Energy and Climate Change | New Regulatory Proposal Aims to Optimize Grid Capacity Allocation
This initiative is now open for public consultation, and we encourage you to review the proposed changes and consider their implications. The consultation period is open until August 7, 2024.
Key Changes in the Proposal:
- Shift in Allocation Principle: The current “first come, first served” principle for network capacity allocation is proposed to be replaced by “most mature, best in right.” This means that priority will be given to the most mature projects when allocating available capacity.
- Capacity Queue Based on Maturity: In situations where there is no available capacity, projects will be placed in a capacity queue sorted by the date of project maturity.
- Reservation of Capacity: Once a project has reserved capacity, the entity must demonstrate the capability to make progress in their project to maintain their reservation.
- Maturity Assessment Criteria: Grid companies will be required to conduct maturity assessments using at least the criteria listed in the regulation. They may also employ supplementary criteria, but all requirements must be well-known to stakeholders in advance and based on objective, transparent and non-discriminatory principles.
The proposed regulatory changes aim to mitigate the issue of capacity hoarding without utilization, ensuring that mature projects can secure the necessary capacity while preventing immature projects from unnecessarily occupying it. This will lead to more realistic capacity queues for grid companies, facilitating better assessment of the need for new grid investments.
The proposed changes also emphasize the importance of transparency in the connection process and the associated costs due to delays, as highlighted in recent official reports (NOU 2022: 6 and NOU 2023: 3).
BAHR View on the New Regulatory Proposal
We welcome the proposal to refine grid connection regulations and advocate the need to provide developers of significant industrial and renewables projects with clear and reliable criteria during the initial, often uncertain, stages of project development. The move to prioritize project maturity and the ability for grid companies to introduce additional objective criteria are steps in the right direction.
We appreciate the proposal’s intent to clarify maturity criteria. Nevertheless, the practical enforcement of these rules will be critical. There must be a balance between ensuring progress and acknowledging the realities of project development, where delays can occur outside of the developer’s control. The potential for a mature project to forfeit its connection over minor delays is a concern that needs careful policy crafting.
The Ministry’s proposal for grid companies to have the authority to withdraw capacity reservations is aimed at efficient capacity utilization and market barrier reduction. However, this raises questions about the responsibility and risk that developers must assume, particularly in cases of force majeure or other unforeseen events.
As grid companies evaluate significant deviations in project maturity, we believe that a nuanced approach taking into consideration the nature of such deviations is essential. The actor’s responsibility for issues beyond the grid company’s control should be clearly defined to ensure fair and reasonable treatment.
Going forward
Looking ahead, the dialogue on capacity withdrawal is set to become increasingly relevant as the demand for grid capacity grows. BAHR anticipates a large number of challenging grid connection cases which will highlight the importance of regulations that support both industry growth and grid efficiency.
Should you have any questions or require assistance in preparing for these changes, please do not hesitate to contact us. Our team is ready to offer strategic advice and support to ensure your company navigates this transition smoothly.