Ofgem has today launched a consultation on proposals to approve the case for awarding a cap and floor regulatory regime to the NSN interconnector project. The interconnector, which is expected to be operational in 2020, will link the GB and Norwegian electricity systems via a 700km subsea cable, allowing the two countries to trade power.
Ofgem’s consultation follows its assessment of the consumer benefits that the project is expected to deliver. These include more competition in the wholesale electricity market and lower wholesale prices, a more varied and secure supply of electricity, and increased access to renewable sources of energy at a lower cost. The benefits of the project are described in the initial project assessment, published today for consultation. Ofgem has already begun analysing development costs, design specifications and tendering arrangements to ensure that these deliver good value for consumers, and will consult on detailed cost assessments next year, before setting provisional cap and floor levels for NSN’s future revenues.
Dermot Nolan, Ofgem chief executive said: “Our goal is to encourage new investment in interconnectors that will make energy supplies more secure and increase competition in the market, to the ultimate benefit of households and businesses. Our consultation today sets out our analysis and evidence base and seeks views from all stakeholders. We expect to make a decision on the justification for the investment in March next year.”
Secretary of State, Ed Davey, said: “This is a crucial milestone in connecting Britain to Norway’s vast hydro resources. The interconnector would bring benefits to our energy security, providing enough green electricity to power up to four million homes and helping to lower consumer bills.”