Citizens Advice Response to Ofgem Consultation on CMP470: Introducing an Oversubscribed Technologies Commitment Fee (OTCF)
We agree with Ofgem’s minded-to position that intervention is justified. We agree with Ofgem’s assessment that there are too many grid-scale batteries in the connection queue. We judge that, assuming all of the projects in this queue will be delivered, this risks unnecessary investment in the electricity network, which is ultimately paid for by electricity consumers in Great Britain.
We note that in relation to Clean Power 2030, DESNZ has derived target capacity ranges for generation technologies, ‘informed by internal modelling and an assessment of maximum feasible deployment based on current knowledge of the project pipeline’. The capacity range for short duration battery storage for 2030 is 23-27GW. For 2035, it is 24-29GW. There is currently over 83GW of short-duration battery storage capacity with protected Gate 2 offers in the grid connection queue.
This surplus, potentially of more than 50GW by 2035, is inefficient when measured against Government target capacity ranges. While market dynamics could correct this oversaturation over time, the sheer size of the queue risks giving rise to negative externalities in the form of excessive network investment, as well as delays to strategic projects such as LDES. Policy intervention is therefore necessary to reduce the risk that consumers will face inefficient costs arising from the oversubscription of batteries in the grid connection queue.