UK Electricity Networks Commissioner’s report: letter to UK Government

From: Neil Gray MSP, Cabinet Secretary for Wellbeing Economy, Fair Work and Energy
To: Rt Hon Claire Coutinho MP, Secretary of State for Energy Security and Net Zero

Accelerating electricity transmission network deployment: the Scottish Government’s response to the Electricity Networks Commissioner’s recommendations

The Scottish Government is fully committed to delivering a just transition to net zero emissions by 2045, and Scotland has already made great strides with carbon emissions almost halved when compared to 1990 levels. There is still a long way to go, however, and challenges remain. An electricity system that is fit for the demands of the future will play a vital role in overcoming these challenges and in achieving our shared ambition to reach net zero. 

It is critical that investment in the grid happens at the pace and scale required to enable the full utilisation of Scotland’s current renewable generation, and to realise the enormous potential of further deployment – without which the UK will not achieve its target of decarbonising the electricity system by 2035. The urgent need to transform our energy system and scale up our grid capacity is evident. However the Scottish Government is clear that there must also be real benefits in terms of sustainable jobs, community benefit, skills and economic development.

It is in this context that I am grateful to Nick Winser for his work into what is a vitally important aspect of our journey to net zero – and for engaging with the Scottish Government during the evidence-gathering process. I have enclosed the Scottish Government’s detailed response to the recommendations in the report. However, I wish to flag the following key urgent asks for the UK Government:

• Ensure that there is swift implementation of the recommendations.
• Build a high standard of co-design and collaboration with devolved governments to ensure that the recommendations are fit for purpose, robust and tailored to the circumstances across GB as a whole, ensuring their success.
• Ensure that the Scottish Government is integral to the overall governance structure that is set up to oversee implementation and ongoing monitoring and evaluation.
• Finalise and publish clear guidelines on community benefits for electricity transmission network infrastructure without delay.
• Bring forward the legislative change that is required to enable an effective onshore grid consenting regime in Scotland, working alongside the Scottish Government to ensure that we can develop the system appropriately.

I would welcome the opportunity to discuss these points with you at the earliest opportunity and I look forward to hearing from you on how you plan to ensure the Scottish Government is included in the development of the key recommendations from Nick Winser’s report.

Yours sincerely

Neil Gray

Annex A

Scottish Government response to the UK Electricity Networks Commissioner’s recommendations

Strategic Spatial Energy Plan (SSEP)

The Scottish Government recognises that an integrated SSEP could play a valuable co-ordinating role in the delivery of essential energy infrastructure and could help offer greater certainty within planning and consenting decisions. We are aware of  a  desire for greater clarity amongst planning authorities, industry, communities and environmental stakeholders on the potential location and volume of essential electricity network infrastructure that needs to be delivered. A SSEP could also play a key part of  a public awareness campaign to highlight the need for investment in electricity network infrastructure and the opportunities this presents.

The value of any SSEP will depend on the process by which it is prepared and its interaction with other key areas of work.  Views from a wide range of key stakeholders, including devolved governments, will need to be taken into account during its development. In his report, Nick Winser highlights that “Government targets across the whole energy system would be spatially mapped across GB and over a time period of several years.” It is essential that the Scottish Government’s ambitions, which will be fully set out in our forthcoming Energy Strategy and Just Transition Plan, are included. As the SSEP will have implications for Scotland’s energy system and our policy ambitions across a wide range of sectors, it is critical that the Scottish Government is fully engaged in the process of its development. 

It will also be key that the SSEP is closely tied into work relating to market reform and the potential impacts of such reform, including queue management and connections reform. Ensuring that the SSEP is cognisant of other important developments in the energy sector will reduce the need to redo work and increase efficiency.

As outlined in Nick Winser’s report, it was recommended that two Centralised Strategic Network Plans (CSNPs) are  developed from the SSEP: a short term plan which would cover a 10 year period, to be refreshed annually, and a longer term plan covering a minimum of 25 years, refreshed every five years. The Scottish Government is concerned that by classifying projects differently there is a risk that the holistic approach to network development could be fragmented and the SSEP could lose its value in providing certainty for investment. Should the recommendations be taken forward in their current form, project reviews would be carried out over differing timescales. This may create uncertainty given the SSEP could be refreshed every year under the short term CSNP, and may be subject to significant changes every five years when the longer term CSNP is reviewed. 

We agree that there are significant potential benefits from taking a fresh approach and considering a range of options to help achieve outcomes. This includes the role of well-functioning flexibility markets, new technologies and storage to increase capacity and enhance operations. However, further work is needed to understand how the proposed zonal flexibility markets could work in practice and understand how any benefits would accrue for Scottish projects and consumers.

We are also keen to understand the detail of the Prime Minister’s recent announcement to establish a spatial plan for energy infrastructure and how it relates to Nick Winser’s proposals.

Standardisation of Infrastructure and Automation of Route Design

The Scottish Government recognises the need for a more coordinated approach to system planning across GB. However, there are several factors surrounding the proposals for standardisation of infrastructure and automation of route design that need greater attention to ensure the proposals do not undermine the Scottish Government’s energy policies.  

We recognise that the principles underpinning the route design of electricity network infrastructure known as the ‘Holford Rules’ date to 1959. We acknowledge that there is benefit in reviewing these general principles to determine if they remain fit for purpose.  There is also likely to be some benefit in considering where advice can be offered on the design and positioning of some standard elements of network infrastructure (tower design, substations etc.) to improve their visual appearance and environmental performance.

We would recommend caution, however, in automating route designs and rigidly assessing proposals against principles included in the Electricity Transmission Design Principles (ETDP).  This is because each project must be designed in consultation with communities to respond to the individual environmental characteristics of the location where it is to be installed.  Even with the broad parameters set by the ‘Holford Rules’, there have been significant challenges in adopting a one size fits all approach due to the varied and sensitive nature of Scotland’s landscapes.

Following approval by the Scottish Parliament, Scotland’s Fourth National Planning Framework 4 (NPF4) was published and adopted on 13 February 2023. The Town and Country Planning (Scotland) Act allows us to amend the National Planning Framework and the process for making amendments to NPF4 will be covered in new regulations which we will consult on and which we expect to bring forward later this year. In practice however, we would not make any change of substance without appropriate evidence, engagement and consultation. Any changes would also be subject to all relevant statutory and other impact assessment requirements.

Given the distinctive and sensitive nature of Scotland’s landscapes, it will be important that any design principles are developed in close collaboration with the Scottish Government, and relevant stakeholders, with an understanding of the country’s landscape and geographical challenges.

Regulatory Approval

The Scottish Government welcomes the expansion of Ofgem’s objectives to include net zero  and we support its inclusion in the Energy Bill. However, the Scottish Government has a statutory target to reach net zero emissions of all greenhouse gases by 2045. It is important that Ofgem recognises, and honours, the Scottish Government’s climate targets in all regulatory decisions relating to Scotland.

In addition, it is of the utmost importance that Ofgem’s objectives continue to ensure that the electricity system provides value for money and that consumer rights are protected. We recognise that the current regulatory approval process can significantly impact on delivery timescales of nationally important infrastructure, and that there are benefits to adapting the regulatory framework to decrease the time taken for approval, however this must come with stringent consumer protections to ensure the network is not over built unnecessarily. 

Consenting Reform

The Scottish Government has repeatedly called on the UK Government to modernise the Scottish onshore consenting regime to accelerate onshore grid consenting, and the need for legislative change is recognised by the Nick Winser report. However we are disappointed that Nick Winser’s recommendations to make the required amendment to the Electricity Act 1989, as a matter of urgency in the UK Government’s Energy Bill, have not been taken forward. As a result, the recommendation to amend and make improvements to the Electricity Act 1989 now requires a legislative vehicle, and we welcome the opportunity to work alongside UK Government to enable more efficient onshore grid consenting.

We also welcome the recommendation to ensure the marine planning process for GB is aligned with current Scottish processes and that  the Scottish Government and Crown Estate Scotland’s work in this area is recognised as best practice. We would like to take the opportunity to share the Scottish Government’s expertise to help further this shared ambition. However from a marine perspective, any new regulations should function consistently to avoid handling issues between two sets of regulations.

Community Benefits

Scotland is an extremely attractive place to site renewable generation due to the levels of natural resources available. The Scottish Government is clear however that this potential must be translated into tangible benefits for communities that host generation and electricity network infrastructure.

Despite the powers to mandate community benefits from renewable energy and electricity network developments being reserved to the UK Government, we are continuing to work with communities and a wide range of businesses to maximise community benefit from existing and new developments.

Some renewables developers are already leading the way in Scotland. As part of the recently published Scottish Onshore Wind Sector Deal, onshore wind developers have signed up and committed to meet or even exceed the national benchmark for community benefits as set out in the Scottish Government’s Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments. The Scottish Government has also been consistently urging network companies to work closely with communities to develop tangible benefits for communities and tailor solutions to their needs.

We welcomed the UK Government’s consultation on community benefit from transmission infrastructure earlier this year. In our response, we set out the need to ensure that any new guidance that is developed encourages community benefit to be used to meet the genuine needs of communities for lasting economic and social benefits. This includes community-led decision making on how funds are deployed.

It is vital that UK and Scottish principles and frameworks combine in a consistent approach to meet the highest level of ambition and ensure communities are fully engaged in our shared vision for a net zero future and fuel security. We eagerly await the outcome of the consultation and, in line with the recommendations in the Nick Winser report, we urge the UK Government to publish new guidelines without delay.

Supply Chain

We were disappointed to note that initial proposals to implement a centralised national procurement agency to purchase electricity transmission components were not included the final report.  It has become apparent that there are acute global supply chain pressures which have resulted in long waits for components, with some taking up to seven years from order to delivery.  This specific issue is only set to be exacerbated as the energy transition accelerates and as countries around the world seek to invest in new network infrastructure.  Whilst we welcome the ambition to halve the time taken to deploy electricity infrastructure, this will not be achieved if the components required to build the network are not available when needed. 

We agree with the recommendation in the report that the new regulatory deal established by Ofgem with TOs should place a strong responsibility with the TOs to address the acute supply chain constraints. The Scottish Government is playing its part by actively pursuing opportunities to promote a secure supply chain by working closely with industry and other stakeholders to identify solutions. There has been progress in manufacturing, with the proposed Sumitomo Electric’s new subsea HVDC cable manufacturing facility in the Highlands progressing, and XLCC’s subsea cable manufacturing operations in Hunterston gaining planning approval in 2022. 

In the absence of a centralised national procurement agency we call on the UK Government  to take urgent action now, and work with the industry, the regulator and all relevant stakeholders to tackle supply chain constraints and encourage better cooperation and coordination.

National Campaign and Review of Skills and Jobs

The Scottish Government welcomes the recommendation to establish a national campaign on the need for electricity infrastructure and skilled jobs. As highlighted in the report, there is a need to engage effectively with people and communities impacted by transmission infrastructure build-out.  A public information campaign would help to build consensus on the requirement for this new infrastructure and ensure that the wider benefits are understood.  Given the number of projects already underway, and the huge pipeline of potential developments that will come forward over the next decade, the campaign should be implemented as a matter of urgency. As education, skills and training are devolved matters, it is essential that the Scottish Government is part of any working group that is established to review the skills that are required to expand our electricity network and help deliver net zero. The Scottish Government stands ready to work with the UK Government and all relevant stakeholders to develop this strategy and highlight the tremendous opportunities that will be derived from the modernisation of the grid. 

Outage Planning

The Scottish Government agrees that outage plan optimisation is critical to ensure constraint costs and operational costs are minimised to protect consumers from higher bills. However we are concerned that Scotland will host a large percentage of the infrastructure required and will therefore be more likely to be impacted by required system outages. At present the current Use of System (TNUoS, BSUoS) charges are higher in Scotland. Ofgem’s own analysis suggests that by 2040 Scottish renewable & low carbon generators will be the only ones to pay a wider TNUoS charge, with all others (including gas generators) elsewhere in GB being paid credits.

Land Access

We welcome the recommendation to participate in a working group on land purchase and wayleave processes. Given the Scottish legal system is separate from the rest of the UK and that any changes would require legislative amendments, it critically important that this work is taken forward at pace to ensure any required legislation can be progressed through the Scottish parliament at the earliest opportunity.

Governance Structures

We urge the UK Government to move swiftly and implement the recommendations in the report with the pace and urgency required. As the recommendations cover the entire GB electricity system, it is essential that the Scottish Government is included in the governance structures to take forward the recommendations and monitor progress. Specifically, it is vital that the Scottish Government is included in the Energy System Delivery Board and Change Management Committee to ensure our policy objectives and ambitions are fully taken into account. We are also keen to be involved in the further work that has been identified from the Commissioner’s report on the need for better coordination to address supply chain challenges, and a review of the GB electricity system to ensure local distribution networks are ready to meet the challenges of further decarbonisation.

We look forward to working closely with the UK Government, Ofgem, NGESO (and FSO once established), Transmission Owners and all stakeholders to ensure Scotland’s interests are taken into account in the timely delivery of long-awaited reforms to our GB electricity system.