Clean Power 30: What does it mean for real estate?
The UK’s long-awaited energy grid reform is finally here–from ambitious targets–including sourcing 95% of electricity from renewables by 2030 and overhauling the connection system–property owners with stakes in the sector are left wondering: what does it mean for them?
6 minutes to read
What is it?
The energy grid and system in the UK has garnered all the wrong attention for several years. Connection dates have hit the late 2030s, there are limitations in transporting renewable energy, and property developments have been blocked because there is not enough power – to name a few issues. The new government has pledged to decarbonise the grid – with 95% of electricity coming from renewables by 2030.
Progress has been made, with half of the electricity in 2024 coming from renewables, but to supercharge the rollout, they have acknowledged the need to invest in the infrastructure and overhaul the connections process.
To date, connections and grid upgrades have been piecemeal. In November the government/Ofgem Open Letter on aligning connections with strategic plans, they recognised that just bringing forward projects on ‘readiness’ alone would not be sufficient – there is a need for a holistic approach and strategic planning. This is all welcome news – surely?
The detail
The way forward has been outlined in the Clean Power 30 Action Plan (CP30) and associated annexes. There is a lot of information, but let’s focus on the connections process piece. They state, “by removing unviable projects, re-ordering the queue, and accelerating connection timescales for the projects we need most, these reforms will unleash investment in renewable generation and electrification of the wider economy – investment that has been held back for too long.” To allow for a stocktake and establish this new process, the National Energy System Operator (NESO) and Ofgem announced that from 29th January, all new connection applications will pause, except for demand projects and specific modification applications.
The new system will move from a ‘first come, first served’ based one to one that is strategically aligned. In doing so, the CP30 sets out:
- GB-level capacity ranges, informed by the NESO 2030 advice and in line with the government’s 2030 pathway for most generation technologies.
- Regional breakdowns for onshore wind, solar, and batteries.
- Technology capacity ranges to 2035 to provide a 10-year horizon for connection offers.
Ofgem is set to decide on NESO’s proposed reforms by the end of Q1 2025, which would see projects ‘which meet the strategic needs’ as set out in the annex prioritised. This approach, they estimate, will release approximately 500GW of capacity, or two-thirds of the current queue of 722GW. They state a CP30 permitted queue capacity of 120 GW where the current queue with connection dates to the end of 2030 is 210 GW- 135 GW of which are ‘ready’. Table 1 demonstrates the permitted queue capacities for selected technology types.
What does it mean?
With some 40% of the GWs currently in the queue, in theory, to be removed, the location and technology type are now the make-or-break factors. The CP30 plan outlines regional capacity limits, determining which projects move forward. Table 1 shows permitted queue capacities by technology, while Table 2 breaks down quotas by distribution zone.
What’s next?
For projects already in the queue, NESO has commented that those with “protections” will be assigned to the pre-2030 or 2035 phases with residual projects assessed and ordered based on planning status (submitted planning or obtained land rights) until the capacity limit is reached. The “protections” are slated to be, provided each project has also met the Gate 2 Readiness Criteria:
- any project that has been awarded a Contract for Difference or Capacity Market contract, an Interconnector or Offshore Hybrid Asset Cap and Floor agreement, Merchant Interconnector approval, or
- any project that has secured planning permission as a Nationally Significant Infrastructure Project or via relevant Town and Country Planning Acts (including through devolved governments’ planning regimes).
After this process, there will also be some rebalancing, which may see more come forward (read later in this blog for more).
By looking at the Transmission Entry Capacity (TEC) register, which tracks projects in the queue, we can start to understand the impact and potential outcomes of this process. Although some projects list multiple technologies (e.g., Energy Storage Systems and PV Array), which leads to double counting in capacity estimates, we can start to pinpoint where some of the greatest pinch points may be. It is noted that NESO would split connection offers by technology type and then allocate them to the quota accordingly.
When only considering those with ‘consents approved’ or ‘under construction/commissioning’—the likely protected projects—most 2030 quotas have not been met—except for the UK Power Networks (UKPN) distribution and National Grid Electricity Distribution (NGED) zones, where Battery Energy Storage Systems (BESS) already exceed quotas by 4x and 1.2x, respectively.
If we include those ‘awaiting consents’, BESS exceeds quotas in every distribution zone except SSEN – Southern Electric Power Distribution (SEPD). For solar and onshore wind, the TEC queue levels remain below quotas for each distribution zone. However, these start to be met/exceeded when ‘scoping’ projects are added.
For those with exposure, it is important to understand the position, protection, readiness and options available.
David Goatman, Knight Frank’s Global Head of Energy and Sustainability Services, and Charlie Smith, a Surveyor specialising in Cleantech Investment in the team, have been working closely with both developers and landowners to navigate the implications of the announcement and assess project viability.
“The impact is already evident, with some developers facing a sharp decrease in their pipeline, largely associated with grid connection offers beyond 2030.” They continue that “at the same time, the market has seen a surge in Ready-to-Build opportunities as developers look to exit certain projects.”
But, there are also opportunities to potentially change the connection.
Chris Jones, Partner in Knight Frank’s Data Centres team, has been helping developers change from a BESS import/export connection into a demand import connection to power data centre development. He commented that “the first, a 400MW BESS connection at the Elstree GSP, was used as a test case by NESO and NGET to prove the methodology and was completed in December 2024.”
It is also imperative to note that projects that remain in the queue will still need to attain and maintain planning consent and meet project milestones.
Not set in stone
The Strategic Spatial Energy Plan (SSEP), due to be published in 2026, will “further examine the mix of technologies in the pipeline and consider whether capacity reserved for undersupplied technologies should be released for other technologies” and “subject to Ofgem approval, could provide additional flexibilities to allow for project attrition, and over- or under-supply. These potential flexibilities could include:
- Allowing ready projects exceeding 2030 quotas to connect earlier, as long as they fit within the 2035 ranges.
- Reallocating capacity between adjacent zones where there is over- or under-supply, so long as this does not cause material network constraints.
- Ensuring that projects under construction in 2025/26 retain their connection dates.
The end result
Once fully implemented, the connection reform process aims to create a “capacity-rich” grid network, which will allow future generation and demand connections to be delivered in a timely manner in accordance with new and updated quota requirements.