MPs call for grid improvements and affordable household loans so more can join the solar revolution
4 May 2023
In a wide-ranging letter setting out how the Government can achieve its ambition to install 70GW of solar generating capacity, the Environmental Audit Committee (EAC) calls for better collaboration to address grid constraints and access to capital for households.
Based on previous installation rates, EAC believes that achieving the Government’s 70GW ambition is possible. However, a number of key barriers are preventing the UK from achieving its full solar potential in the UK’s energy mix.
Among barriers for households are access to finance and the need to improve battery storage rollout. Solar no longer needs subsidy and is now the cheapest form of power. For many households, accessing the capital required for installation remains a problem. Therefore, the Government should consider consulting on how it can facilitate affordable loans for households. Further, EAC recognises the benefit of installing a battery alongside solar PV. However, if a battery were to be installed retrospectively, it would be subject to VAT. To spur the rollout of batteries, EAC is urging the Chancellor to extend the VAT discount to household battery storage.
In some cases, customers are having to wait 10 to 15 years to secure a connection for solar installations. Through evidence, EAC identified three key areas where the current approach on grid connection is delaying progress: a lack of physical infrastructure such as cables and transformers; poor availability of data on solar PV generation, particularly for small-scale installations; and a ‘queuing system’ of applications where developers are applying for grid connections without the project having planning permission. EAC heard of a regulatory failure for Ofgem to prioritise net zero.
To help solve these issues, EAC is calling on the Government to work with distribution network operators (DNOs) and National Grid ESO to seek some short-term solutions to unblock the pipeline of delays. It is also urging Ofgem to change the way it assesses investment from the DNOs and National Grid so that investment can be accelerated.
In light of the concerns around grid connection raised in the Committee’s work on onshore solar power, and in numerous inquiries ranging from Accelerating the transition from fossil fuels and securing energy supplies and Technological innovations and climate change: Community energy, the Committee has today launched a new inquiry examining this issue in greater depth.
‘Enabling sustainable electrification of the UK economy’ will examine barriers hindering low-carbon technologies from connecting to the grid. It will also consider the potential for a smarter and more flexible grid which enables dynamic demand management and peer-to-peer electricity trading and storing.
Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said:
“There is potential for solar energy to have a bright future in the UK, but a dark cloud of delays for the industry hinders the ability to meet its full potential. Evidence to our Committee made clear that the UK has the potential to fulfil the UK’s ambition of 70GW of generating capacity from solar. But sticking points for households around access to finance and VAT being slapped on batteries remain.
“The ability for low-carbon energy sources, including solar, to be able to connect to the grid could seriously jeopardise Net Zero Britain. Our solar inquiry found that some developers wait up to 15 years for a grid connection: this simply isn’t good enough. We must make sure that concerns around infrastructure and planning are addressed swiftly.
“Given our Committee’s mounting concerns over grid connections for low-carbon energy projects, we are today launching a new inquiry that will consider this in greater detail. I encourage anyone with views on these issues to submit evidence.”
Enabling sustainable electrification of the UK economy: terms of reference
The Committee invites written submissions addressing any or all of the issues raised in the following terms of reference, by 17:00 on Thursday 1 June.
The National Grid and the Government’s energy targets
- What challenges does connecting more renewable electricity to the grid pose, both for those businesses and households who wish to connect to it, and for grid operators?
- To what extent do the following act as barriers to the UK’s targets to decarbonise the power supply? How well is the Government addressing these barriers, and what else can be done to address them? What, if any, targets should be set in these areas?
- grid connection delays and bottlenecks, onshore and offshore;
- lack of, or delays to developing, necessary infrastructure;
- insufficient scale or capacity;
- supply chain and skills constraints, and
- access to finance
- How resilient is the National Grid? How does it need to adapt to achieve the Government’s targets of (a) decarbonising the UK power system by 2035 and (b) becoming a net zero economy by 2050? What changes are needed to promote resilience through diversity of supply?
- What contribution do, or should, localised mini-grids make to achieving the Government’s targets of (a) decarbonising the UK power system by 2035 and (b) becoming a net zero economy by 2050? What role ought there to be for decentralised energy distribution points and distributed energy generation in the future of electricity supply?
- What role will, or should, artificial intelligence play in decarbonising UK’s power supply?
- To what extent will the measures in the British Energy Security Strategy and the Powering Up Britain plan deliver the Government’s high-level targets of (i) decarbonising the UK power system by 2035 and (ii) becoming a net zero economy by 2050?
- How will the design of the future grid incorporate adaptation measures so as to minimise the potential impacts on the electricity system from extreme weather events, such as Storm Arwen in November 2021?
Storage and flexibility
- What developments, including technological developments, and incentives are required in the areas of:
- transmission and distribution;
- demand management and flexibility, and
- interconnection with neighbouring grids?
- How will the expected growth of demand for electricity to power low-carbon technologies such as electric vehicles and heat pumps affect how supply and demand is balanced across the electricity system?
Governance and institutional arrangements
- Are the current governance arrangements for the grid fit for purpose? To what extent do the proposals in the Energy Bill address any issues in governance?
- Does the current Electricity System Operator—or will the proposed Future System Operator—have sufficient powers? If not, what further powers will they need?
- Is there enough resource available—across the Electricity System Operator, regulatory bodies, Government, and network companies—to deliver policy, regulatory and industry workstreams at the pace necessary to achieve Government targets? If not, what additional resource is required?
- Is Ofgem fit for purpose as a regulator to deliver the increase in electricity supply and grid connection needed? Should Ofgem have a net zero remit?
- Could the introduction of competition in parts of the network be used to reduce the cost to consumers in delivering a net-zero power system?
- Is the five-year business plan cycle appropriate to achieve the overarching objectives of delivering a net zero grid by 2035 and a net zero economy by 2050? How does the pricing review process need to evolve to achieve the UK’s strategic objectives on decarbonisation?
Planning, local government and communities
- What barriers are there in the planning process? Do the proposed changes to the National Policy Statements on energy infrastructure address these adequately? Can the grid development required be undertaken wholly under the nationally significant infrastructure project planning arrangements in the Planning Act 2008?
- Is land availability a constraint? If so, how can the constraint best be addressed?
- How can communities be encouraged to accept the infrastructure required to increase capacity? What compensation, if any, might be required?
- What potential is there for community energy schemes to contribute to sustainable electrification? How can they be encouraged to develop?
What role are local authorities playing in delivering the Government’s targets to decarbonise the grid by 2035? Should net zero energy plans be mandated at a local level?