By email: to Michael Mahoney
Our ref: MCB2020/30213
Your ref: 27654
18th September 2020
Dear Michael and Fiona,
Thank you for your letter dated 7 September, following up on our previous engagement last month. Please see responses below to your further questions.
Scope of the review
The ambition of the medium-term work stream is to enable and incentivise as much coordination as possible within the bounds of the existing regime. However, as you will appreciate, it is not possible for us to mandate projects to alter existing plans given that they have been designed and funded based on the existing regime. Not only would changes to some projects at a later stage of development incur significant additional costs for consumers, it could also have a detrimental impact on investor confidence in the UK offshore wind industry and jeopardise our long-term goal to achieve net zero emissions by 2050.
While the projects you mention are yet to enter the examination phase of the planning process, at this point project developers have completed a significant amount of consultation on their designs for connecting and constructing their assets. This process began in Autumn 2017 for the projects you mention with the final stages, including the examination process, scheduled to take a maximum of 12 months. Therefore, these projects are three quarters of the way through the consenting process.
As previously mentioned, we are not in a position to mandate changes to projects already in the pipeline under the existing regime and it will be up to individual developers as to whether or not they wish to make changes. This will need to be considered in terms of the costs and delays that will be incurred for a specific project, versus the potential benefits that may be realised.
The intention of Government is, where possible, to provide support and incentives to drive change in the medium term ahead of implementing the enduring regime. However, it is unlikely that this will be able to capture all projects that are due to connect between 2025-2030 given the various stages of development the individual projects are at.
I note your comments relating to the transparency of the Suffolk Coast Energy Delivery Board, which you have also copied to relevant colleagues. This group has provided a useful route for BEIS to engage with Local Authorities in the region and to further understand the challenges being faced in terms of the development of energy infrastructure. At present, BEIS and the other organisations involved in delivering the review are carefully considering how best to engage with broader stakeholder groups such as yourselves, so that we ensure the experiences of coastal communities are reflected. In the Autumn we intend to inform a
wide range of stakeholders about the details of the review, including timelines and expected outputs. Details of this engagement will be shared via our website.
I would also like to reassure you that the National Grid Electricity System Operator (NGESO) does not own any transmission assets or receive any of its remuneration on the basis of their construction or operation and has been a legally separate company within the National Grid Group Since April 2019. This separation was introduced to address perceived conflicts of interest between the ESO and National Grid Electricity Transmission. Under the terms of separation, commercial information may not be shared between the ESO and the National Grid Group and this is overseen by Ofgem who actively monitor compliance with the terms of separation.
You may have seen that NGESO is conducting vital work for the review that is considering, a cost benefit analysis of various integrated designs, reviewing the connections process, and reviewing technology available to deliver these solutions. This has involved significant stakeholder engagement and a consultation will be launched at this end of this month to gather further input. If you have not participated in this work to date, I would encourage you to take part. More details can be found on the NGESO website.1
Other offshore electricity projects
While the core focus of the review, particularly in the medium term, is the connection of offshore wind, for the longer term we are looking to design an enduring regime that facilitates the coordination of offshore infrastructure more generally. In the current scope of the review there is a specific workstream to consider international interconnector projects and the potential for hybrid offshore wind/interconnector projects to help minimise impacts on coastal communities. The review will also consider how onshore reinforcements could form part of an integrated solution. We are also aware of the growing interest in hydrogen and while this is not in the immediate scope of the review we are working to ensure that any recommendations consider the potential impacts on the development and possible integration of these more novel technologies in the future.
Thank you again for writing. I hope you find this information helpful.
RT HON KWASI KWARTENG MP
Minister of State for Business, Energy and Clean Growth
Looking at the existing regimes, questions have arisen regarding the suitability of the current regulatory regime for offshore wind. It is currently heavily concentrated on competitiveness, which is considered beneficial for consumers. That means that currently there is no sharing of infrastructure, and each wind farm has an individual connection to transmit the power that it generates. There are three material concerns with this: it is financially inefficient; it has a negative environmental impact; it may have a negative impact on coastal communities where connections make landfall.
Eight Offshore Wind Energy Projects are widely believed to be planned to connect to the National Grid at Friston (this does not include future windfarm projects as a result of the seabed leases awarded by the Crown Estate in relation to the Round 4 process). Cumulative impact means eight substations and interconnectors constructed sequentially or consecutively. Plus, the addition of a nuclear power station, one of the largest in the world. This will be the largest complex of energy infrastructure in the U.K. situated in one of the most fragile ecosystems in the U.K. These are judged to be ill-conceived plans where the process of choosing the site for the mega infrastructure hub is shown to be flawed. There are a number of better alternative brownfield sites for this designated vast complex.