands MP told us that getting local communities on side was increasingly the UK Government’s focus.166 In the ENSF the Government committed to exploring options for community benefit schemes which acknowledge the role of communities hosting grid infrastructure.167

125. There is a lack of clear policy directing energy development companies on how to provide adequate benefits to communities hosting grid infrastructure.

126. The Government should incentivise energy companies and transmission infrastructure owners to provide benefits to communities hosting network assets. Communities should be directly consulted on the benefits they would like to receive. A starting presumption should be introduced through policy that a proportion of all future energy projects must be partly community-owned or provide direct benefits to the community which hosts the energy project and associated grid infrastructure.

4 Anticipatory Investment

127. Throughout this inquiry we have heard that anticipatory investment in grid infrastructure is essential to achieving net zero. In its Consultation on Anticipatory Investment in April, Ofgem defined the term as investment in grid infrastructure to support the later connection of a specific development or developments.168 Currently, grid reinforcement works will only begin once a specific energy generation project and the associated connection requirements have been established. In relation to offshore wind, Ofgem stated in the consultation document that the existing framework for development “disincentivises […] developers from taking on additional development risks which may put them at a competitive disadvantage due to factors such as cost and timescale”.169

128. Witnesses suggested to us that anticipatory investment was essential to meet net zero targets. Tom Glover explained that the grid was an enabler to decarbonisation and that if the grid was constructed in advance, developers would then compete to connect. Mr Glover highlighted an example in Germany whereby an offshore substation was built with three bays, but only two projects already committed. He explained that multiple companies then competed to connect into the final bay.170 Celtic Sea Power highlighted the benefits of Multi-connection Offshore Substations (MOS) including reducing costs and time delays as well as providing “strong and strategic locational signals”, which enable supply chains to be established near Welsh port infrastructure.171 It further stated that a more anticipatory approach to investment in the grid would ultimately create a stronger marketplace and attract investment.172 National Grid ESO explained that “anticipatory investment will enable networks and industry to address the chicken and egg scenario that has developed in Wales”.173

129. Witnesses also highlighted the potential risks of not investing in grid infrastructure on an anticipatory basis. RWE stated that without significant anticipatory investment in grid infrastructure taking place now, the huge onshore and offshore potential in Wales is likely to go under-utilised for decades to come.174

130. The risk of anticipatory investment is that costly infrastructure will be built at cost to the consumer and then not utilised. Tom Glover said that Ofgem regulated transmission “by only allowing investments when they are very, very certain that connections are required” and that:

only a very small amount of anticipatory investment is allowed. Under RIIO-2 proposals, there is what is called the net zero investment, which is really small.175

131. The energy companies told us, however, that the risk was low. Jon O’Sullivan, EDF Renewables, explained that industry was aware of the best places to build new renewable energy wind farms, solar farms and offshore wind farms and that it was therefore low risk that grid infrastructure in these areas would not be used.176 He said “the risk of having stranded transmission assets is pretty much zero whereas the risk of having stranded renewable assets… is far higher”.177 Hub den Rooijen, Managing Director, Marine, The Crown Estate, stated that the market interest would be there if the transmission line was built on an anticipatory investment basis.178

132. Chris Williams, Industry Wales, told us that mapping and modelling could ease the risk for anticipatory investment in grid infrastructure.179 He explained that the current system of grid investment made it difficult for bigger companies and projects to plan in the long term.180 SPEN, the DNO for the North Wales transmission line, told us that they had released their baseline view of high certainty investments that would be needed for the North Wales region. They stated that the Government should support Ofgem in allowing for anticipatory investment where necessary.181

133. EDF proposed that the exact level of anticipatory investment and locations should be determined by a review of the requirements for the grid system reinforcement which should be carried out by the UK Government, Welsh Government, Ofgem, National Grid ESO, NGET and the relevant DNOs.182 However, in oral evidence Jon O’Sullivan said:

On anticipatory investment, we all know where the best place is to build these new renewable energy wind farms, solar farms and offshore. We know and I am not sure why we need to wait.183

134. National Grid ESO produced a Future Energy Scenario (FES) in July which outlined four different, credible pathways for the future of energy between now and 2050. In the FES, National Grid ESO stated that the delivery of the British Energy Security Strategy would require urgent anticipatory investment to ensure the energy system is not a blocker to net zero.184

135. However, when we asked Julian Leslie of the National Grid ESO about anticipatory investment he told us that in areas such as mid-Wales, grid infrastructure would only be constructed if there was a clear pipeline of development and not on an anticipatory basis.185 National Grid ESO recognised the potential role of anticipatory investment a means to overcome the “chicken and egg” situation but also noted that this could also create additional risks for consumers.186

136. Witnesses highlighted the need for Ofgem and National Grid to enable and encourage anticipatory investment. The Isle of Anglesey County Council stated that, for there to be a demonstrable shift towards anticipatory investment and development of low regret options, there needs to be reform at the regulatory level which was supported by National Grid ESO.187

137. Centrica plc told us that Ofgem’s RIIO-ED2 Business Plan Guidance sets out basic guidelines for anticipatory investment and that the Welsh Government should work with Ofgem to ensure that this is sufficiently flexible for Wales’ electricity network needs. Centrica called for Ofgem to review RIIO-ED2 after the first few years of operation to assess whether it was blocking anticipatory investment.188 RWE submitted that the regulatory framework must create space for anticipatory investment and that these should be introduced with the next price control mechanism.189

138. Peter Bingham told us that “traditionally as a regulator we have been a little reticent to allow investment where there is not a clear need” but that “our stance has changed and continues to change towards being much more supportive of anticipatory investment”.190 He gave the example of approving a transmission link to the Shetland Islands. He said Ofgem had “authorised the transmission companies to get on with that before that need had absolutely crystallised” and said that this approach would be taken “forward with other areas, particularly the offshore developments that we will see in other parts of the country”.191

139. BEIS told us in written evidence that network regulation, including agreeing anticipatory investment in the network, is the responsibility of Ofgem as market regulator. It recognised anticipatory investment as having a key role in ensuring network readiness for net zero.192 In the ENSF the Government stated that a key part of ensuring value for money would be investing in grid networks ahead of need to ensure that the electricity network enables the achievement of net zero targets. It stated that this would be accomplished through enabling strategic investment through Ofgem’s price control mechanism and by increasing competition and promoting innovation.193

140. Rt Hon Greg Hands MP agreed with the need for investors to have a greater degree of certainty and that the acceleration of the transmission infrastructure network was part of this. He told us that BEIS planned to strengthen Ofgem’s powers to allow anticipatory work in the future. He explained that anticipatory investment afforded developers a greater degree of certainty but warned against overburdening customers with “too much network” that could end up not being needed.194

141. Without an established system of anticipatory investment in grid infrastructure the significant opportunities for renewable energy generation in Wales will go under-utilised, which will have an impact on the achievement of net zero targets. Were grid infrastructure to be built on an anticipatory basis in areas where there is a high probability of the construction of future energy projects, this would reduce the risks of costly grid infrastructure not being utilised. Furthermore, multi-connection substations, such as the MOS described by Celtic Sea Power, could have an important role in both reducing the costs and delays associated with grid construction and in providing strong locational signals to establish local supply chains. While we are encouraged that Ofgem’s stance has changed in favour of anticipatory investment and that BEIS is looking to strengthen Ofgem’s powers in this area, we consider that this does not reflect the urgency of the situation.

142. The UK Government should use National Grid ESO’s Future Energy Scenarios to work with energy companies and grid infrastructure owners to determine areas where anticipatory investment in grid infrastructure would be justified to achieve net zero targets. Where anticipatory investment in grid infrastructure is deemed justified, the UK Government should encourage the development of multi-connection substations in order to establish local supply chains, which can then support the connection of future renewable energy projects.

143. In order to utilise the opportunities for renewable energy generation in Wales a system of anticipatory investment in grid infrastructure needs to be created and implemented urgently. In the government response to this report, we request further information on the nature of the changes to Ofgem’s powers and the timeline for this to be implemented. The UK Government should also conduct a review with Ofgem of the impact of the current price control mechanism on the level of anticipatory investment in grid infrastructure across the UK.

5 Strategic Planning of the Network

144. Energy generation and use has evolved over the past few decades. In the future, the grid network needs to be designed in a different way to facilitate the changing nature of energy generation, supply and demand.

145. Witnesses criticised the approach to grid design of connecting projects on a case-by-case basis and supported a more strategic approach to grid network design and reinforcement. NGET stated that the incremental approach to developing grid infrastructure is likely to result in inefficient developments with higher costs, later delivery and greater environmental impacts whilst also missing the opportunity for significant community benefits.195 Renewable UK explained that projects will continue to be developed on a ‘piecemeal’ basis which will not provide for an holistic, efficient, strategic approach and which may lead to progress stalling.196

146. Peter Bingham highlighted the risks of moving away from individual connections towards a strategic, planned approach, including the potential for developers to overbuild and the possibility of stranding grid assets.197

147. Witnesses called for holistic thinking and greater coordination in grid network design to reduce connection costs, avoid delays and prevent the building of unnecessary infrastructure. Hub den Rooijen highlighted less construction, higher community support and lower costs as the possible benefits of a more coordinated approach.198 The Isle of Anglesey County Council advocated a fully integrated network approach to capacity planning drawing together the Welsh and UK Governments, Ofgem, National Grid, DNOs and developers to share system knowledge and identify “low regret” infrastructure options.199 The Celtic Sea Developer Alliance stated that that ongoing reviews including the Offshore Transmission Network Review (OTNR) and Holistic Network Design focus on the East coast, which may affect the ability for Wales and the Celtic Sea to remain competitive.200

148. As well as calling for a more strategic approach to grid investment, witnesses called for the UK and Welsh Governments to clarify the scale of their ambitions by setting grid capacity and renewable energy generation targets for 2030, 2035 and 2050.201 RenewableUK and UK Marine Energy Council submitted that by setting targets for specific technologies, the UK and Welsh Governments could provide confidence to network operators and enable them to prepare for future energy projects.202 Logistics UK called for a public spending programme, alongside changes to the regulatory framework to provide a clear structure of responsibility for funding necessary grid upgrades.203

149. The Welsh Government deems the planned approach as the only way to manage the grid network. Julie James MS told us that government needed to move away from the market-based mechanism of providing grid reinforcements once a need for them has been established, towards a planned approach to building grid reinforcements ahead of need.204 She further explained that a planned approach would provide certainty and enable developers to formulate investment strategies and affordability packages.205 It would allow those involved in the process to “look at what is required and then share that cost out appropriately” . She said that “some of that [cost] would fall to Government… but some of it will then be able to be distributed among the various groups wanting to connect into the grid”.206

150. Rt Hon Greg Hands MP told us that “fundamental” to the grid in Wales supporting the energy transformation would be “more strategic approaches to planning the electricity network”. The components he cited of the Government’s strategic approach were: the Holistic Network Design published by National Grid on the offshore wind network; a similar blueprint for the whole of the onshore electricity network; revision of the energy National Policy Statement; and the new Independent Systems Operator provided for in the Energy Bill to act as a central strategic network planner.207 Since we took evidence from the Minister, BEIS has also published the Electricity Network Strategic Framework (ENSF) with Ofgem in August; and appointed the Electricity Networks Commissioner to accelerate grid delivery.

151. The ENSF outlines that the Government and Ofgem are working with industry to develop a strategic approach to network planning. It further explains that network planning will evolve over the next couple of years into a single Centralised Strategic Network Plan (CSNP) for the onshore and offshore electricity transmission network. The CSNP will also provide guidance on the development of the wider energy system including 2050 targets for hydrogen and gas infrastructure.208 The ENSF also highlighted the role of the Future Systems Operator (FSO) which, when established, will take the lead on strategically planning the future electricity network.209

152. The grid network has been built piecemeal on the basis of the energy needs of the nation over time. The energy system in the UK is changing and electricity grid network design needs to adapt to meet this change. We are encouraged to see the Government shifting to a more strategic, planned approach to the network and welcome the recent policy work to set this out. However, given the complexity of delivering new grid infrastructure, the urgency of net zero targets and the multiplicity of different actors involved in the sector, we consider that there is a need for a more joined-up approach, which ultimately must be led by the UK Government.

153. Due to the urgency of the situation the UK Government needs to take control of electricity grid network design by setting deadlines and targets for Ofgem, grid infrastructure owners and other significant bodies including National Grid ESO. The UK Government needs to provide the leadership and strategic planning to deliver a complicated set of changes across multiple bodies. This will involve taking a ‘round-table’ approach with regular meetings between stakeholders.

154. As well as considering the grid in Wales as part of a Great Britain enterprise, the UK Government must recognise the distinctive challenges and opportunities associated with the grid in Wales. The UK Government should engage directly and regularly with the Welsh Government to deliver a coordinated and strategic approach to electricity grid network design.

Conclusions and recommendations

Challenges facing the electricity grid in Wales

1. We have heard that there are constraints on both the distribution and transmission grids in Wales. Julie James MS told us Wales does not have the grid capacity it needs “right now”. However, Rt Hon Greg Hands MP told us that the grid is “fit for purpose today”. We are concerned by the difference in understanding between the UK and Welsh Governments over current grid capacity in Wales. (Paragraph 40)

2. We recommend that the Government explain the timescales of “today” and “tomorrow” in the context of grid capacity in Wales. Further to this we recommend that the Government explains the evidence for its statement that the electricity grid in Wales is “fit for purpose today” in light of the evidence we have received on grid constraints in Wales. The UK Government must work with the Welsh Government to produce an agreed assessment of current electricity grid capacity in Wales and set out the agreed timetable for publication. (Paragraph 41)

3. To ensure that communities and business in Wales can decarbonise in line with government targets, grid infrastructure must be able to meet the projected increase in demand for electricity.The evidence we received suggested that the grid in Wales will not be suitable to facilitate the decarbonisation of heat and transport across Wales. (Paragraph 48)

4. While we understand that the UK Government must consider the energy and network needs of the UK as a whole, we consider that it would be inequitable if the UK were to benefit from Wales’ natural resources for renewable energy generation while Welsh households, businesses and industry were not adequately connected to the grid. (Paragraph 49)

5. We recommend that the UK Government task the new Electricity Networks Commissioner to determine the grid infrastructure necessary to enable industry, communities and businesses in Wales to decarbonise heat and transport in line with net zero targets. (Paragraph 50)

6. We recognise the strengths of an electricity grid that serves the whole of Great Britain. However, we conclude that there are distinct challenges and opportunities relating to grid infrastructure in Wales that require specific focus and intervention from the UK Government. (Paragraph 61)

7. The Committee welcomes that Celtic Sea projects have been included in the list of infrastructure projects in the UK Government’s Growth Plan and notes the recent decision by The Crown Estate to seek to accelerate the leasing process where possible. This appears only to be possible in Wales if improvement to grid infrastructure is also accelerated and we would welcome a clear commitment from the UK Government on this point. (Paragraph 62)

8. We note the work by the Welsh Government to develop a long-term plan for energy networks in Wales and call on the UK Government to explain how it is engaging with this. The UK Government needs to explain how it is taking into account Wales-specific challenges and opportunities when considering grid design and how it is ensuring that Wales is able to benefit from the increased investment and development associated with grid reinforcement. (Paragraph 63)

9. Upfront connection costs can be prohibitive and prevent the development of energy projects.This results in a “chicken and egg” situation whereby developers wait for other developers to commit to the funding of connection costs. (Paragraph 72)

10. We are encouraged that Ofgem is reviewing connection arrangements and we look forward to hearing more about the progress being made in the run up to 1 April 2023. We consider that due to the tight timeframes set by government net zero targets, urgent work should be done to overcome prohibitive upfront costs and the ‘chicken and egg’ situation by incentivising developers to share grid connection and reinforcement costs. (Paragraph 73)

11. Larger companies have a financial advantage linked to scale, whereas smaller energy projects are often reliant on the development of larger projects and the availability of spare capacity once these have been completed.(Paragraph 74)

12. A mechanism should be developed to allow small energy generation projects to defer and spread grid connection payments over time. (Paragraph 75)

13. We are encouraged to see that the UK Government recognises that grid connection costs can be prohibitively high for developers. However, we are concerned by the decision to move more of the reinforcement costs to the network charges paid by “all electricity consumers in the area”.(Paragraph 76)

14. It is not equitable that grid reinforcement costs should be shared by consumers in an area because this would create a higher burden for rural households and businesses and those in areas which historically lack existing grid infrastructure. We ask Ofgem and the UK Government to define what is meant by the phrase “in the area” and to explain how they will ensure that rural or isolated communities will not be unduly burdened. (Paragraph 77)

15. There is a multiplicity of different bodies involved in securing planning consent for grid infrastructure and this process needs to be streamlined. We welcome the commitment to cutting processing times by fifty per cent and appreciate the challenge that this constitutes. However, in light of the evidence we received, it is clear that in order to meet government net zero and renewable energy generation targets a reduction in processing times of fifty per cent is the least that needs to happen. (Paragraph 89)

16. We are encouraged to see the new Electricity Networks Commissioner appointed with a remit to reduce timelines and look forward to understanding in more detail how this will be achieved. However, it is not clear that the UK Government appreciates that a step change is necessary to deliver a streamlined planning and consent process that enables the achievement of net zero targets. We call on the UK Government to produce a projected timeline for how it will reduce processing times by fifty per cent within a year. (Paragraph 90)

17. The planning consent process has created a queue of renewable generation projects in Wales to which grid capacity has been reserved before planning permission has been granted.(Paragraph 91)

18. Government should work with National Grid ESO, NGET, the DNOs and Ofgem to revise consenting processes to align the allocation of grid capacity with the application for planning permission.National Grid’s work should be expedited on reviewing commercial contracts with developers reserving grid capacity, where those projects have consistently failed to achieve planning permission. (Paragraph 92)

19. Ofgem, as the market regulator, must ensure that the regulatory environment enables the decarbonisation of energy markets. Whilst ensuring the best value for consumers is important and should remain one of Ofgem’s primary considerations, this should be balanced against achieving net zero targets. (Paragraph 98)

20. We recommend that the UK Government amend Ofgem’s primary duty to include both ensuring the best value for consumers and achieving net zero targets, by bringing forward government amendments to the Energy Bill. This would provide strong signals to developers and grid infrastructure owners. (Paragraph 99)

21. The policy in favour of laying cables underground in AONBs is welcome. However, due to the significantly higher construction costs it is likely that overhead lines will simply be re-routed around AONBs. This will mean that communities and businesses in those areas will remain isolated from grid infrastructure and face high costs to connect to the grid. (Paragraph 109)

22. The Government should outline the circumstances in which higher grid construction costs, for example due to undergrounding, are justified to enable rural communities to keep pace with the decarbonisation transition. (Paragraph 110)

23. We have heard that community energy projects face specific difficulties in connecting to the grid, and that the UK Government is not aware of those difficulties. (Paragraph 116)

24. We recommend that the Government engage directly with community energy projects in Wales to understand the difficulties they face connecting to the grid. The UK Government should lead a working group made up of the Welsh Government, grid infrastructure owners, energy companies and communities to explore how access to the grid for community energy projects can be improved in Wales. (Paragraph 117)

25. We recommend that the UK Government strengthens the legislative framework to support the growth of community energy schemes. The Energy Bill provides a potential opportunity to do this. (Paragraph 118)

26. There is a lack of clear policy directing energy development companies on how to provide adequate benefits to communities hosting grid infrastructure. (Paragraph 126)

27. The Government should incentivise energy companies and transmission infrastructure owners to provide benefits to communities hosting network assets. Communities should be directly consulted on the benefits they would like to receive. A starting presumption should be introduced through policy that a proportion of all future energy projects must be partly community-owned or provide direct benefits to the community which hosts the energy project and associated grid infrastructure. (Paragraph 126)

Anticipatory investment

28. Without an established system of anticipatory investment in grid infrastructure ty chains. While we are encouraged that Ofgem’s stance has changed in favour of anticipatory investment and that BEIS is looking to strengthen Ofgem’s powers in this area, we consider that this does not reflect the urgency of the situation. (Paragraph 141)

29. The UK Government should use National Grid ESO’s Future Energy Scenarios to work with energy companies and gridhe significant opportunities for renewable energy generation in Wales will go under-utilised, which will have an impact on the achievement of net zero targets. Were grid infrastructure to be built on an anticipatory basis in areas where there is a high probability of the construction of future energy projects, this would reduce the risks of costly grid infrastructure not being utilised. Furthermore, multi-connection substations, such as the MOS described by Celtic Sea Power, could have an important role in both reducing the costs and delays associated with grid construction and in providing strong locational signals to establish local suppl infrastructure owners to determine areas where anticipatory investment in grid infrastructure would be justified to achieve net zero targets. Where anticipatory investment in grid infrastructure is deemed justified, the UK Government should encourage the development of multi-connection substations in order to establish local supply chains, which can then support the connection of future renewable energy projects. (Paragraph 142)

30. In order to utilise the opportunities for renewable energy generation in Wales a system of anticipatory investment in grid infrastructure needs to be created and implemented urgently. In the government response to this report, we request further information on the nature of the changes to Ofgem’s powers and the timeline for this to be implemented. The UK Government should also conduct a review with Ofgem of the impact of the current price control mechanism on the level of anticipatory investment in grid infrastructure across the UK. (Paragraph 143)

Strategic planning of the Network

31. The grid network has been built piecemeal on the basis of the energy needs of the nation over time. The energy system in the UK is changing and electricity grid network design needs to adapt to meet this change. We are encouraged to see the Government shifting to a more strategic, planned approach to the network and welcome the recent policy work to set this out. However, given the complexity of delivering new grid infrastructure, the urgency of net zero targets and the multiplicity of different actors involved in the sector, we consider that there is a need for a more joined-up approach, which ultimately must be led by the UK Government. (Paragraph 152)

32. Due to the urgency of the situation the UK Government needs to take control of electricity grid network design by setting deadlines and targets for Ofgem, grid infrastructure owners and other significant bodies including National Grid ESO. The UK Government needs to provide the leadership and strategic planning to deliver a complicated set of changes across multiple bodies. This will involve taking a ‘round-table’ approach with regular meetings between stakeholders. (Paragraph 153)

33. As well as considering the grid in Wales as part of a Great Britain enterprise, the UK Government must recognise the distinctive challenges and opportunities associated with the grid in Wales. The UK Government should engage directly and regularly with the Welsh Government to deliver a coordinated and strategic approach to electricity grid network design. (Paragraph 154)

Formal minutes

Wednesday 12 October 2022

Members present

Rt Hon Stephen Crabb, in the Chair

Simon Baynes

Wayne David

Ruth Jones

Ben Lake

Rob Roberts

Beth Winter

Grid Capacity in Wales

Draft report (Grid Capacity in Wales), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 154 read and agreed to.

Summary agreed to.

Resolved, That the Report be the First Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Ordered, That embargoed copies of the Report be made available, in accordance with the provision of Standing Order No. 134

Adjournment

Adjourned till Wednesday 19 October at 9.30 a.m.

Witnesses

The following witnesses gave evidence. Transcripts can be viewed on the inquiry publications page of the Committee’s website.

Wednesday 16 March 2022

Jon O’Sullivan, Director of Onshore Wind and Solar, EDF Renewables; Tom Glover, RWE UK Country Chair, RWE UK; Robert Procter, Business Development Manager, Community Energy WalesQ1–23

Chris Williams, Head of Industrial Decarbonisation, Industry Wales; Rhys Wyn Jones, Head of RenewableUK Cymru, RenewableUKQ24-42

Wednesday 27 April 2022

Julian Leslie, Head of Networks, National Grid ESO; Peter Bingham, Chief Engineer, Ofgem; Huub den Rooijen, Managing Director, Marine, The Crown EstateQ43–59

Ben Godfrey, Distribution System Operator Manager, Western Power Distribution; Malcolm Bebbington, Head of Future Systems Strategy, SP Energy Networks, Scottish Power; Roisin Quinn, Director of Customer Connections, National Grid NGETQ60–70

Wednesday 18 May 2022

Julie James MS, Minister for Climate Change, Welsh GovernmentQ71–101

Wednesday 8 June 2022

Rt Hon Greg Hands MP, Minister of State, Department for Business, Energy & Industrial Strategy; Paul Van Heyningen, Deputy Director, Net Zero Electricity Networks, Department for Business, Energy & Industrial StrategyQ102–153

Published written evidence

The following written evidence was received and can be viewed on the inquiry publications page of the Committee’s website.

GRD numbers are generated by the evidence processing system and so may not be complete.

1 Anonymised (GRD0020)

2 BP plc (GRD0029)

3 Celtic Sea Developer Alliance (GRD0019)

4 Celtic Sea Power (GRD0011)

5 Centrica plc (GRD0014)

6 Community Energy Wales (GRD0001)

7 Department for Business, Energy & Industrial Strategy (GRD0027)

8 Department for Business, Energy and Industrial Strategy (GRD0031)

9 EDF Renewables (GRD0012)

10 Energy Saving Trust (GRD0004)

11 Energy and Power Group, Department of Engineering Science, University of Oxford (GRD0024)

12 Enertechnos (GRD0008)

13 Institute of Welsh Affairs (GRD0018)

14 Isle of Anglesey County Council (GRD0013)

15 Lightsource bp (GRD0010)

16 Liquid Gas UK (GRD0006)

17 Logistics UK (GRD0003)

18 Menter Mon (GRD0005)

19 NFU Cymru (GRD0009)

20 National Grid (GRD0025)

21 National Grid Electricity System Operator (GRD0017)

22 Nova Innovation (GRD0026)

23 Ørsted (GRD0023)

24 RWE (GRD0021)

25 RenewableUK Cymru (GRD0015)

26 RenewableUK Cymru (GRD0030)

27 ScottishPower (GRD0022)

28 Thales (GRD0007)

29 The Crown Estate (GRD0028)

30 UK Marine Energy Council (GRD0016)

List of Reports from the Committee during the current Parliament

All publications from the Committee are available on the publications page of the Committee’s website.

Session 2022–23

Number

Title

Reference

1st Special Report

The Benefits System in Wales: Government response to the Committee’s Fourth Report of Session 2021–22, and correspondence from the Welsh Government

HC 402

2nd Special Report

The economic and cultural impacts of trade and environmental policy on family farms in Wales: Government response to the Committee’s Fifth Report of Session 2021–22

HC 470

Session 2021–22

Number

Title

Reference

1st Report

Railway Infrastructure in Wales

HC 438

2nd Report

Renewable energy in Wales

HC 439

3rd Report

Implications of the UK-Australia FTA for Wales

HC 481

4th Report

The benefits system in Wales

HC 337

5th Report

The economic and cultural impacts of trade and environmental policy on family farms in Wales

HC 607

1st Special Report

Railway infrastructure in Wales: Government response to the Committee’s First Report of Session 2021–22

HC 715

2nd Special Report

Renewable energy in Wales

HC 756

3rd Special Report

Implications of the UK/ Australia FTA for Wales: Government response to the Committee’s Third Report of Session 2021–22

HC 895

Session 2019–21

Number

Title

Reference

1st Report

Pre-appointment hearing with the Government’s preferred candidate for the Chair of S4C

HC 89

2nd Report

Freeports and Wales

HC 205

3rd Report

The Welsh economy and Covid-19: Interim Report

HC 324

4th Report

Wales and the Shared Prosperity Fund: Priorities for the replacement of EU structural funding

HC 90

5th Report

Brexit and trade: implications for Wales

HC 176

1st Special Report

The Armed Forces and Defence Industry in Wales: Government Response to the Committee’s First Report of Session 2019

HC 97

2nd Special Report

City Deals and Growth Deals in Wales: Government Response to the Committee’s Second Report of Session 2019

HC 146

3rd Special Report

Freeports and Wales: Government Response to Committee’s Second Report of Session 2019–21

HC 667

4th Special Report

Wales and the Shared Prosperity Fund: Priorities for the replacement of EU structural funding: Government response to the Committee’s Fourth Report of Session 2019–21

HC 1083

5th Special Report

Brexit and trade: implications for Wales: Government response to the Committee’s Fifth Report of Session 2019–21

HC 1223

Footnotes

1 Welsh Affairs Committee, Second Report of 2021–2022, Renewable Energy in Wales, HC 439

2 Ibid., para 71

3 Ibid., para 72

4 Welsh Affairs Committee, Second Special Report of Session 2021–22, Renewable Energy in Wales: Government response to the Committee’s Second Report, HC 756, October 2021

5 Western Power Distribution (WPD) was acquired by National Grid Group in 2021. On 21 September 2022 it was renamed National Grid Electricity Distribution (NGED).

6 Welsh Affairs Committee, Second Special Report of Session 2021–22, Renewable Energy in Wales: Government response to the Committee’s Second Report, HC 756

7 Ibid., p. 8

8 Welsh Parliament, Climate Change, Environment, and Infrastructure Committee, Renewable Energy in Wales, 26 May 2022

9 Department for Business, Energy & Industrial Strategy, Electricity generation and supply in Scotland, Wales, Northern Ireland and England, 2016 to 2020, December 2021

10 Welsh Government and Regen, Energy Generation in Wales 2020, May 2022

11 Department for Business, Energy & Industrial Strategy, Electricity generation and supply in Scotland, Wales, Northern Ireland and England, 2016 to 2020, December 2021

12 Welsh Government/Regen, Energy Generation in Wales 2020, May 2022

13 Department for Business, Energy & Industrial Strategy, Electricity generation and supply in Scotland, Wales, Northern Ireland and England, 2016 to 2020, December 2021

14 Department for Business, Energy & Industrial Strategy (REW0043)

15 Department for Business, Energy & Industrial Strategy and Prime Minister’s Office, British Energy Security Strategy, April 2022

16 HM Government, The Ten Point Plan for a Green Industrial Revolution, November 2020

17 HM Government, Energy White Paper: Powering Our Net Zero Future, December 2020

18 HM Government, Net Zero Strategy: Build Back Greener, October 2021

19 Department for Business, Energy & Industrial Strategy press release “New Electricity Networks Commissioner appointed to help ensure home-grown energy for Britain”, 6 July 2022

20 Welsh Government and Regen, Energy Generation in Wales 2018, September 2019

21 Welsh Government, Assessment of onshore wind and solar energy potential in Wales, March 2019

22 Welsh Government, Renewable energy deep dive: recommendations, December 2021

23 Q3

24 Q99

25 Q115

26 Welsh Government, Future Wales: the National Plan 2040, February 2021

27 Isle of Anglesey County Council (GRD0013)

28 Crown Estate press notice, “The Crown Estate announces areas of search to support growth of floating wind in the Celtic Sea”, July 2022

29 Crown Estate press notice, “The Crown Estate announces areas of search to support growth of floating wind in the Celtic Sea”, July 2022

30 Wave Hub Development Services Ltd, trading as Celtic Sea Power (CSP) is a 100%-owned subsidiary of Cornwall Council with funding from the Welsh European Funding Office (WEFO) and the Swansea Bay City Deal (SBCD) to develop ‘The Pembrokeshire Demonstration Zone’ (PDZ),)

31 Celtic Sea Power (GRD0011)

32 Q84 [Julie James MS]

33 HC Deb, 9 February 2022, col 929 [Commons Chamber]

34 National Grid Plc, Completion of acquisition of Western Power Distribution, 14 June 2021

35 Department for Business, Energy & Industrial Strategy, Energy Security Bill factsheet: Future Systems Operator, September 2022

36 Welsh Government and Catapult, Offshore Wind and Grid in Wales, September 2021

37 Belltown Power, Who are we, Accessed September 2022

38 Oral evidence taken on 4 March 2021, HC (2021–22) 1021, Q64 [Paul Hewett]

39 Ofgem, Our powers and duties, July 2013

40 Department for Business, Energy & Industrial Strategy (GRD0027)

41 RIIO stands for the formula Revenue = Incentives + Innovation + Outputs.

42 Ofgem, Network Price Controls 2021–2028 (RIIO-2), Accessed July 2022

43 Ibid

44 National Grid Electricity System Operator (GRD0017)

45 Ibid.

46 National Grid (GRD0025)

47 Q61

48 Scottish Power (GRD0022)

49 Ibid

50 Western Power Distribution and Scottish Power’s network covers Merseyside, North Wales and parts of Cheshire.

51 EDF Renewables (GRD0012)

52 Q71

53 Q87

54 Q110

55 Q138

56 Energy and Power Group, Department of Engineering Science, University of Oxford (GRD0024)

57 Logistics UK (GRD0003)

58 Qq22, 12

59 Q22

60 Q22

61 Q23

62 Industry Wales provides services to support companies established in Wales and to advise those looking to situate in Wales.

63 Q26

64 Q26

65 Q102

66 Q102

67 National Grid Electricity Systems Operator (GRD0017)

68 Energy Saving Trust (GRD0004)

69 National Grid (GRD0025)

70 National Grid Electricity Systems Operator (GRD0017)

71 Q49

72 EDF Renewables (GRD0012)

73 RenewableUK Cymru is the Wales branch of RenewableUK, and is the trade body for all renewable energy, and smart energy and storage technologies in Wales.

74 Q25

75 EDF Renewables (GRD0012)

76 RWE (GRD0021)

77 Q3

78 Q11

79 Q44

80 RenewableUK Cymru (GRD0015)

81 Celtic Sea Developer Alliance (GRD0019)

82 Q84

83 Julie James MS, Minister for Climate Change, Welsh Government, Written Statement: Evolving the Energy Grids for Net Zero Wales, September 2021

84 Q110

85 Centrica plc (GRD0014)

86 Q25

87 Celtic Sea Power (GRD0011); Centrica plc (GRD0014)

88 Q12

89 Q14

90 Community Energy Wales (GRD0001)

91 Q73

92 Q74

93 Q87

94 Q25

95 National Grid Electricity System Operator (GRD0017)

96 Ofgem, Access and Forward Looking Charges Significant Code Review: Final Decision, May 2022

97 Q119

98 Q123

99 Department for Business, Energy & Industrial Capacity/Ofgem, Electricity Networks Strategic Framework, August 2022

100 National Grid Electricity Transmission, Planning and Development, Accessed July 2022

101 Centrica plc (GRD0014)

102 National Grid ESO, Pathway to 2030, July 2022

103 EDF Renewables (GRD0012)

104 National Grid (GRD0025)

105 Q56

106 Q47

107 Q57

108 National Grid ESO, Pathway to 2030, July 2022

109 Q30

110 Q30

111 Qq54, 55

112 Q20, Celtic Sea Developer Alliance (GRD0019)

113 National Grid (GRD0025)

114 House of Commons, Business, Energy and Industrial Strategy Committee, Revised (Draft) National Policy Statement for Energy, February 2022

115 Q74

116 Q91

117 Q107

118 Department for Business, Energy & Industrial Strategy and The Rt Hon Kwasi Kwarteng MP, New Electricity Networks Commissioner appointed to help ensure home-grown energy for Britain, July 2022

119 National Grid ESO, Pathway to 2030, July 2022

120 Department for Business, Energy & Industrial Capacity/Ofgem, Electricity Networks Strategic Framework, August 2022

121 Q16

122 Q16

123 Q16, RWE (GRD0021); RenewableUK Cymru (GRD0015); National Grid Electricity System Operator (GRD0017)

124 Q49

125 Q51

126 Q16

127 Q103

128 Q113

129 Q102

130 Department for Business, Energy & Industrial Strategy (GRD0027)

131 Welsh Parliament, Equality and Social Justice Committee, Fuel poverty and the Warm Homes Programme, May 2022

132 Qq4, 5

133 Community Energy Wales (GRD0001)

134 Centrica plc (GRD0014)

135 NFU Cymru (GRD0009)

136 Centrica plc (GRD0014)

137 Department for Business, Energy & Industrial Strategy (GRD0027)

138 Department for Business, Energy & Industrial Strategy (GRD0031)

139 Welsh Government, Help for Wales’ countryside following boost in tourism, May 2022

140 Department for Business, Energy & Industrial Strategy, Draft National Policy Statement for Electricity Networks Infrastructure (EN5), September 2021

141 Q68

142 Q68

143 Q52

144 Q52 [Peter Bingham]; Liquid Gas UK (GRD0006)

145 Q92

146 Q92

147 Department for Business, Energy & Industrial Strategy (GRD0031)

148 Welsh Government, Schools and public buildings to get solar panels as Wales drives community owned renewable energy, April 2022

149 Lee Waters, Deputy Minister for Climate Change, Welsh Government, Written Statement: Outcome of the Deep Dive into Renewable Energy, December 2021

150 Welsh Government/Community Energy, Community Energy in Wales: State of the Sector Report 2021, 2021

151 Department of Energy & Climate Change, Community Energy Strategy: People Powering Change, January 2014

152 Q6

153 Q19

154 Community Energy Wales (GRD0001)

155 Q7

156 Welsh Government, Policy Statement: Local ownership of energy generation in Wales – benefitting Wales today and for future generations, 2020

157 Q84

158 Q81

159 Q132

160 National Grid (GRD0025)

161 Q9

162 Q9

163 Q9

164 Q85

165 HM Government, British Energy Security Strategy (BESS), April 2022

166 Q116

167 Department for Business, Energy & and Industrial Capacity/Ofgem, Electricity Networks Strategic Framework, August 2022

168 Ofgem, Consultation on our Minded-to Decision on Anticipatory Investment and Implementation of Policy Changes, April 2022

169 Ibid., para 1.4

170 Q15

171 Celtic Sea Power (GRD0011)

172 Celtic Sea Power (GRD0011)

173 National Grid Electricity Systems Operator (GRD0017)

174 RWE (GRD0021)

175 Q20

176 Q19

177 Q17

178 Q56

179 Q30

180 Qq32, 33

181 ScottishPower (GRD0022)

182 EDF Renewables (GRD0012)

183 Q19

184 National Grid ESO, Future Energy Scenarios, July 2022

185 Q48

186 National Grid Electricity Systems Operator (GRD0017)

187 Isle of Anglesey County Council (GRD0013)

188 Centrica plc (GRD0014)

189 RWE (GRD0021)

190 Q53

191 Q53

192 Department for Business, Energy & Industrial Strategy (GRD0027)

193 Department for Business, Energy & Industrial Strategy and Ofgem, Electricity Networks Strategic Framework, August 2022

194 Q113

195 National Grid (GRD0025)

196 RenewableUK Cymru (GRD0015)

197 Q53

198 Q53

199 Isle of Anglesey County Council (GRD0013)

200 Celtic Sea Developer Alliance (GRD0019)

201 National Grid (GRD0025)

202 RenewableUK Cymru (GRD0015)

203 Logistics UK (GRD0003)

204 Q73

205 Qq89, 70

206 Q76

207 Q102

208 Department for Business, Energy & Industrial Strategy and Ofgem, Electricity Networks Strategic Framework, August 2022

209 Department for Business, Energy & Industrial Strategy and Ofgem, Electricity Networks Strategic Framework, August 2022