Ofgem said this threshold would mean assets are tendered where benefits from cost savings and innovation significantly outweigh potential administrative and interface costs and be “likely to attract significant market interest”.
In a letter, Ofgem said it is consulting with stakeholders on how to define and apply its “new, separable and high value” criteria for proposed onshore electricity transmission assets, to ensure they offer value for consumers.
The regulator argued that for an investment to be considered “new and separable”, it should include construction of transmission assets where such assets don’t currently exist and it should be made clear who is responsible for each asset.
The consultation will close on 10 July.
Ofgem’s Integrated Transmission Planning and Regulation draft conclusions in 2014 considered arrangements for planning and delivering onshore, offshore and cross-border electricity transmission networks. Following the project, the regulator proposed three criteria that would be used to define whether a proposed project may be open to competitive tender.
The project must be “high value”, with Ofgem suggesting a range of £50 million to £100 million; “new”, completely new transmission infrastructure projects, including asset upgrades that involve new transmission towers “separable”, assets that can be easily identified as discrete construction projects that have limited interfaces with the existing network.
The Budget in March this year set out the government’s intention to bring forward plans to introduce competitive tendering process for onshore electricity infrastructure, to help lower customers’ bills.
It said a competitive regime “could significantly reduce the cost of building this infrastructure” and that a similar regime for offshore transmission infrastructure has saved up to £400 million, “helping to lower electricity bills” for consumers.