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Fast tracking of grid upgrades vital -- Network impact report

Grid upgrades to take new renewable capacity will have to be fast-tracked through the planning process if the UK is to meet its 2010 target of 10% of electricity from renewables, according to a report for the Department of Trade and Industry (DTI) and the Carbon Trust.

The Renewables Network Impacts Study finds that current plans for wind projects by the major developers could deliver 72% of the 2010 target by 2006. This new capacity alone would involve £1 billion to £1.4 billion of upgrades, while a total of up to £3 billion of network investment would be needed to connect enough renewables capacity to meet the national 10% target. But the target dates will not be met without drastic change to the "business as usual" planning procedures for transmission and distribution upgrades, says the report.

Permitting presents a serious bottleneck, it explains. Building new high voltage lines can take around two years, but gaining consent currently takes up to ten years. The DTI and the Scottish Executive must facilitate consents for the grid reinforcements to start construction in 2004. For full compliance with the 2010 targets, transmission system operators (TSOs) need to be ready to start construction of further reinforcements from 2006 onwards.

"What this report highlights in particular is the urgency of accelerating the planning process and continuing to devise an appropriate ... pricing mechanism to drive forward the approximately £3 billion investment in the grid required to meet the 2010 target," says David Vincent of the Carbon Trust.

The report points out that by 2010 investment of £1.4 billion to £2.1 billion will be needed in the high voltage grid to accommodate renewables and some £782 million investment in the distribution networks. It identifies major bottlenecks in the Scotland networks, the Scotland-England interconnector and National Grid Transco's system in the north of England.

Energy market regulator Ofgem must finalise its incentive mechanisms for transmission system operators (TSOs) and distribution network operators (DNOs) "as a matter of urgency," says the report. In March, Ofgem published its proposals for final consultation for incentives for DNOs, due to take effect from April 2005. And last month it launched a final consultation on an interim incentive to allow TSOs to embark on investment in their grids in advance of transmission expenditure reviews in 2007-08.

Variability not an issue

Interestingly, the report finds that the variability of supply from renewables such as wind is not a significant issue for the network until levels of wind penetration increase beyond 2010. Full compliance with the 10% target would mean additional annual costs to balance supply and demand of no more than £31 million-£55 million (assuming 7.6% wind penetration on the system). The Carbon Trust points out that this contradicts the pessimistic claims of an earlier report by the Royal Academy of Engineering which quotes high costs for providing standby generation as back-up for wind.

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