In March 2013 Ofgem published its ‘Strategy decision for the RIIO-ED1 electricity distribution price control’. This proposed that to reduce the cost of grid reinforcement to individual developers and first movers, developers apply for grid reinforcement as a consortium, teaming up with other developers operating in the same region. Ofgem cite Section 22 of the Electricity Act (s22): “Special agreements with respect to connection as the method by which this different approach to applying for and funding grid reinforcement can be undertaken”. It allows a consortium of customers to approach a District Network Operator (DNO), and steps outside of the individual connection offer mechanism. The approach gives the potential for developers to reduce costs by sharing upfront charges.
Consortia are a common feature of grid reinforcement for demand customers such as large housing and commercial developments. In these cases developers will form a single company responsible for the infrastructure to support the development. This company will form a contractual agreement with Western Power Distribution (WPD) to reinforce the grid as necessary for the demands of the whole development and then split the costs amongst developers. These developments will have planning permission and, therefore, a reasonable degree of confidence they will progress at some stage.
Published: February 2016