Out-Law News 1 min. read
11 Mar 2015, 5:21 pm
Together, the proposed FAB Link and IFA2 with France and Viking Link with Denmark could provide access to an additional 3.4GW of electricity capacity, according to the plans. However, Ofgem does not intend to proceed with the planned 0.5GW Greenlink between Ireland and Britain because the proposals put forward "did not demonstrate enough value for GB consumers".
"Ofgem is helping to deliver greater interconnection," said Martin Crouch, the regulator's senior partner for electricity transmission. "These three interconnectors would further boost Britain's energy security and reduce pressure on bills."
Interconnectors are transmission cables that allow electricity to flow from one country to another. There are currently four interconnectors between Britain and Europe, which together provide around 4GW or 4% of Britain's electricity supply.
The proposed projects come under Ofgem's 'cap and floor' regulatory regime, which offers developers of new interconnector projects a guaranteed revenue stream. If developers' revenues go above this 'cap' then the excess is returned to consumers. Consumer gains and costs are passed on through the 'network costs' element of their energy bills Ofgem will only approve projects for a cap and floor if they are in the interests of consumers.
The four projects, including Greenlink, were included on a shortlist of five proposed new interconnectors published by Ofgem last year. A fifth project, the NSN link to Norway, is already at initial project assessment stage.
The FAB Link project is a proposed 1.4GW interconnector between France and Britain via Alderney in the Channel Islands, which is being developed jointly by Transmission Investment and RTE, the French transmission system operator. IFA2, which is also being developed by RTE and National Grid Interconnector Holdings (NGIH), would provide a further 1GW connection capacity between the two countries. The Viking project is being developed by NGIH and Energinet.dk, the Danish transmission system operator.
According to Ofgem's consultation documents, these three projects are likely to deliver "significant net benefits" for customers in Britain. However, the proposed Greenlink project is expected to increase the cost of operating the British transmission system while offering limited strategic benefits, as it "connects to a smaller market with a more similar generation mix and more correlated wind output".
Ofgem is consulting on these "minded-to" positions until 2 May.