The final agreement between National Grid and Elia will bring forward the UK’s first power link to Belgium, and the first interconnector project to be built under Ofgem’s cap and floor funding regime.
The regulator approved the plans in December last year, setting the annual revenue floor for Nemo at £50.4 million over the 25 year duration of the scheme while the annual revenue cap was set at £80 million.
These levels could be adjusted following a final assessment of costs after construction, Ofgem said.
Energy secretary Ed Davey welcomed the deal as a step forward for security of supply and the efficient use of increasing renewable energy.
“Better electricity links to our neighbours help to guarantee our energy security at the lowest possible cost to billpayers and means we can use renewable electricity more effectively, allowing excess generation to be exported,” Davey said.
The 140 kilometer power link will run from Richborough on the Kent coast and Herdersbrug, near Zeebrugge with a combination of undersea and underground cables, National Grid said.
Although the UK currently has 2GW of interconnection capacity with France, and a further 1GW link with the Netherlands the Nemo link will be the first link to Belgium.
National Grid chief executive Steve Holliday said the joint venture between National Grid and Elia is targeting a 2019 delivery date.