The regulator said it is consulting on abandoning plans to offer financial support to the Greenlink power cable to Ireland through its ‘cap and floor’ support regime, saying it does not offer value for money.
Under the terms of the regime developers are guaranteed revenue at an agreed floor price but with a ceiling set at the cap price. Revenues will either be topped up by, or paid back to, the UK’s energy consumer through the transmission element in all bills.
By contrast three interconnector projects, of which two link to France and a third connects the UK to Denmark, would provide around £8 billion of benefits to UK consumers, Ofgem said.
The projects could be built by 2020 and provide around 3.4GW of additional interconnection capacity which would help secure the UK’s electricity supply.
“These three interconnectors would further boost Britain’s energy security and reduce pressure on bills. To date, under our cap and floor regime, we are looking at adding around 5GW to Britain’s energy supply,” said Ofgem’s senior partner for electricity transmission Martin Crouch.
There are currently four interconnectors linking the UK to the rest of Europe, providing around 4GW of electricity capacity, and 4 per cent of the UK’s total supply.