A new consultation outlines Ofgem‘s proposals for a regulatory approval and funding framework for onshore electricity transmission projects recommended by the Electricity System Operator (ESO).
This initiative supports the ESO’s plan to connect 21GW of additional offshore wind generation and strengthen the UK’s electricity transmission network to meet the government’s decarbonisation and net zero targets.
Significant investment is required in the electricity transmission (ET) network to decarbonise the system and facilitate the transition to net zero.
This investment will enable the connection of new renewable generation and ensure the network can transmit the generated energy to meet demand.
In July 2022, the ESO published its first transitional Centralised Strategic Network Plan (tCSNP1), recommending offshore and onshore network upgrades to connect up to 50GW of offshore wind by 2030.
To accelerate this plan, Ofgem introduced the Accelerated Strategic Transmission Investment (ASTI) framework in 2022.
Since then, Ofgem has worked with the government, ESO and Transmission Owners (TOs) to further speed up project delivery.
The ESO has now developed another network plan for reinforcements needed beyond 2030, published as the “transitional Centralised Strategic Network Plan 2” (tCSNP2).
Since the release of tCSNP2, the new government has set a target to decarbonise the electricity system by 2030.
An updated network plan is expected in the coming months.
Ofgem believes the work proposed under the tCSNP2 framework will be necessary regardless of the 2030 target and sees no reason to delay it.
Ofgem’s proposed framework for tCSNP2 projects builds on the ASTI framework but recognises the differences between tCSNP1 and tCSNP2 projects.
Most tCSNP2 projects are at an earlier development stage, creating more uncertainty about their solutions, design, routes, costs and delivery timelines.
The ESO recommends more detailed network design work by the TO, which Ofgem agrees with.
These options will be submitted to the ESO for reassessment before confirming funding.
The main goal of the proposed framework is to support the TO in progressing projects according to their initial delivery plans so they can be completed on time.
Ofgem proposes a multi-track funding approach for tCSNP2 projects, considering their varying maturity levels and reducing the risk of inefficient investment.
For less mature, higher value (>£100m) tCSNP2 projects, Ofgem proposes a Development track funding route.
These projects will receive an initial development funding allowance to develop further and resubmit for reassessment by the ESO in late 2025.
Projects recommended for delivery after reassessment will move to the Delivery track.
For more mature, higher value tCSNP2 projects, Ofgem proposes a Delivery track funding route.
These projects will receive a pre-construction funding allowance to be used flexibly. Further funding will be available under applicable mechanisms to progress the projects into construction and delivery.
Outputs, licence obligations, and financial incentives for timely delivery will be set according to relevant policies.
Lower value projects (<£100m) will be immediately eligible for full project funding through the relevant mechanisms.
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