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Connecting and Managing Offshore Wind

Danish Embassy - 4th December 2012

John Twomey, Offshore Customer Connections Manager

2

Today’s Agenda

Introduction to National Grid

Connections Update

Key Connection projects across the UK

Integrated offshore networks

National Grid’s approach to enabling connections

3

National Grid

UK and US Electricity and Gas

Transmission & Distribution

4

Connection requests

Timing

Subsequent amendments

Financial commitment

Conversion rate historic vs. future

Connection charges and security

Transmission investment timing

Contracted generation

Contracted new generation by 2025

as at 1 Aug 2012

90 GW

0

10

20

30

40

50

60

70

80

90

100

Type Status

Gas Nuclear

Interconnector Wind

Other (including CCS)

Awaiting consents /

scoping

Consented

Under construction

Contracted generation (GW)

Data source: National Grid TNQCU – Aug 2012

5

2.4 GW currently under construction

0.6 GW CCGT

1.8 GW wind

14.5 GW with consents

9.3 GW CCGT

5.2 GW wind

Current status of generation projects

Generation consented or under

construction

17 GW

0

2

4

6

8

10

12

14

16

18

Type Status

Gas Interconnector Wind Other (including CCS)

Consented

Contracted generation (GW)

Under construction

6

Contracted Generation

7

Areas of local difficulty

8

-

500

1,000

1,500

2,000

2,500

3,000

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21£

m (

no

min

al)

Non-Load Related Capex Load Related Capex Load Related Capex (incremental)

-

500

1,000

1,500

2,000

2,500

3,000

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

£m

(n

om

inal

)

Opex System Operator Capex

Total gas and electricity transmission

capital and operating costs in RIIO business plans 2013-2021

£30bn CAGR in RAV gas and elec transmission

including assumed ~3% RPI over the RIIO price control

~10%

New sources of energy

The transmission challenge

Different demand profiles

Greater geographical spread of supply

Greater supply and demand variability

Environmental targets Asset replacement

NGET business plan expenditure: NGGT business plan expenditure:

9

Electricity transmission:

delivering the network

Offshore

Point-to-Point competitive tender

future potential investment to

connect Scottish renewables

existing network

potential wind farm sites

future potential load related

investment to 2017

potential nuclear sites

Onshore

RIIO = Incentives + Innovation + Outputs

10

The Offshore Commercial regime

11

What is an Integrated offshore

Network?

1GW

HVDC

Platform

Onshore

TO

Sub

station

500MW

AC

platform OFTO

Sub

station 500MW

AC

platform

Onshore

TO

Sub

station

1GW

HVDC

Platform

500MW

AC

platform OFTO

Sub

station 500MW

AC

platform

12 12

Round 3 – A different approach required

Radial (today) Coordinated (the future)

13

Just to re-cap…

– any offshore network will be a challenge

Designing and building an integrated network is complex

Scenarios are uncertain

Securing consents will be difficult

Extensive supply chain relationships will be required

A need for extensive co-ordination of active ‘through routes’ to make sure it works

Substantial value left behind if complexity not dealt with properly ~54GW

potential offshore wind

~6,600 5,600km HVDC cable

~90 45 cable landing sites

~180 100 offshore platforms

~£34 25bn potential investment

radial vs integrated (Accelerated growth 2030)

14

Where are we?

18 Month of industry engagement to determine benefits of integration

Offshore Transmission Coordination project

8 – 15% cost savings (£0.5bn – £3.5bn)

Consultation on Network Coordination

Response by 26 April 2012

Focus on driving changes to the framework

Planning a

coordinated

Network (NETSO)

Anticipatory

investment

• Process and criteria for taking

this forward

Regulatory

Boundaries

• clarity on assets

Commercial Regime

• Mechanism for delivery,

charging and security

Planning Regime

•Consenting of anticipatory

assets

Technology and

Deliverability

• Availability and interoperability

Today

15

Pre-construction

Develop range of potential solutions

Identification of options, value engineering of

lead options, surveying, milestones, costs etc

Produce generic functional specifications

Protection and control strategy

Focus on technology developments

Establish need case for preferred option

Engage with supply chain

Local and non-

active elements

Today

Short term – Anticipatory Funding Request Interim approach until

framework delivered

Maintain potential delivery of coordination, without committing to who or how

Maintain options for range of potential solutions

Provide developers confidence that work can be delivered against time requirements

Provide supply chain confidence that investment in R&D is necessary

How can we keep options open?

16

The next steps……

90GW of new connections contracted over the next 13 years

RIIO Submission of circa £23bn across onshore TOs to 2021

20 years of ‘sweating’ assets and innovation to maximise power transfers

Moving into a phase of large scale construction across a number of key projects across the UK.

A key Focus now on Planning and Consenting to enable 2020 generation commitments.