7 August, 2023
Cap X, by Sam Dumitriu
In the next decade, our energy system is set to be transformed. Electricity demand will surge as households make the switch from gas boilers and petrol cars to cleaner, more efficient alternatives. By 2050, electricity demand is forecast to more than double.
Meeting that demand will require a massive expansion of energy generation. Solar and offshore wind capacity will need to expand five-fold. New nuclear power stations will need to be built to replace the ones we have lost and provide reliable baseload power. Yet there’s a common misconception that all we need to do is generate enough power. Just as important is making sure that power actually gets to people’s homes.
This will mean a massive expansion of grid infrastructure. By 2030, National Grid estimates that our inability to transport power from where it is generated (i.e. the North Sea) to where it is needed could cost us more than £4bn per year.
Across the UK, vital projects are being delayed due to lengthy grid connection queues. Major housing developments in West London are put on hold. EV chargers sit powerless at service stations. Solar farms are told that they will be waiting up to 13 years for a connection.
To keep up with demand, Britain will need to build four times more grid infrastructure in the next seven years as it has in the last 30.
The problem is, under the status quo such an expansion in such a short period of time is effectively impossible. It can take up to 14 years to go from identifying a need to actually getting a new strategic transmission line built. Put simply, we need to halve that timeframe if any of the Government’s Net Zero ambitions are to be achievable.
Let’s put that into perspective. In 1925, Lord Weir chaired a committee which proposed the creation of a ‘national gridiron’. By 1926, the proposals were made law and in 1935, the national grid was born.
Can Britain rediscover its ability to build at pace? A new government report by Electricity Networks Commissioner Nick Winser says yes.
There are two key obstacles to a fast build-out that need to be addressed.
The first is regulatory. National Grid is a privatised monopoly, so to protect consumers Ofgem controls the prices they are able to charge bill payers. What National Grid is able to charge depends on the investments they have approval to make. In the past, Ofgem were reluctant to approve investments in anticipation of future demand to prevent billpayers from being lumbered with the cost of over-investment.
In the past this approach may have made sense. The energy market was relatively stable – there were no forecasts of demand doubling and power generation was highly centralised before the advent of renewables. Today’s energy market is very different and a reluctance to approve anticipatory investments will make a decade of electrification next to impossible.
The second major obstacle is also regulatory, but a different kind of regulation: planning. It is not enough to be able to make investments in anticipation of future demand, you also need planning permission to build them. The key problem is that outside of a few anoraks in the Pylon Appreciation Society (yes, that’s a real thing), most people would, all things considered, prefer it if a new transmission line wasn’t being placed in their patch.
When the Beauly to Denny transmission line in Scotland was proposed, more than 17,000 people lodged objections. It is no wonder it took longer to build that single transmission line than it did to build the original grid.
Winser’s report tackles both obstacles. To unlock anticipatory investment, it proposes the creation of a Strategic Spatial Energy Plan run by the Grid’s Future System Operator. This would identify both the scale of new investments that are needed and where best to target them. We know, for instance, that there is a large pipeline of offshore wind projects in the North Sea. This plan allows National Grid to build in anticipation and eliminate layers of Ofgem bureaucracy that currently contribute to delays.
To overcome the planning barriers, Winser advocates a carrot-and-stick approach. On the one hand, he backs reforms to speed up the process for Nationally Significant Infrastructure Projects (NSIPs). This includes updating the National Policy Statements that guide planning decisions.
When the fast-track for major infrastructure was first created, there was an assumption that these documents would be updated every five years. However, most haven’t changed since 2011, which has created increasing regulatory uncertainty. Developers now have to produce many more documents and ever longer environmental assessments to avoid costly legal challenges down the line.
Updated National Policy Statements shouldn’t just set out need and general principles. They should identify where investment is most needed. In Europe, new go-to zones for renewables are being designated with environmental red-tape cut for projects in those areas. Outside of the EU, there’s no reason for Britain to have a more bureaucratic system.
That’s the stick, but there’s also a carrot. If new pylons are needed near your house to take power from the North Sea to where most people live, then you should get a bill discount. Some, such as South Cambridgeshire MP Anthony Browne, have suggested that new transmission lines be buried underground. This might make sense in some cases, such as through beauty spots or in storm hot-spots (less of a problem in Britain). Yet, it is also a lot more expensive – between five and ten times, according to Nick Winser. Paying off local residents could end up a major cost-saver if it reduces the amount of underground cabling.
There’s a growing recognition that planning presents one of, if not the, largest barriers to delivering Net Zero. In the future, decisions about where the grid should invest should take this into account.
The pro-growth campaign group I work for, Britain Remade, argues that Texas – a haven of onshore wind power – provides one possible model for the UK. The state’s Competitive Renewable Energy Zones directed grid investment to areas where regulatory barriers to onshore wind and solar were lowest. It is estimated that this policy saves Texans almost $2bn a year. We should try something similar here in Britain.
Winser’s ambition of halving the time to build new strategic transmission lines is bold, to say the least. Yet, if politicians don’t have the bottle to deliver it then we can resign ourselves to a future where legal binding Net Zero targets are missed and Britain remains exposed to international gas prices. It is time to get building.