Effects of the SCR
With the release of Ofgem’s Significant Code Review in April 2023, came hype about ‘free’ connections and upgrades to the network, with costs under £1720 per kVA for network reinforcement being socialised into everyone’s Distribution Use of System costs. Swathes of developers held their applications back until April Fool’s Day, in the belief that they would save many thousands (or more) on their projects.
But, such is life, whenever there are winners, there are also losers. Whilst the price cap covers ‘reinforcement’ to the network, the developer is still liable for all ‘extension’ charges. Also, it only covers connections up to one voltage rung higher than the final point. Whilst the distribution network operators (DNOs) must provide the lowest cost overall, this may be to the benefit of the DNO, rather than the developer, so you may not receive the lowest cost quote to you.
This has left many companies blindsided by unexpected grid costs, coupled with increased wait times as the queue built substantially after the 2023 gold rush. Many have opted for a non-firm offer, with which demand or generation is curtailed at certain times of the day to avoid overload. As such, the DNOs have incentivised these with curtailment limits and agreement end dates, to encourage people to grit their teeth and sign them. However, the feasibility of these agreements depends on the load being variable, such as by charging an electric vehicle fleet at night. If your load cannot be controlled, the terms may prove impossible to adhere to.
DNO minefield
How much you pay for a connection or upgrade still very much depends on what the DNOs class as reinforcement, as opposed to extension, as well as whether the offer is firm or non-firm, and what works best for them. Queue times can be somewhat of a post code lottery, with certain areas taking priority. It can almost feel like it depends on which way the wind is blowing, as is exemplified by three of our recent clients:
Firstly, a chicken farmer built a new chicken shelter, with state-of-the art automation and heating. He needed his standard 100 Amp single-phase supply upgrading to three-phase. The quote cost was £82,000 with an eighteen-month wait time.
Another client was rapidly growing their campsite and hotel in Wales, and needed to upgrade their supply from 60 kVA to 150 – they were quoted a whopping £150,000, and it wasn’t even increasing the number of phases. They were given an indeterminate queue time at the time of writing.
Finally, the owner of a luxury wedding venue in Yorkshire needed their 100-Amp supply upgrading to 140 kVA three-phase import with 264 kVA of export to avoid blowing their fuse every six months. You would expect that cost a lot, but the quote was only £14,000.
Luckily, the first two clients had the sense to seek an alternative solution, which is exactly what they got.
To grid or not to grid: is that the question?
To be clear, saying ‘no’ to the DNO is not always the best option. If, like the wedding venue, your connection is relatively low-cost, the business case for doing so may be weak. Also, you should query unexpectedly high quotes if the reasoning is shaky, such as connecting at 33 kV instead of 11 kV. It may be disputable, if the DNO has put their own interests far above yours.
Nonetheless, many developers see these costs as an inevitability. They pay the fees and ask questions later; questions like: ‘Is there another way?’
If you were told that the answer could be to go off-grid, this may conjure up ideas of tin foil hats and peace symbols, which is certainly not suitable for a commercial site. Though, this is exactly what we helped our clients to do, in a sense. Their original grid connections remain, but no loads or generation on the sites are connected directly to them. It is a sort of off/on-grid setup.
The system simply requires a containerised battery system (600 kWh for the campsite and only 160 kWh for the chicken farm), which is trickle charged by renewables. All the loads are connected to the system, which then becomes the main service head. The grid can charge the battery at a set capacity, with a unidirectional charger that cannot feed back at all. It becomes a protective bubble around the loads to stop unacceptable strain on the distribution network.
This provides multiple benefits to the client. It can provide higher current and three-phase when it is required, without the expense and time required dealing with the DNO. Although, you could also use this system in conjunction with a non-firm connection offer to easily control your import and export to firmly keep to your contractual arrangements. You could even go completely off-grid by replacing grid backup with a generator.
Impressive return on investment
Of course, this system is unlikely to cost less than any grid connection offer, and if you’re planning to go completely off-grid with a generator, you will need a significant amount of renewables generation to offset the high diesel costs.
However, the ROIs we project for these setups typically range between four and six years. Once you factor out the DNO connection cost that you will no longer be paying, you effectively have a very low-cost energy storage system for your renewables generation. Our chicken farmer client also saved a cool £70,000 by avoiding the need to purchase a generator because those chickens couldn’t wait eighteen months for heat and light.
With battery costs so low, and grid connection costs so unpredictable, such a novel and simple solution might be the time and cost saver you didn’t know you needed.
Image credit: Dreamstime
