The big news in our industry this week was the final chapter in the zonal pricing debate.
Our director of Business Development, Rick Campbell, outlines B&P’s position.
It’s such a relief to see the back of zonal pricing.
The UK renewables market is going through a number of changes at the moment. Inevitably change brings uncertainty and challenges the investment case.
As a land, planning and development consultancy specialising in supporting project promoters in the renewables space – in particular with our work in new site origination – Blackhall & Powis have excellent insight into the appetite for new investment in the market at a macro level.
We’ve seen a level of caution applied to projects, most notably for clients at the more risk-averse end of the market.
Grid Connection Reform
There is a general acceptance that the “first come, first served” approach to grid connections is outmoded and does not take account of the varying complexity of project consents and land agreements for different technology types.
Connections Reform (TMO4+) and Clean Power 2030 (CP30) will deliver a “first ready, first connected” model which will focus on requisite land, planning, energy density and strategic requirement. This is a welcome change which will give meaningful, sensible connection deadlines for projects.
The changes are imperfect. In particular I believe the geographic capacity targets applied by CP30 do not align with permitting challenges, and this will be borne out by the results of the Gate 2 process later this year.
However, the direction of travel from these changes is both necessary and will improve the investment case for projects. There is general acceptance that the resultant model will be an improvement following these changes.
Zonal Pricing
I don’t claim to be an expert on electricity market structure, and for that reason have felt a little helpless on this subject.
Zonal pricing was designed to address the imbalance in energy costs from a consumer perspective. From a project developer perspective – gained from discussions across the industry – the effect would have been a hammer blow to the business case. Massive depletion in renewable project development. Huge reduction in one of the country’s leading industries.
As one industry veteran put it to me, we’ve waited for years for a replacement to TNUoS and managed to find something worse.
As a consultant supporting a large number of developments, unashamedly reliant on continuing investment in the market, I’m delighted it has been put to bed and we can focus on the business of supporting the next wave of renewable energy projects.