Access to and cost of grid connections for renewables developers has become an acute issue over recent months. After receiving approximately 150 applications for connection to the grid in Scotland in the run up to the end of 2004, NGC has been left with a massive headache in terms of providing access on fair and non-discriminatory terms for connection to the grid in circumstances where network reinforcements will be necessary to accommodate all (or even a realistic proportion) of the capacity currently in development. For onshore windfarm developers, this has raised serious commercial concerns at a stage when their projects typically do not have planning or section 36 consent and have often not yet achieved internal board approvals.
NGC issued a consultation document on its proposals for managing the connections queue on 9 May, received responses by 3 June and published a conclusions document on 13 July 2005. The short timescale over which this consultation took place is itself evidence of the extreme circumstances that have arisen due to the combined impact of large numbers of proposed windfarm developments in Scotland and the introduction, via BETTA, of a single transmission system operated by NGC.
NGC have created 3 "sub-queues" for handling connection offers. Those in the A queue (those who applied and had accepted offers prior to 31/12/04) have all now received offers and we have seen 2 key issues arising.
Firstly, many of the offers for the North of Scotland are dependent on the Beauly to Denny upgrade receiving Section 37 consent and being constructed. This causes a timescale delay for many projects including some which are distribution connected and just over 5 MW capacity. It is difficult to understand why such projects (whose combined impact on the transmission network must be low), are being handled in this manner. In addition, these offers tend to be highly interactive resulting in very little time to consider and accept an offer from NGC before another party has accepted theirs.
Secondly the exposure to final sums liability is controversial as it hits developers very early in the life of their project and usually prior to obtaining consents. This is the amount to be secured by the applicant should their project not go ahead with NGC meantime carrying out grid reinforcement works. The cost of putting in place the security for the sums indicated can itself be significant. Our recent experience has shown that the initial amounts indicated by NGC can often be substantially reduced in negotiation with NGC thus reducing the level of security required, at least during the period prior to planning being obtained.
The B queue (those who applied between (1/1/05 and 1/4/05) is being dealt with via a series of "clusters" of projects and this is now causing even more acute difficulties for developers. Ultimately, those in the A queue may also end up in a "cluster". NGC have taken this approach to try and establish the transmission reinforcement works necessary to accommodate a number of developments to ensure that investment in the system is efficient rather than dealt with piecemeal. The level of final sums liability for developers in such a cluster can therefore be high depending on the works that NGC considers are necessary to accommodate that cluster.
There is little, if any, visibility for developers as to how many or which developments are in their cluster. The approach that NGC has taken with regard to the final sums liability for a cluster is that, if a developer decides not to proceed, that developer's liability for final sums would remain up to the point of termination. The balance of the costs would either be re-allocated to the developer moving up in the queue to take on that capacity (if anyone was in a position or willing to do so) or spread over the remaining developments in the cluster. Developers have to take into account, therefore, not only the viability of their own project but also how likely it is that they might end up as the only remaining party in a cluster and therefore bearing the brunt of the final sums liability.