3 Grid connection and relation to the grid system
Image: Ministry of Transport
The electricity grid is an important framework in relation to deployment of a charging infrastructure. To deploy additional rapid charging stations and ensure charging services that meet demand, an effective system for grid connection and grid utilisation is important.
3.1 Framework terms associated with the grid system
Grid connection and system contribution
Grid connection is required to set up a charging station. Grid companies are obliged to connect all customers that require grid connection to the grid. Operators who wish to deploy charging infrastructure must therefore contact the local grid company (area statutory licence holder) to determine whether there is sufficient capacity in the existing grid. The local grid company is also the customer’s contact point for grid companies at a higher level. The grid company shall give the customer information about the expected processing time to determine whether there is available capacity in the grid. The grid company shall thereafter provide grid connection without undue delay.
If there is no available capacity in the existing grid, the grid company is obliged to make the necessary grid investments to offer a connection without undue delay. If a grid connection entails investments in the grid, the customer must cover all or part of the investment costs (investment contribution). The grid company must enter into a written contract with the customer specifying what the customer has ordered, the estimated investment contribution and estimated time for completion. The final investment contribution will be determined in a settlement based on the actual accrued costs after the system has been fully installed. However, the grid company cannot invoice the customer for costs that exceed the estimated investment contribution by more than 15 percent.
The purpose of the investment contribution is to substantiate the costs for grid connections or expansions of an existing connection, and to distribute the costs across customers who invoke investments and the grid company’s other customers. Depending on the location and capacity requirement, there can be large variations in the measures required in the grid to connect a charging station and thereby large variations in the extent of the investment contribution. When the customer receives an estimate of the investment contribution from the grid company, the customer will have a basis to evaluate the grid connection at the desired location against other alternative solutions.
Licensing requirements and ownership
Most rapid charging stations have a capacity requirement that requires the installation of a transformer in connection with the charging station to convert from high voltage to low voltage. The local grid company, the area licensee, is obliged to supply electrical power to all customers in their area. This also involves an obligation to invest in new grid systems such as transformers when this is necessary. When the grid company builds this type of system there is no licensing process carried out by NVE, and the grid company must seek the necessary authorisations from the municipality, landowner etc.
In some cases, the developer of rapid charging infrastructure will wish to, or is required to, own a transformer himself – for example if alternative technical solutions are required that are not supplied by the grid company. In such cases, the operator must apply to NVE for a system licence for the transformer. NVE will only grant a system licence if the applicant can provide good grounds as to why it is appropriate that the operator owns the system himself. If the operator is granted a system licence for the transformer, the area licensee (grid company) must supply a high voltage supply to the transformer; however, the operator owns the transformer and converts the electricity from high voltage to low voltage. There is no requirement for system licences for charging stations if the operator himself does not own the high voltage system.
Generally, a charging station can therefore be deployed if permission has been granted from the landowner and appropriate authorisations have been cleared with the municipality. For most charging station constructions there is no need to apply for a system licence and the area licensee is responsible for the construction and operation of the network grid.
A trading licence is a permit to sell electricity. The Norwegian Energy Regulatory Authority (RME) has concluded that providers of charging services do not need a trading licence.
Grid tariff
All customers that are connected to the electricity grid pay a grid tariff. Low voltage customers with a consumption of more than 100 000 kWh/year are subject to a capacity-based grid tariff.7 The capacity-based grid tariff has a fixed component, an energy charge and a capacity charge. Capacity based grid tariffs give incentives to smooth the demand for capacity. Thus, the capacity-based grid tariff allows for better utilisation of the grid which can reduce the need for grid expansion.
Grid companies have different grid tariffs for high voltage and low voltage customers. High voltage customers do not pay grid tariffs for the low voltage grid and therefore largely have lower tariff rates than low voltage customers. Charging stations that have received a system licence for their own transformer, pay the high voltage tariff and will therefore often have lower network charges. On the other hand, the owner of a charging station is himself responsible for, and must cover the cost of, operation, maintenance and reinvestments in the transformer.
3.2 Challenges associated with the power grid system
The queue for processing licences has increased in the last few years
Deployment of charging stations requires processes with landowners, municipalities, grid companies and, if applicable, NVE. All these processes can be time-consuming and involve periods without apparent progress.
If the developer of the charging infrastructure has a technical need to own the high voltage system (transformer) himself, the developer must apply for a system licence from NVE. Before the application for a system licence is submitted, NVE requires authorization from the landowner and the local grid company. This is because NVE does not wish to grant licences for the installation of transformers for charging systems without the landowner and grid company authorising deployment of a charging station and appurtenant solutions, and without the system being allocated grid capacity.
In some cases, deployment of larger charging stations will require that the grid companies must upgrade the grid at higher levels to supply electricity to the charging station. If the connection involves investments in grid at higher levels, the network company must apply for a system licence from NVE.
Since 2019, NVE has seen an increase in the number of applications for system licences and anticipates that the number of applications will continue to increase in the years to come. Licence processing by NVE can take some time, and at present there is also a case processing queue, therefore applications can remain pending before a case handler reviews the case. The time the case handler spends processing an application will depend on the complexity of the case. In the autumn of 2022, NVE was requested by the Ministry of Petroleum and Energy to implement measures to reduce grid licence processing times.
Grid capacity
The main rule for grid connections is that customers shall be connected to the grid promptly, according to the principle of “first in time is first in right”. However, at present, many customers are requesting grid capacity, and in many areas there is little or no grid capacity that has not already been allocated or reserved. Grid companies have a supply and connection obligation, which shall ensure that all customers receive a grid connection with the capacity they require, without undue delay. However, it takes time to plan and construct new grid and there will not always be sufficient available grid capacity in all locations where charging infrastructure is desired. This means that there can be some delay before the customer can be connected.
Dialogue with grid companies
Several developers of charging stations believe that the grid companies take too long to provide them with a grid connection, and that the grid companies have few incentives to offer a rapid connection to the electricity grid. RME in particular receives feedback that the time it takes before a customer has a connection contract with an estimated investment contribution is taking far too long.
It is the grid company that has the overview of the grid in its licence area. To identify where there is available capacity in the electricity grid or where a charging station alternatively could be deployed to give a lower investment contribution, the developer of the charging infrastructure must have a dialogue with the grid company. Many developers believe that this dialogue is too time-consuming. Developers of charging infrastructure have also experienced that grid companies to a limited degree provide information about where there is available capacity in the grid company’s area, or offer suggestions for alternative connection points. Grid companies must facilitate a good dialogue with their customers. It is in both the customer’s and the grid companies’ interest that the charging infrastructure is located in a suitable location in the grid.
Connecting a charging station to the grid is largely a two-phased project. The first phase is the time from when the developer contacts the grid company with a request for a grid connection until they are presented with a written quote with an estimated investment contribution. A review of the grid solution and detailed planning can be time consuming, particularly in complex connections and if there is a need for investments in the grid at higher levels. The grid company must determine whether there is capacity in the grid at higher levels, obtain permissions from landowners and in some cases obtain a permit for expropriation. In addition, the grid company must investigate ground conditions and obtain procurements from external contractors. If the connection requires investments in the grid at higher levels, this also requires a licensing process with NVE. The second phase is the time from when the customer accepts the connection quote until the customer is connected to the grid. The grid company is obliged to execute both the first and second phase without undue delay.
If a customer believes that the grid company has not provided a grid connection without undue delay, the matter can be brought before RME. If RME finds that the grid company has breached regulations, the grid company can be ordered to rectify the matter and be subject to sanctions such as daily penalties and fines for violations. RME is receiving an increasing number of complaints regarding grid companies’ connection times.
Grid connection time is important to customers who wish to connect to the grid, and there is a lack of information regarding the grid companies’ time usage on connections. RME has therefore initiated a project to draft a standardised method for measuring and reporting time spent by the grid companies connecting new customers. The project objective is that grid companies gain a better overview of their own time spent on the various phases of connections. The project will also provide RME with a national and comparable overview of time spent by grid companies on connections. The project is expected to be completed at the turn of the year 2023/2024.
On 14 June 2022, the Electricity Grid Commission published their Official Norwegian Report (NOU) Future development of the electricity grid in Norway to the Ministry of Petroleum and Energy (NOU 2022: 6, in Norwegian only). The Commission proposed several measures to improve the connection process and reduce installation times for grid expansion and grid connection. The proposed initiatives relate to all grid connections, including charging stations. As a part of follow-up of the report, NVE has already been requested to implement measures to reduce licence processing times.
The government will:
- Consider the Electricity Grid Commission’s recommendations to reduce the time taken to implement grid expansion and grid connections.
- Reduce the time it takes to process grid licensing applications, and has therefore proposed to expand the case processing capacity in NVE significantly in the state budget for 2023.
- Increase the efficiency of the licensing processes and electricity grid reports that are used in the planning of the electricity grid, through increased digitalisation, and has therefore proposed increased allocations for NVE’s digitalisation projects in the state budget for 2023.