The greenlight from Ofgem boosts the chances of all five applications moving forward, which would increase the UK’s interconnection by 7.5GW through a total investment of £6 billion.
The interconnector projects which Ofgem has deemed eligible for the scheme include two projects linking the UK to France, which has an abundance of renewable and nuclear power; a link to Ireland which is expected to export wind power; and links to renewable energy from Denmark and Norway.
“These five new projects, if approved and then built, could provide real benefits to consumers. They can help to lower electricity supply prices, lower the cost of delivering security of supply and support the decarbonisation of energy supplies,” said Ofgem’s senior partner for transmission Martin Crouch.
The program will hold particular benefit for National Grid which has partnered with Norway’s Statnett, Denmark’s Energinet.dk and French transmission operator RTE in developing plans for three of the five projects, totaling 3.4 GW in capacity.
The second Anglo-French project, known as FAB, will be developed by FAB Link and RTE; while the Irish interconnector will be developed by renewable generator Element Power.
Ofgem said over the summer that it would open the scheme to interconnectors which expect to begin operations by 2020, and that some of those would begin construction as soon as 2016 if approved for the regime.
The so-called ‘cap-and-floor’ funding regime provides certainty for interconnector developers by promising that if revenues fall below a pre-determined floor then consumers top up the developers’ revenues to the level of the floor. But should revenues exceed the cap then the difference would be paid back to consumers.
Currently the UK relies on imports for around 4-5 per cent of its electricity supply.