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 alex.macdonald@wsj.com
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