Interconnectors could benefit UK consumers by £9bn

Increased interconnection with neighbouring countries could benefit British consumers by up to £9 billion up to 2040, according to a government report published today.

The Department of Energy and Climate Change (Decc) report said more interconnection to the continent “is likely to be in GB’s benefit” and will contribute to the UK’s energy security, decarbonisation objectives, and help to keep prices affordable.

The Decc report also stated that the government is “seeking views” on how non-GB interconnected capacity might participate in the 2015 capacity auction.

Another independent report, commissioned by the government and conducted by Redpoint Energy, was published alongside Decc’s today, stated the “least regret” option would be an additional 5GW of interconnector capacity to be developed by 2040.

This would include links to the UK’s “closest neighbours”, such as Belgium, France, and Ireland.

Large interconnection projects and a rapid increase in interconnector capacity are described as “more risky” options, although a link to Norway is highlighted as a “notable exception”.

A Norwegian interconnector is described as potentially leading to lower energy prices due to the “shape of prices in Norway, which are considerably more flat compared to GB prices”.

A link to Iceland, alongside an interconnector to Norway, “offers the greatest benefit to GB consumers in terms of lower electricity prices”.

The Redpoint report also carried out two “stress tests” of an interconnected UK energy system and found that “greater levels of interconnection are generally associated with improved security of supply”.

However, it did state that, “in times of extreme system stress” – such as in high demand, low wind conditions, coupled with a forced plant outage – “most interconnectors are likely to be supplying energy to GB at near full capacity”.