Post - Blog
Pressure builds for the energy system transformation in 2025
- 14 days ago (2024-12-16)
- Junior Isles
Spencer Thompson , CEO of Eclipse Power Group
World Future Energy Summit (WFES) 2025
For the energy industry, 2024 has been an absolute whirlwind year for all sorts of different reasons. The length of the grid connection queue continued to dominate the agenda and became an election issue. It’s encouraging that the new UK government is trying to step in and accelerate the issue. The additional focus and a new sense of urgency is welcome but it’s probably too late to accelerate anything now. A reflection that I think is being recognised among the key stakeholders. Which goes some way to explaining the delay to Connections Reform, which was due to go live on January 1st but has been pushed back to Q2, 2025 by Ofgem.
It’s both disappointing and encouraging that Connections Reform has been pushed back a year. Disappointing, because as an industry we really need to be moving forward significantly in order to deliver sufficient energy security to fuel growth for the country. And encouraging, because it shows that Ofgem has taken notice of the pushback the reforms received during the public consultation.
Clean Power 2030 is a welcome ambition, which does need to be resolved quickly as many of the candidate projects will take two to three years to deliver. With sensible selection criteria, it can work, but we mustn’t lose sight of the investment already made in these project developments.
Connection timeframes of 10 years and over are widely regarded as unacceptable. They will inevitably hold back the growth aspirations of the new Labour government. But grid connectivity is bigger than just a GB problem. Connecting renewable electricity sources to the grid to hit Net Zero targets is a global issue. We are seeing countries like Australia making some great advances with regional renewable development zones, which is certainly something we should be looking closely at in the UK.
Elsewhere, countries like Greece, Italy, Poland and Germany have hundreds of local Distribution System Operator (DSOs), which are the equivalent of our Distribution Network Operators (DNOs) but operate and run their own local energy. This makes them more adaptable to local energy solutions including microgrids and private networks, and potentially create social tariffs that utilise local energy.
The noise building around microgrids has triggered the smarter developers to look at different and more innovative solutions to save cost, keep building and reduce the length of time to connect to the grid.
More pressure might come from developers thanks to the Future Homes standard, set to be introduced in 2025. This will see changes to building regs to require new build homes to reduce carbon emissions to 75% - 80% of previously built homes. Less access to renewable power means less carbon reduction, which in turn could mean no planning permission to meet house building targets. When large developers see the potential for local energy solutions, they will add their voice to calls to devolve power from central to local levels.
It’s giving impetus to a ‘think global, act local’ approach to decentralise the management of electricity supply. The industry is divided on this, of course. Bringing this out into the open could hopefully see this becoming more of a focus in 2025.
Grid connection challenges extend beyond the energy industry. Planning constraints and nimbyism still present enormous obstacles. Local authorities face conflicting pressures. Councils and LAs obviously want to preserve their local environments and keep their communities happy, but most have also declared a climate emergency and know that they must act on it. That means granting planning permission for the electricity infrastructure to support renewables and unlocking access to the grid for such projects.
The part that the energy industry plays in the country’s economic ecosystem is important, but it is does not operate in isolation. As pressure builds from central and local government, from industry, developers and energy consumers, the industry is under pressure to act. That’s not to say that it has been resting on its laurels over the past years, but things are definitely coming to a head. It calls for strong leadership to break through the barriers to progress, and an appetite for making bold moves, such as shutting down the queue for six months to put the brakes on, understand what’s actually needed, and support real deliverable projects. With that in mind, it does make sense to give more time to consider all the options for Connections Reform.
All in all, if 2024 was a whirlwind, throwing up more questions than answers, 2025 is likely to see a raft of different solutions being considered, some discarded and some adopted. So, instead of seeing the past year as frustrating, let’s consider it one of growth leading to new ideas. Ultimately, 2025 may echo to the sound of ‘Don’t Look Back In Anger’ in more ways than one.