The growing support for decentralised, secure, low carbon energy is putting an onus on local authorities to act to implement local, low carbon energy solutions. Sustainable energy has become a key area for infrastructure development – with many local authorities investing in or pioneering projects from combined heat and power, to district heating, to energy efficiency.
A review of the current public energy project pipeline shows driven and ambitious plans.
Challenges lie ahead, not least in securing the cost effective procurement and development of such projects, but also in understanding and navigating the vastly technical and perse UK electricity and gas sectors.
This article aims to demystify a key area of the electricity sector – electricity connections.
When planning a new project – whether it be a housing or regeneration development which needs new utility connections, a dedicated renewable energy project to supply the local community, or even an infrastructure project with carbon neutral ambitions – obtaining an electricity connection is likely to be near the top of the list of project development tasks and a key milestone in the project.
So, how do you get an electricity connection?
The DNO, or Distribution Network Operator, is the company which owns and is licenced by Ofgem to operate the infrastructure which delivers electricity to premises in your geographical area. In Scotland, SP Distribution owns and operates the south and central part of the country and Scottish Hydro Electric Power Distribution owns and operates the north of the country.
As DNOs own and operate the network it is often assumed that they are the only companies which can install and connect new supplies in their locations. Indeed your DNO is required by law to make you an offer of connection to its electricity distribution network. However, there are a number of different connection options available.
Distribution Network Operator (DNO) connection options
When you contact your DNO with the information required for a connection request the DNO will give you two options for connection:
- to have the DNO carry out all of the works required for your connection and, once the works are complete, the DNO will own and operate the new network infrastructure; or
- to have the DNO carry out only the ‘non-contestable works’ (works which only the DNO is licenced to carry out for your connection).
Under the second option you will need to instruct an ICP to perform the ‘contestable works’ required for your connection which are all the work required for the connection, other than the non-contestable works which must be carried out by the DNO.
Independent Connection Provider (ICP) option
The ICP is a company which is accredited to build electricity networks to agreed standards. The ICP can carry out almost all of the work required to build and operate a new network e.g. design your connection (subject to compliance with DNO requirements), lay cables, build electricity substations and even make the final connection.
When you chose an ICP to perform the contestable works, the DNO will provide them with all the information they need to know about the DNO’s existing network in order to carry out the works.
Once the works have been completed by the ICP, the DNO will assess your project’s effect on its network and perform the non-contestable works. Then, either the ICP or DNO will make the final connection to get your project powered.
Independent Distribution Network Operator (IDNO) option
The IDNO is an accredited company that can build electricity networks to agreed standards. However, unlike an ICP, it also owns and maintains the network (similar to a DNO) once it is complete.
IDNOs can be distinguished from DNOs as they are not restricted by geographical area and can own and operate networks located in areas covered by DNOs. IDNO networks are often extensions to existing DNO networks for new developments and include private housing, hospitals, schools, retail and manufacturing sectors.
IDNO can often supply packages of multiple utilities – electricity, gas and water – all at once. They will also liaise with DNO and local gas network operators and water companies on your behalf so that you have one point of contact. They might even also be able to provide telecommunication and street lighting services.
Private Wire Connection option
A final option for procuring your electricity connection is to avoid the distribution network altogether and to connect directly to a source of demand/supply. A private wire connection could distribute electricity generated by a project to one or a number of local users (for example various council owned buildings and/or local businesses) and could carry either all of the project’s electrical output or a proportion of it.
Decentralised supply is becoming much more common, particularly for locally owned projects and avoiding connecting to the network (or even just reducing the capacity which requires to be connected) can save a significant amount of time and money. ICPs and IDNOs offer services to build (and IDNOs to operate) private wire networks.
There are additional considerations to be taken into account when developing a private wire connection, for example if you are supplying a significant amount of electricity to customers you may require a supply licence under the Electricity Act 1989.
Conclusion
Knowing the range of options available will help you to choose the type of connection most appropriate for your project. Choosing your electricity connections provides a number of options, regulatory challenges and commercial opportunities.
If you would like to learn more about regulation in the energy sector and the different options for connection to the electricity network, then please join us at our Public Aye seminar on 8 November. You can sign up to attend tracey.moodie@cms-cmno.com.
