Earlier in the year, Western Power Distribution (the largest distribution network operator in the country and responsible for electricity distribution in the South West) said that without expensive investment, the electricity grid would struggle to take any more electricity. It has been suggested that a large proportion of the upgrade cost will need to be borne by developers. The additional costs of upgrading the grid may result in a number of renewable energy projects becoming financially unviable.
One option proposed by Ofgem would increase grid capacity by developers entering into special arrangements with Western Power Distribution. This arrangement would commit the developers to pay their share of the costs (under the current charging rules) once the generating equipment (wind turbine, solar PV etc) has been installed. The developers in the consortium would then be reimbursed within five years if the additional capacity created by this investment is used by other developers.
This suggestion has had a mixed reception; some developers do not see it as their duty to upgrade the electricity network. However, if the renewable energy market in the South West remains buoyant, it is likely that more large-scale developers will form consortiums to develop the network, with the aim of recouping their money particularly if the additional capacity can be used by others.
The Michelmores Energy and Renewables team is already assisting on a number of arrangements for co-development of additional capacity to facilitate distributed generation.
For further information, please contact Ian Holyoak, Head of Energy & Renewables at Michelmores, by telephone on 01392 688 688 or by email ian.holyoak@michelmores.com, or your usual Michelmores contact.
