Repowering Britain: How grid reform is driving the clean energy transition

The repowering and rewiring of the United Kingdom is now underway. This initiative is driven by the transition to clean energy and the need to accommodate rising demand from initiatives such as electric vehicles and data centres, among others. On top of this, the Russian Ukraine war caused a spike in international wholesale gas prices, and to date has cost the United Kingdom an extra £90 billion in additional costs. Energy security has now become a major political concern. As a result, the UK now aims not only to be powered by clean energy but also to achieve self-sufficiency.

These plans will all have a major impact on landowners. Generating electricity obviously requires some form of land or water. Many of you reading this will have agreements for such developments to be built on your land. However, once generated, that electricity then needs to be distributed. This means more landowners are now being approached to host the supporting infrastructure for its distribution. If agreements cannot be reached to host these cables, pylons and other distribution infrastructure, utility companies are now much more willing to impose these through statutory powers, which we will examine in more detail in future articles.

Here, we are focusing on the ‘repowering’ aspect, and the Government’s efforts to ‘supercharge’ this process. The Government’s goal is to have 95% of the UK’s energy generated from clean sources by 2030, including nuclear energy.

Despite this, clean energy project developers are faced with significant bottle necks when trying to connect their projects to the grid. For example, we recently acted for a landowner who concluded a contract for a renewables development this year but their developer was given a grid connection date of 2032 due to the ‘first come, first served’ policy of dealing with grid connections.

As of June this year, more than 1,000 projects were waiting to connect. If all these projects were connected, they would generate approximately 1.5 times the UK’s total energy requirements for each year.

Whilst some of this energy could be sold internationally, it’s obviously not realistic nor required to connect all these projects to the grid. As such the National Energy Systems Operator (or ‘NESO’) aims to prioritise workable projects that support the 2030 target and strip grid connections from projects that are causing delays. Some of these are known as ‘zombie projects’, and, for example, may have a grid connection, but not have secured land on which to build. Other projects may be workable but be located in an area with an overprovision of that technology.

This summer, NESO required developers to submit their projects for evaluation. We are currently in that evaluation period. On completion, developers will be offered what is known as ‘Gate 1’ or ‘Gate 2’ Offers. Those will be issued in stages as outlined below.

If a project fails the initial check stage or is incomplete, then a Gate 1 offer will be made by 31 December 2025. If a project fails the detailed review or does not align with the Government’s clean energy plan, a Gate 1 offer will be issued by the end of March 2026. A Gate 1 offer provides only an indicative connection date and location. NESO expects that around two thirds of all projects will fall into this category.  Consequently, it is expected that a significant number of these may never then be built.

Developers aim to receive a Gate 2 offer, which provides a definitive connection date, secure queue position, and grid connection point. For projects originally scheduled to be connected in 2026 or 2027, developers should receive a Gate 2 offer by the end of March 2026 (some projects connecting directly into the transmission part of the grid will know by the end of January 2026).

Projects given connection dates up to and including 2030 should receive Gate 2 offers by the end of June 2026. For projects scheduled after 2030, Gate 2 offers are expected by the end of September 2026.

It is important to note that this is not the end of the process. NESO will open additional application windows for Gate 2 offers, including for projects that previously received Gate 1 offers. Projects with Gate 2 offers must meet specific milestones or risk losing their spot in the queue and as connections are stripped from some projects, others can advance and take their place in the queue. This approach should benefit ‘shovel-ready’ projects that are currently delayed.

Conversely, some workable projects will have their connections stripped, or experience delays. Litigation is likely, and the regulator (OFGEM) has recently completed a consultation on how best to deal with these complaints. However, until NESO completes the offer process, there remains considerable uncertainty in the market, which is having a negative impact on investment into the industry.

How we can help

It should be noted that this is a high-level overview of a complex process, and one which is still subject to ongoing amendments. If you have any questions about the development on your land, or this process, please contact Stuart Orr (stuart.orr@andersonstrathern.co.uk) or your regular Anderson Strathern contact.