The approach to securing a grid connection for generation projects has changed, with the traditional building block approach replaced with a multi-gate qualification criteria being established. In this article Rick Campbell looks at the next steps for the industry.
After months of wrangling – getting applications submitted, confirming land agreements, finalising documents and grappling with portals, we’ve finally reached the end of the Gate 2 submission window.
Our industry has never seen a situation like it, where projects en masse have faced an externally appointed deadline to decide whether or not they are a “goer”. It also represents the biggest collection of live project information in our industry, ever. (As an aside, I wonder if any industry has collated a comparable dataset.)
There will be, of course, some companies who submit applications and get what they hoped for. Well done to them.
For the others I believe the following outcomes are most likely:
1. Good projects will be left behind
Through some fault of timing or capacity, projects which would otherwise be viable will not have been submitted or fail to achieve a Gate 2 (Phase 1 or 2).
2. Some people will win too much
The lack of a crystal ball means that developers cannot predict what they will win – so cannot confirm to investors what grid liabilities they will be on the hook for. This is bound to cause problems and one of those will be companies having bitten off more than they can reasonably chew.
So – what happens next?
Projects that have not made the grade (or were not submitted) still retain a value. The development pathway and timescales change but a good project is fundamentally a good project.
Likewise, projects that achieve a Gate 2 offer now present the best opportunity for delivering new generation. (Note: we should not fall into the trap of thinking Gate 2 offers are equivalent to FID. They are not, and projects will continue to be subject to the trials, tribulations and idiosyncrasies they always have.)
Blackhall & Powis are fortunate to represent and work alongside a large portion of the developer community, and our clients and their projects will no doubt fall into all three categories above.
Our position provides a degree of insight into developer order books, and our role as a trusted supplier means that we are well placed to steer clients towards prospects, either as an investor or where they are looking to secure additional or alternative support for a project.
If you’d like a chat about where your portfolio sits following the Gate 2 process, please do reach out. We’d love to talk.
Get in touch at info@blackhallpowis.com