7.5GW of interconnector capacity blocked by Ofgem

Ofgem has provisionally vetoed six electricity interconnector projects, including one backed by a controversial former Tory donor.

The projects had applied for support under the latest phase of the ‘cap and floor’ support regime.

However, the energy regulator has dismissed the applications in its initial vetting of seven interconnector projects submitted for the third window of its cap and floor regime.

Ofgem’s initial project assessment (IPA) has given the go-ahead for the 1.4GW Tarchon interconnector, which links Germany and the UK.

The other six projects, which have a total capacity of nearly 7.5GW, have been knocked back mainly due to grid constraints in their planned locations in the south of England.

The provisionally vetoed projects include the 1.4GW Aminth to Denmark, 2GW Aquind to France, 1.4GW Cronos to Belgium, 0.7GW LirIC to Northern Ireland, 0.75GW MaresConnect to Republic of Ireland and 1.2GW NU-Link to the Netherlands interconnectors.

Ofgem’s decision document adds: “As the bulk of GB’s wind resource sits in the north, the proposed location of most of the applicant interconnectors in the south means that most Window 3 interconnectors will substantially increase transmission system costs because of network bottlenecks.”

These constraint factors outweigh the carbon savings that the interconnectors could contribute across Europe through exports of the UK’s renewable energy as well as the route to market they could provide for surplus wind power that would otherwise have to be curtailed.

The constraint costs, which Ofgem estimates could be as high as £4.6 billion for the most expensive interconnector, “often overshadow” the system operability benefits that the six projects deliver

The high constraint costs across the GB network’s various boundaries and in the local areas to which they are connected mean the projects are ‘not in the most suitable locations’ in the country to maximise overall value, says the Ofgem document.

As a result, the regulator’s analysis suggests that the interconnectors will contribute to increased wholesale prices.

Ofgem said it is not minded to offer a cap and floor regime to Aquind, mainly due to the very high constraint cost impact of the project, which is designed to run from the south coast of England to Normandy.

The increased flows it would cause in typically constrained parts of the south of England network would result in costs of up to £3.6 billion and require the new Electricity System Operator to provide grid reinforcement works, says the regulator.

A succession of government ministers have had to excuse themselves from determining the development consent order for the 2GW subsea High Voltage Direct Current transmission link project because its key backer, Russian businessman Alexander Termerko, had donated money to their constituency parties.

The project is currently being reassessed after an earlier planning refusal was overturned by the High Court but has hit a fresh delay after the Ministry of Defence was granted additional time to submit representations.

Aminth, which is due to connect to the stalled Energy Island that Denmark is planning to serve the country’s offshore wind farms in the Dogger Bank section of the North Sea, has been rejected on the grounds that Ofgem lacks confidence that the project will be ready by 2032 when Window Three projects are due to be operational.

Ofgem’s IPA document says construction of the energy island has been paused due to the high costs of the current design and will not be fully completed until 2040.

Under the cap & floor mechanism, which has supported the roll out of the UK’s burgeoning interconnector fleet, backers are guaranteed a minimum level of revenue to reflect the projects’ construction and debt costs with the quid pro quo that profits are also capped.