Clean Power 2030 and connections reform – what we know so far

Two ‘strategic plans’ currently dominate GB energy policy. The first is the Strategic Spatial Energy Plan (SSEP) which was expected to be published at the end of 2024 but will now be delayed until the end of 2026. The SSEP will take a longer-term view of whole energy system planning beyond this decade.

In the meantime, Clean Power 2030 (CP30) is expected to be the definitive roadmap for the new UK government’s ambitions of a clean GB power system by 2030. On 23 August 2024, the government formally commissioned NESO to provide practical advice on how to deliver these ambitions i.e. produce a report to inform the government’s plan now known as CP30 or CP2030. 

This article will unpack what we currently know about CP30 and how it is envisaged to impact the ongoing grid connection reform process. 

What do we mean by ‘clean power’?

In various October 2024 webinars, NESO has described clean power as ‘GB produces at least as much clean power as our total annual electricity demand. Unabated fossil fuel generation is reduced to the minimum required to keep the system secure, considering the availability and deliverability of alternatives. For 2030, we expect this to be less than 5% of total power generation in a typical year.’ 

The share of unabated fossil fuel generation as a proportion of total electricity generation is currently 33% according to NESO and will mainly be coming from gas fired power plants. Reducing this proportion to 5% would align with the government’s pre-election manifesto statement of maintaining a ‘strategic reserve’ of gas for power generation. 

According to NESO, clean power will also include nuclear, biomass and energy storage as part of the generation mix, with NESO provisionally expecting there to be four to five times the amount of energy storage currently on the system by 2030. 

What do we know about the pathways to CP30?

NESO are exploring two primary pathways (down from previously four) to CP30: 

• High renewables and flexibility: This pathway envisages fast development of renewables alongside the highest deployment of energy storage capacity and consumer engagement in demand flexibility. Minimal amounts of new ‘low carbon dispatchable power’ will be on the system. Our understanding is from NESO is that ‘low carbon dispatchable power’ is anticipated to include technologies such as gas and biomass with carbon capture and hydrogen powered generation as types of ‘non-weather dependent’ technologies.
  
  
• High dispatch: This pathway expects growth in renewables but the lowest growth level in all pathways. There will be deployment of low carbon dispatchable power alongside the highest level of nuclear capacity.

How does CP30 interact with grid connection reform? 

Grid connection reform is stated as one of five enablers for CP30, alongside (i) planning, consenting and communities, (ii) markets, financing and funding, (iii) supply chain & skills and (iv) institutions and governance. 

In September 2024, both NESO and Ofgem recommended aligning the ongoing connection reform process (TM04+) with CP30, with Ofgem acknowledging that reforms as currently proposed will not be effective in securing a decarbonised power grid by 2030. 

NESO have progressively signalled a clear move from evaluating projects with a first ready, first connected approach to a first ready and needed, first connected approach. This will have significant impacts on the composition of the connections queue. 

Will CP30 dictate what projects are needed where? 

It is expected that CP30 will delineate technology, location and capacity requirements for the GB power system and the connection queue will therefore need to align with these requirements. 

In a 16 October 2024 webinar, NESO outlined their current preference for the process as follows:

1. Apply the Gate 2 land right requirement and any upcoming financial instrument (please see ‘What about financial criteria?’ below) to filter the connections queue so only projects with requisite land rights remain – the ‘ready’ projects.
   
   
2. From the ‘ready’ projects, then filter for alignment with the CP30 plan i.e. capacity limits for technology types by location. NESO gave an example of a requirement for 10GW of solar in south-west England by 2030. If there is oversupply of a certain technology type in an area, no further projects will be allowed to proceed unless they are ‘designated’ projects.
   
   
3. This should leave (i) ‘ready’ projects which are aligned with CP30 and (ii) ready NESO ‘designated’ projects. ‘Designated’ projects is likely to include projects which are not known at CP30 but are still critical (please see ‘Designated projects methodology’ below) or projects outside the technology scope of 2030, such as certain directly connected demand projects. Examples by NESO included Pathfinder projects, hydrogen connected electrolysers and large industrial demand users. These two types of projects – ‘ready and CP30 aligned’ and ‘ready NESO designated’ - would then receive full ‘Gate 2’ connection offers.  

NESO is proposing a further element to government to consider alignment with a 2035 pathway and include in the queue a second bucket of projects which can connect between 2030 and 2035. These projects would align with NESO’s Future Energy Scenarios (FES) 2024 holistic transition pathway. To address project attrition, NESO will be suggesting to government that this bucket of 2030 - 2035 projects should be the first port of call as backup for equivalent projects which are no longer able to complete before 2030. Beyond 2035, the SSEP will then inform the 2036 to 2040 make-up of the connections queue. 

What are these ‘methodologies’?

The TM04+ code modification proposals introduced the concept of three methodologies which will be prepared by NESO and approved by Ofgem. The methodologies will contain much of the detail of how connections reform will be implemented. 

• Gate 2 criteria methodology – will specify the criteria to pass Gate 2 i.e. receive a full connection offer with a confirmed connection location, date and queue position. Gate 2 is expected to continue to focus on obtaining land rights but could potentially also include additional requirements to (i) align with the CP30 plan, (ii) be a ‘designated’ project or (iii) be a specific type of directly connected demand project.
  
  
• Designated projects methodology – will set out how NESO will ‘designate’ specific projects which will be prioritised in the queue, which could be projects which are critical to security of supply or system operability, which would materially reduce system/network constraints, are innovative / emerging technologies, or that have particularly long lead times.
  
  
• Connection Network Design Methodology – will set out the process for queue formation, determination of reinforcement works, reallocation of capacity following termination (potentially looking at a standby list of post 2030 projects), prioritisation and ordering e.g. what will happen where two or more projects meet Gate 2 criteria at the same time. 

What about financial criteria?  

In addition to technology criteria, NESO has also stated it is exploring options to introduce further financial criteria. This would require projects to demonstrate a financial commitment to retain their place within the queue. Options could include imposing additional fees, charges or securities, with the potential to revise existing charges for projects in the queue. NESO is undertaking a full options assessment for introducing financial criteria, and if it proceeds, will introduce a separate but complimentary code modification to the TM04+ proposals. 

What are the next steps? 

• CP30: NESO is due to publish its advice to government by the end of October or early November. The government then plans to publish its CP30 action plan by the end of 2024.
  
  
• Methodologies: Ofgem is due to consult on new licence conditions to enable NESO to adopt the methodologies. NESO is also expected to consult with industry in November on the methodologies themselves but will not be required to go through the CUSC modification process to implement them.
  
  
• Code modification proposals: All documentation is expected by submitted to Ofgem for approval by the end of 2024, with the aim to have an Ofgem decision by the end of Q1 2025. Assuming a positive Ofgem decision, NESO will be aiming to issue Gate 2 connection offers by the end of 2025.

The Freeths Clean Energy team advise on all aspects of clean energy projects, including industry regulation and legislation. Please contact Shraiya Thapa, Deborah Harvey and Clare King if you have any questions or for further information.