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A 1,400MW undersea power link between Norway and the UK came a step closer on Friday as Ofgem set out plans to allow interconnector operators to earn stable revenues.
The proposed 700km cable, if built, will be the longest of its kind in the world and give the UK access to Norway’s abundant and flexible hydroelectric power.
Ofgem is consulting on a cap and floor regime to help secure investment in interconnectors, which it says will help with UK security of supply. Once the interconnector is operating, if revenues exceed the cap, the surplus will be paid back to consumers. If revenues fall below the floor, consumers will pay for a top-up to the level of the floor.
National Grid is working with Norwegian network operator Statnett to develop the project. Although the new Ofgem regime only applies to the UK section of any interconnector, Statnett said it would help reduce the overall project risk.
Hakon Borgen, executive vice president at Statnett, said: “We are pleased that our project will most likely be among the projects that will fall under this regulation. This gives us an even better foundation for preparing to realise this project.”
The UK has four electricity interconnectors with a combined capacity of 4GW. A report commissioned by government from consultancy Redpoint last year estimated adding 5GW of capacity by 2040 would benefit UK consumers by up to £9 billion.
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