Background
The Clean Power 2030 Action Plan (“CP 2030”) sets out the generational capacity required to meet the government’s target. Specifically, this means 43 – 50 gigawatts (“GW”) of offshore wind, 27 – 29 GWs of onshore wind and 45 – 47 GWs of solar projects to be operational before 2030. To enable this goal, CP 2030 states how much of each renewable technology is ‘needed’.
To achieve the government’s stated aims, CP 2030 proposes reform to the grid connection system. In particular, the existing system is a ‘first come first serve’ system. However, there has been concern that there are several ‘phantom’ projects in the pipeline, with little prospect of ever entering construction. As such, the grid connection queue is to be re-ordered so that projects which are considered ‘ready’ and ‘needed’ will go to the top of the queue, and other projects may potentially lose their grid connection agreements altogether.
What does this mean for the battery sector?
As a result of the proposed changes, there has been a lot of commentary on how this will impact Battery Energy Storage System (“BESS”) projects. Specifically, there is a concern that BESS projects are oversubscribed in terms of the capacity that CP 2030 deems required. Additionally, it has also been argued that due to the quantity of BESS projects in the pipeline, a number of these have little to no prospect of completion.
CP 2030 states that 23 – 27 GWs of BESS are required to meet the 2030 targets. This demonstrates that the government continues to see BESS as a key part of the renewable energy landscape up until 2030 and beyond.
While it is acknowledged that there is a risk to several existing BESS projects that they may lose their grid connections, for serious developers in the BESS sector, the UK remains a buoyant market, and any reordering of the grid connection queue potentially ‘declutters’ the BESS market, and is likely to be beneficial for genuine projects.
CP 2030 builds in protections for projects that are close to commissioning so that they are not in danger of losing existing grid connection agreements. A project close to commissioning is defined by the publication as one that is due to connect before 2026. For projects that are well advanced, it is important that this timescale is adhered to and reflected in the Programme for both the supply contract and the construction contract. Additionally, developers should work with contractors to ensure that this timescale is achievable, and the requirements are met. For critical timescales such as this, where non-compliance has catastrophic consequences for the project, collaboration and honest communication between developer, contractor, and the wider supply chain is critical.
For projects that are unlikely to achieve the 2026 commissioning date, projects should prepare for the queue reordering. This requires projects to demonstrate that they are ‘ready’ and ‘aligned’ with the CP 2030 plan. This will require gathering evidence for submission to demonstrate this. While the first application window has not yet been confirmed, it is likely to be at some point in Q2 2025. Therefore, developers should make gathering such evidence a priority to secure a grid connection under the CP 2030 framework.
Looking ahead, in the medium and long term, developers may need to be more selective of their projects to ensure the required grid connections are allocated. As onshore and offshore wind are cornerstones of the new plans, co-location could be a fruitful avenue to ensuring a successful BESS project.
For BESS projects in development, developers, funders, and other investors should remain aware of the requirements of CP 2030.