Ofgem to open up networks to greater competition, says Nolan

The transmission and distribution networks will be opened up to competition by the regulator, according to the Ofgem chief executive.

Giving evidence to the Energy and Climate Change select committee (ECCC), Dermot Nolan said the regulator will “make more elements of these companies open to competition”.

He told MPs that this was “very much a goal for Ofgem” and that it would increase the efficiency of the energy networks and lower the costs ultimately paid by consumers.

Nolan added that while regulation of the sector had “very much delivered”, increased competition would “force [network operators] to deliver even more”.

The Ofgem chief executive provided the Caithness Moray subsea transmission link as an example that could have been “much better if we could have tendered that process out publically”.

The regulator approved plans for planned subsea power transmission cable, but at a proposed funding level 16 per cent lower than requested by SSE’s Scottish Hydro Electricity (SHE) Transmission company.

Nolan said: “The most obvious case for further competition is on larger projects, what we have called strategic wider works – major transmission projects which are designed to bring parts of the grid together.”

He added that the types of projects that would be ripe for competition include the grid connection for the Hinkley Point C nuclear power plant, which is set to be constructed by 2023.

Ofgem senior partner for transmission, smarter grids and governance, Martin Crouch, who also gave evidence to the committee, stated that exposing the network companies to competition could have “real benefits” in terms of reducing costs.

However, he added that while “it is possible to introduce [competition], it may require legislative changes to make that process more effective”.