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Impact of Ofgem letter from the 20th October on Synchronous Condensers

Ofgem published a letter on the 20th October titled “Review of the regulatory framework for ancillary service assets and clarification on our short-term treatment of synchronous condensers”.

In this letter, Ofgem confirmed that they will continue to grant generation licences to synchronous condensers as a short-term, temporary measure and will conduct a regulatory review of licencing arrangements to assess what the best enduring solution is. This decision creates clarity for the treatment of synchronous condensers (also called synchronous compensators or sync comps) required for current and future Pathfinders. Ofgem will conduct a review on current licencing arrangements to consider how assets dedicated to providing ancillary services should be treated. The outcome of this review may result in legislative and licence change for sync comps and other asset types.

We will implement the outcome of this decision through relevant changes to existing and future Pathfinders involving synchronous condensers. In the coming weeks we will contact affected developers to update their connection agreements to reflect this change. We will continue engaging with Ofgem and BEIS to support the regulatory review and ensure the impact on consumers and fair competition are considered.

As new sources of stability and voltage are becoming increasingly important for meeting our zero carbon goals and to encourage consumer value through competition it is important to create transparency and clarity on roles and obligations of different and new types of parties and market participants. We look forward to Ofgem sharing their roadmap and next steps of their regulatory review.