Energising Infrastructure: Key Infrastructure Reforms in the Latest Planning & Infrastructure Bill

Introduction

The Planning and Infrastructure Bill (Bill) represents a landmark for the consenting and delivery of infrastructure projects. We have previously written about the Planning Reform Working Paper here. The Bill is very welcome and generally delivers on those proposals as we explain briefly below.

National Policy Statements (NPSs)

NPSs provide the need case and set the framework for the determination of different types of Nationally Significant Infrastructure Projects (NSIPs), and the Bill proposes a statutory requirement for each NPS to be updated at least every five years. This ensures that these national policies reflect government priorities, but also provide clarity and avoid arguments of interpretation of dated policies as schemes are being examined. In addition, a more streamlined procedure for making amendments to a NPS is introduced.

Flexibility

NSIPs above a certain threshold are required to be consented under the Planning Act 2008 procedures by the making of a development consent order. The Bill provides for the Secretary of State to give a direction, on a case-by-case basis, that disapplies the requirement for development consent. Whilst current legislation provides for projects below the threshold to be brought within the NSIP regime by direction of the Secretary of State, the Bill provides more flexibility for projects above the threshold to be determined by local planning authorities under the normal Town and Country planning system. This may be applicable for instance where compulsory acquisition of land is not required. Whether planning authorities have the resources to consider such large infrastructure schemes remains to be seen, but prior consultation by the Secretary of State should be considered.    

Consultation

The Bill changes the consultation requirements, an important element of the development consent process, by firstly, modifying the application acceptance stage. The Bill gives the Planning Inspectorate more discretion to take a proportionate approach when determining whether to accept an application for examination, including accepting minor amendments. Secondly, by introducing a new duty on statutory consultees and local authorities to have regard to guidance published by the Secretary of State about how they should engage in consultation in the development consent process. Thirdly, by revising the requirements for consultation reports so that they summarise the themes and issues raised, rather than a line-by-line analysis of responses as often occurs currently, and fourthly, removing the requirement to consult those who may have a claim for compensation due to physical disturbance resulting from the scheme ('Category 3’ persons) during the pre-application stage. This will reduce the time taken in identifying and consulting parties that may or may not be affected by the scheme.

Judicial Review

The Bill amends the judicial review process for NSIPs which will go straight to an oral hearing, rather than first going through the paper permission stage. As is currently the case, the Bill will also enable judges to certify a claim as ‘totally without merit’ at an oral hearing in the High Court, thereby removing the right to appeal that decision to a higher court.  Where claims are not found to be ‘totally without merit’, an appeal can still be made to the Court of Appeal. This will ensure unmeritorious claims do not hold up NSIP projects whilst maintaining access to justice.  

A further striking part of the Bill is the sea change that it will usher in for electricity transmission, connections and storage. There are four ways in which the Bill seeks to improve the current system:

Transmission

The roll out of new and improved transmission network at pace is critical to accommodate the burgeoning increase in low-carbon and renewable electricity generation. The grid is at capacity and the system provides for constraint costs to be paid to generators. This occurs when there is insufficient capacity to transmit power to electricity users meaning that generators are paid not to supply. It is estimated that constraint costs could rise from around £1.4 billion per year in 2023 to around £8 billion per year in the late 2020s. This brings extra costs for everyone. One of the impediments to the increased roll out of new and improved transmission is often the planning system (which the Bill is seeking to streamline – see above), but opposition to infrastructure proposals can be significant, yet those living close to a new grid or sub-station scheme do not see the benefit individually. Therefore, based on research and consultation undertaken by the previous government, the Bill provides for a Bill Discount Scheme for those living closest to new electricity transmission infrastructure. The scheme does not change the planning system and participants in the scheme are entitled to object to proposals, but it changes the relative economic balance for the participants.  The provisions in the Bill are merely in outline, and details of the scheme will be rolled out in new regulations. The onus will be on the energy supply companies to fund and administer the scheme, which in itself could be problematic depending on how the regulations balance out the costs.

It should also be noted that in addition to the provisions for a Bill Discount Scheme, the Government has also updated the Community Benefit guidance that is applicable to transmission projects. Currently, developers frequently offer a range of community benefits for new schemes which are totally voluntary and fall outside the planning system. 

The new guidance provides that there is an expectation on developers to move away from ad-hoc practices and deliver a comprehensive community-led funding mechanism. It encourages early and transparent community involvement with flexible funding tailored to local needs, with a focus on long-term impact. The guidance also provides for monetary and non-monetary benefits, and for the former, provides benchmark recommended funds, such as £200,000 per km of overhead line or £530,000 per substation. As with the proposed Bill Discount Scheme, it is made clear that the guidance does not affect or change the planning system and is not a material consideration for planning authorities in determining applications.

Whilst the guidance is applicable to all transmission projects, not just those which are NSIPs, this guidance together with the proposed Bill Discount Scheme once in place should contribute to the faster delivery of critical transmission infrastructure.

Connection Reform

The shortage in transmission capacity has had a knock-on effect in delaying important connections to the grid from low-carbon and renewable electricity generation. To address this, the National Energy System Operator (NESO) together with Ofgem is reforming how the connections process operates by moving from a “first come first served” to a “first ready first connected” system. This entails the introduction of gateways in the process to weed out stalled projects.  However, should the existing connections reform processes face significant delays or fail to deliver intended benefits, powers are included in the Bill to allow for the Secretary of State to intervene directly in the connections queuing process. The Bill also provides for strategic energy plans to be provided, and connections to align with the plan.

Long Duration Electricity Storage (LDES)

As decarbonising electricity has gathered pace in the form of solar photovoltaic (PV) and wind power technologies there are often long periods of imbalance between electricity demand and variable renewable energy.  Storage and release of energy at periods of demand is therefore critical. There are numerous LDES technologies, for instance battery and hydroelectric systems. This does not mean that other technologies such as hydrogen storage which can be converted to electricity using a power-to-gas-to-power fuel cell are not important. The Bill intervenes in the pricing system by imposing a duty on Ofgem to deliver a cap and floor system for LDES. The system is intended to provide a minimum revenue certainty for investors (the floor) and a regulated limit (the cap) on revenues to avoid excessive returns on investment. Whilst not covered in the Bill, easing the process for hydrogen storage should be a further priority for Government.

Offshore Electricity Transmission – Extension of the Generator Commissioning Clause

Currently offshore wind transmission connecting the wind generator to the onshore grid are consented and built by an offshore wind developer. On completion, Ofgem runs a competitive tender to select an Offshore Transmission Owner (“OFTO”), independent of the generator since legislation requires generator and transmission licence holders to be independent of one another. The OFTO will own and operate the transmission assets.  Section 4 of the Electricity Act 1989 makes it a criminal offence to participate in transmission of electricity without a licence, however, the Energy Act 2013 introduced a statutory exception to the section 4 prohibition thereby allowing the generator to convey electricity over the offshore transmission line during the commissioning period (to allow for testing and technical demonstration) for 18 months from completion (the “generator commissioning clause”).  At the expiry of the generator commissioning clause, the transmission assets must be transferred to the OFTO.  Where the Ofgem tender process is delayed, generators run the risk of their generator commissioning clause expiring prior to the transfer of the transmission assets.  In order to prevent the generator committing a criminal offence in such situations (where the alternative is to shut the windfarm down until the transfer has completed, which has obvious commercial implications), a bureaucratic process of obtaining an exemption from the Secretary of State must be followed.  Responding to numerous tender round delays, where the 18 month period proved insufficient, the Bill extends the generator commissioning clause period to 27 months. While this may address the needs of ever larger capacity projects, it will be interesting to see whether 27 months does suffice, particularly in the context of the OFTO divestment process where the tender timescales are set by Ofgem and are outside the control of the generators.

Comment

Taken together it is believed that these measures are overdue and will provide a pathway for a more efficient and faster means of reaching the Government’s commitment to deliver clean power by 2030,  …”because clean, homegrown energy is the way to lower bills and boost Britain’s energy independence”.