NESO proposes new CUSC modification to drive connections queue progress

10 February
Press release - 10 February 2025
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Key facts
To support the wider connections reform proposals currently under consideration by Ofgem, NESO has today proposed a new CUSC modification to strengthen the future management of the electricity connections queue.
Following industry engagement in October 2024, NESO has proposed a new Progression Commitment Fee to incentivise future projects to proactively exit the connections queue if they become unviable, subject to a trigger being met.
By exiting the queue before submitting planning applications, developers will be able to avoid additional charges from the Progression Commitment Fee for exiting the connections queue.
Increasing the number of unviable projects that exit from the queue at the earliest opportunity will help free up space for projects required to deliver clean power by 2030.

The National Energy System Operator has today proposed a new CUSC modification to introduce a new Progression Commitment Fee (the fee) to support the future connections queue. The proposed fee will augment the connections reforms currently under consideration by the energy regulator Ofgem.

Following a call for input with industry in October 2024, NESO has revised its initial proposal to better balance industry concerns with a requirement to motivate future projects to continue to progress through the connections queue, or to exit at the earliest possible opportunity.

The proposed fee will not immediately be applicable. Instead, it will be subject to a defined activation trigger. If activated, NESO’s proposal would mean that project developers would be exposed to a fee payable on termination or reduction in capacity, with the fee payable increasing over time. 

Under the reformed connections process the proposed fee would provide an additional incentive for developers to regularly assess the viability of their projects during the period before they submit their planning applications. 

The proposed fee would only be applicable to projects that have advanced through the initial stages of the connections process to enter the future gate 2 connections queue but have not yet submitted their planning consent application.

NESO’s proposal is that initially, the fee would be equivalent to an additional £2,500/MW for the project and would increase by an additional £2,500/MW every six months, up to £10,000/MW, during the time a project is in the Gate 2 queue without a submitted application for planning consent. 

Kayte O'Neill, Chief Operating Officer, National Energy System Operator said: 

“Ensuring that we have effective measures to make connections reform a success is critical to the future of the electricity network. The proposed Progression Commitment Fee will maintain the impetus for projects to regularly assess the viability of their project. It will support wider reforms, as another tool to speed up the connections process, deliver the electricity needed for 2030 and beyond.”

Energy Secretary Ed Miliband said:

“Our mission for clean power by 2030 is critical to build an energy system that can bring down bills for households and businesses for good.

“Speculative energy projects have been left to linger in the grid connections queue for too long, while viable projects that can help us deliver clean power by 2030 face frustrating waits of many years in some cases.

“As a next step to deliver our Clean Power Action Plan, these sensible measures will encourage developers to stick to deadlines and only bring forward their most progressed projects so we can accelerate Great Britain towards a new era of clean electricity."

ENDS
About NESO

The National Energy System Operator, NESO, is an independent, public corporation at the centre of the energy system taking a whole system view to create a world where everyone has access to reliable, clean, and affordable energy.

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Notes to editors:

  • The Progression Commitment Fee (“PCF”) code modification has been submitted by NESO and will now go through the code review process before final consideration and approval by the energy regulator Ofgem.
  • The PCF  is initially dormant but may be later activated by a “trigger” (see below)
    • If activated, generation project developers will accrue a liability for an additional £2,500/MW every six months during the time a project is in the Gate 2 queue prior to M1, up to a cap of £10,000/MW.
    • The trigger is based on the total, cumulative MW of projects that are terminated from the queue at M1, unless replaced by a project receiving a connection date within 12 months of the connection date of the original project.
    • The threshold to activate the PCF is [6115 MW], equivalent to 5% of capacity that must be connected between now and 2030 for CP30 targets (Approximately equivalent 3 average-sized projects (340MW) per year over a 5-year period to 2030)
  • Once the threshold is met, NESO has the power to activate the PCF, and Ofgem has the final say.
  • The liability is applied to all generation projects in the Gate 2 queue that have not passed M1. It is not differentiated by technology, project size, or other criteria.
  • Revenue collected by invoicing against the liability (or forfeited securities) will be redistributed to consumers