UK's Ofgem Launches Consultation for New Subordinated-Sea Power Link To Norway

By Alex MacDonald

LONDON--U.K. energy regulator Ofgem launched a consultation process on Wednesday into the construction of a new subsea electricity cable that would link Britain's power grid to Norway.

The consultation will focus on proposal to place a cap and floor on the future revenues of the proposed 700-kilometer NSN transmission cable. The link is due to be built by a unit of U.K. power grid operator, National Grid PLC (NGG), and Norway's power grid operator Statnett. Ofgem expects to make a decision on the justification for the project in March.

The project would add 1.4 gigawatts of electricity generation capacity to the British Grid by 2020. It could deliver more than GBP3 billion in savings to British customers over 25 years by allowing the U.K. to buy cheap and abundant hydro-power generation from Norway, Ofgem said in a statement.

Ofgem is considering the possibility of constructing four power links, two of which would connect the U.K. power grid to Norway and Denmark, and another two that would provide additional connections to France and Ireland.

The U.K. regulator said it has already begun analyzing NSN's development costs and will consult with stakeholders on its detailed cost assessments next year before setting the provisional cap and floor levels for NSN's future revenues.

"Our goal is to encourage new investment in interconnectors that will make energy supplies more secure and increase competition in the market," said Dermot Nolan, Ofgem's chief executive. The regulator is considering applying a cap and floor regulatory regime to all new interconnectors completed by 2020.

-Write to Alex MacDonald at [e-mail]

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