Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 292
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United Kingdom
5. GRID AND
GRID CONNECTION
and operating the offshore wind farm’s
transmission assets.
5.1 Legal framework for the connection
to the onshore grid and the establishment of the grid connection
An offshore wind farm in England and Wales
will most likely connect to the Great Britain
electricity transmission system operated by
National Grid. The National Grid is required
to make a connection offer to anyone wishing to connect to its transmission system,
but the developer must apply for the connection. The developer must then enter into
a bilateral connection agreement ("BCA")
with National Grid and a construction agreement ("CONSAG").
5.2 Planning and construction of
the grid connection system
The developer bears the costs of planning
and constructing the offshore and onshore
transmission cable and grid connection.
European Union (EU) requirements under
the so called Third Energy Directive require that ownership of transmission and
generation assets be unbundled. The UK
has established an offshore transmission
owner ("OFTO") regime, run by Ofgem,
which creates a competitive tender process
through which offshore transmission licences are granted to ensure that offshore wind
projects are economically and efficiently
connected to Britain’s electricity grid.
To date OFTO tenders have been run under
the ‘generator build’ model, where the
generator finances and constructs the offshore wind transmission assets (alongside
the construction of the wind farm) before
transferring (‘unbundling’ those assets to
an OFTO for the operational period. Ofgem
is also developing an ‘OFTO build’ model,
where Ofgem runs a tender to appoint an
OFTO with responsibility for constructing
5.3 Consequence of delays and
disruptions of the GCS
The CfD contains some limited protections
against the consequences of delays and
disruptions to the grid connection system.
For example, the generator is entitled to
an extension of its milestone delivery date
or the longstop date if National Grid fails
to carry out any required system reinforcement or connection works as specified in
the construction agreement attributable
to the wind farm. The owner is not however
entitled to any compensation or extension
of the CfD term.
5.4 Onshore grid congestions,
prioritisation of renewable
energy resources and
compensation mechanisms
Renewable sources do not have priority
dispatch over energy from other sources
and may be constrained in times of surplus
power supply. Generator’s bid into National
Grid’s "Balancing Mechanism", a price at
which they are willing to be curtailed in any
settlement period and can therefore generate revenue from being curtailed in these
circumstances.
