Ofgem plan to fast track NESO grid modification will reduce risk profile of clean energy projects, says trade body

Scottish Renewables has welcomed Ofgem’s plan to fast track a NESO grid modification that will significantly reduce the risk profile of clean power projects and unlock further investment.

Ofgem has granted ‘Urgency’ status to the code modification CMP447 in time for it to be implemented alongside new grid connection offers in the autumn.

Put simply, the modification CMP447 is a change to the grid code. This is the set of contractual rules that govern the electricity network and each project’s connections.

CMP447, specifically, removes the securities associated with large strategic transmission works from the profiles of individual projects. Ofgem’s decision recognises that such transmission works have already been approved by the regulator and are, therefore, less at risk of becoming stranded assets.

The modification means developers will no longer be liable for network expansion that occurs whether their project is built or not. Therefore, projects in scope of the change will no longer have to financially underwrite large works, removing significant sums from a project’s balance sheet. The code modification will unlock further investment, which, in the case of some SMEs, was previously halted due to the costs becoming untenable.

The ‘Urgency’ status means that the modification, CMP447, will be ready for new grid connection offers to be introduced as part of the National Energy System Operator’s (NESO) Connections Reform in autumn.

With a revised security profile, projects will have greater certainty over the details of their grid offer and enhanced confidence to proceed with their investments.

Commenting, Stephen McKellar, Head of Grid and Networks at Scottish Renewables, said:

“The renewable energy industry in Scotland has worked closely with Ofgem and NESO over the past 12 months to highlight the impact that CMP447 would have on a wide range of projects.

“With Connections Reform dominating industry attention and resource over the last year, Ofgem’s decision to grant ‘Urgency’ status to CMP447 critically aligns vital grid modifications with the new implementation process for granting grid connections.

“Scottish Renewables is grateful to all colleagues and stakeholders who have worked collaboratively to understand the urgency of this issue and bring it to the forefront of the regulator’s attention.

“With the size and scale of the strategic network buildout planned for Scotland, maintaining investment and de-risking projects of all sizes is key to achieving our climate goals and CMP447 will help to do this.”

Ends

Notes to editors

• The Ofgem decision: CMP447: Authority Decision on urgency
• The NESO modification: CMP447: Removal of designated strategic works from cancellation charges/securitisation