Q3 2024: Britain to get new transmission, but bottlenecks remain

Investment in transmission infrastructure is key in reaching net zero. Grid congestion, mainly North-South between Scotland and England, has been on the rise in GB. The wasted energy due to bottlenecks is likely to reach 5 TWh in 2024, at a cost of almost £1bn per year, and set to more than triple until 2030, as Scotland is hosting the majority of the UK’s onshore wind and has a 40 GW pipeline of new offshore wind (up from just 3 GW today).

To address the issues, National Grid Electricity Transmission (NGET) will invest £30bn by 2030 in grid infrastructure. As part of this investment, NGET and Scottish & Southern Electricity Networks (SSEN) are developing the Eastern Green Link 2 (EGL2) national interconnector project between Peterhead in Aberdeenshire and Drax in North Yorkshire, which will transport energy southwards, reducing the amount of wind that is wasted, and allowing more capacity to be sensibly added.

So far, the project has signed major contracts in February 2024 for HVDC cables and converter stations, was approved by Ofgem in August 2024, and commenced construction in September 2024. The project is planned to be fully operational in 2029. The project is developed alongside its sister projects, EGL1 and EGL3&4, which are yet to reach final decisions.

EGL2 is a 2 GW, 505 km long project, including 436 km of high voltage direct current (HVDC) cable, the longest within the UK. At an expected cost of £4.3 billion [2], it is the single largest-ever investment in electricity transmission infrastructure in Great Britain, transporting power for two million homes.

EGL2 is mostly constructed as a subsea cable under the North Sea. This has the potential benefit of easier planning and construction, as it avoids lengthy planning disputes throughout Scotland and England, which have also blighted overland projects in other countries. Any delays in construction cost money (likely £100s of millions) in continuing to curtail wind farms, as well as additional financing and legal costs.

At £8.5m per kilometre, this project is 3.5 times more expensive than the £2.5m per kilometre cost of a 400 kV AC overhead line over land (the incumbent cabling solution). However, it is much cheaper than underground cabling at £18-25m per kilometre. While this sounds expensive (£1,000 gets you only 12 cm of the way), it is the same cost per kilometre as building a flat road in the UK, but only a fraction of the new motorway (the road equivalent to HVDC lines) between Cambridge and Milton Keynes, at £62m per kilometre, or HS2 at £290m per kilometre from London to Birmingham.

Major infrastructure costs in the UK.

EGL2 is the first of 26 projects to go through Ofgem’s new Accelerated System Transformation Incentive (ASTI) framework. ASTI allows 26 new transmission projects, worth £19.7bn, to accelerate investment timelines by “up to two years” (Ofgem), streamlining the old project-by-project approach for a more holistic process.

ASTI does not solve new power stations and storage needing to wait for new wires and pylons to be built; the so-called connection queue. The reported queue is now 701 GW, likely to rise to 800 GW by the end of 2024, with similar numbers in Spain (180 GW in August 2022), Italy (337 GW in March 2024), and the US (a whopping 2.6 TW in April 2024). It is clear that most of these power plants and storage units are unlikely to be actually built. In the UK, the electricity generation from 800 GW would be quadruple of what is required in 2050. The queue is traditionally operated on a ‘first come, first serve’ basis, leading to problems for power plants in advanced projects that joined the queue later having to wait for less advanced projects to be connected (or removed) first. Consequently, some customers are now being offered connection dates in the late 2030s (Ofgem), which is not a serviceable arrangement for reaching net zero power by 2030.

In 2023, the Connections Action Plan to set out actions to improve the connections processes and timescales, resulting in 17 GW being offered an earlier grid connection, implementing the NESO’s ‘First Ready, First Connected’ process (referred to as TMO41). There are also provisions in place to remove projects from the queue that do not meet their development milestones.

It is clear that the days of piecemeal infrastructure investments are numbered. The pace needed to reach net zero electricity requires a more holistic approach to grid construction, focussing on overall optimal outcomes, rather than project-by-project cost-benefit analysis. This holistic view is also expressed by the regulatory rules set by Ofgem, and can also be seen in the wider energy system, with the transition of NESO into public ownership, the implementation of Mission Control headed by Chris Stark, and incorporation of GB Energy. If successful, it is likely that other parts of the energy sector will also be governed by increasingly holistic approaches.

[2] In 2024 currency.