The CM is designed to secure the UK’s electricity supply by incentivising investment and securing confidence in clean energy projects.
However, recent proposals under NESO’s Connection Reforms proposals risk creating significant uncertainty for investors.
“The Capacity Market provides a robust framework for ensuring the UK’s energy security” said Andy Willis, Kona Energy CEO. “Projects that prequalify and secure CM contracts demonstrate readiness and are critical to keeping the lights on. Requiring these projects to reapply for connections under a new system could delay deployment, discourage investment, and undermine the very purpose of the CM. An urgent rethink is required. Kona proposes that any transmission connected project that has successfully prequalified and secures a CM Contract in March 2025 will not have to undergo the Connection Reform process. The timings of this reform are crucial in so far as OFGEM are not going to approve any Connection Reform Plans until April 2025."
The key areas of concern are as follows:
Uncertainty for ‘ready’ projects - Under current proposals, projects deemed essential for energy security via the CM process could face delays due to new connection requirements, despite already demonstrating their ‘readiness’.
Investment risk - With OFGEM’s approval of Connection Reforms not expected until April 2025, a year-long pause in energy investment could have severe medium-term consequences, including a significantly increased risk of blackouts.
Inconsistencies in timing: The misalignment between CM timelines and connection reform processes threatens to disrupt critical projects and undermine vital investor confidence.
Kona Energy is urging NESO, OFGEM, and DEZNEZ to engage with stakeholders to create transitional arrangements that protect critical energy projects.
This is vital to safeguard the UK’s energy security, whilst moving towards a cleaner, more sustainable future.
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