Commercial grid connection costs are set to increase – Vattenfall IDNO minimizes excess charges
Earlier this year, NGED, the DNO which manages electricity distribution in the south midlands, Wales and the southwest of the UK, published the statement below on their website:.
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“The way we charge for some of our larger connections quotes is changing from 1 April 2024. Customers seeking quotations for connections greater than 250kVa at high voltage will be required to pay for them when they are issued” DNOs have always been entitled to charge for grid connection applications but have historically avoided doing so. As demand for new and larger grid connections has increased in line with the electrification of industry and the rapid deployment of renewable energy systems, it seemed almost inevitable that DNOs would start charging at some point.
How much the charges will be remains to be seen, and there is no standard answer because charges vary by area within DNO regions and the type and size of the application. Charges are likely to be linked the kVA size but also to the amount of work the DNO must do to create the grid offer for the customer, meaning larger connections could see significant sums needing to be paid.
NGED is the first DNO to introduce charges for commercial grid applications and it makes sense from their perspective. The volume of connection applications has increased tenfold over the last 5 years and, since not all applications proceed to connection, the DNOs have incurred significant costs, which they have passed on to all electricity consumers. The introduction of grid connection application charges should limit the number of speculative applications and reduce overall costs. But for building and renewable energy project developers looking for suitable sites, where a suitably sized grid connection is essential, the new charging regime will be highly detrimental.
Fortunately for project developers, of any kind, Vattenfall IDNO’s new Grid Connection Consultancy service provides a way to minimize costs and avoid being charged wherever possible. Vattenfall IDNO is an Independent Distribution Network Operator, meaning the company can connect projects anywhere in the UK. As an IDNO Vattenfall can also adopt some of the essential infrastructure that is required for large, commercial grid connections, and will pay developers an Asset Adoption Value for these, which directly reduces grid connection costs for the developer.
To support developers further, Vattenfall has now developed a data platform to help clients understand where, and how much, grid capacity is available across the UK. By working with Vattenfall developers can avoid the need for multiple speculative connections in different parts of the UK – and the associated costs which DNOs might charge and get real time assessments of the available capacity at their preferred project locations before submitting applications.
Vattenfall IDNO will also pay any grid connection application charges upfront on behalf of the developer, further assisting cashflow, and will only charge a developer if the project does not go ahead. At the moment NGED have limited the charges to larger schemes of 22kV and above, stating: “We will review the success or otherwise of our targeted approach which will inform our decision on the application of connection offer expenses in the future.”
Whatever they decide in the future it seems that grid connection application charges are set to stay and that it is only a matter of time before the other DNOs follow suit and introduce their own charges per region.
Understanding the variable nature and timing of the introduction of these costs will create additional work for developers, further highlighting the benefits of working with a grid connections specialist, like Vattenfall IDNO, who can manage part, or the whole process, of securing a grid connection on behalf of clients so they can concentrate on what they do best – building the infrastructure for a net zero future.
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