A Grid Connection Due Diligence allows the current and upcoming risks associated with a grid connection offer to be identified, anticipated and ultimately mitigated.
In the past two years, Blake Clough Consulting has seen demand more than triple for our Grid Connection Due Diligence service. This trend is reflective of the value in an independent assessment of the connection offer issued. While the focus of such due diligence is ultimately in identifying specific concerns with the connection offer it can also unearth concerns in areas such as planning or procurement that may warrant its own assessment.
What is Grid Connection Due Diligence?
A Grid Connection Due Diligence is a crucial step that should be completed following receipt of a connection offer from the Electricity System Operator (ESO) with the relevant Transmission Owner (TO) or Distribution Network Operators (DNOs) or when looking to purchase a scheme from a developer. It can provide insight into questions such as: Is the scheme worth buying? Is it able to deliver what you need it to? Is the project deliverable within the timescales? Has everything been costed correctly? Is anything missing?
Is Anything Missing?
This last question is perhaps where the greatest value of the Grid Connection Due Diligence arises. Is anything missing? How would you know? This may be the first connection offer you’ve seen; are the documents that have been provided complete or is the scope of the works needed reasonable? The sooner a risk is identified the cheaper its mitigation.
Our consultants look at dozens of connection offers every month – when something is missing, they can spot it, flag it, and estimate its impact. Ensuring that all the expected documentation has been received is an early step in the assessment. We regularly engage with our clients to ensure that the works breakdown has costs attached or that the Variation Agreement has been received. This is a major point of engagement with a DNO or ESO/TO following the Due Diligence.
These omissions have the potential to incur significant additional cost in a connection offer resulting from costs allocated incorrectly, missing required equipment or the requirement of higher upfront capital contributions following a miscalculation of the project’s securities. Costs that might be assumed to be grid connection costs, i.e. civil works associated with a substation, the cost and installation of a transformer or even cabling costs are in many cases the project/customer’s responsibility and they pay for these outside of the connection agreement.
Growing Connection Queue
As the connection queue continues to grow, we are seeing more distant and less detailed information being issued alongside connection offers. Major changes to the costs and works, the risk of curtailment following planned and unplanned outages, and even changes to the point of connection have all been identified in our most recent Due Diligence reports. The DNOs and ESO/TOs can, and will, update the connection offers as needed in line with a shift in project requirements. It is vital, therefore, that the shape the offer could take before connection is understood. As part of the due diligence our grid connection experts can offer their view on the changes the offer may experience before its connection date.
Fundamentally, a completed Grid Connection Due Diligence can empower you to know what questions to ask, which areas to challenge, and where to focus your attention in engaging with the DNO or ESO/TOs.
