Empowering Great Britain For A Clean And Flexible Energy Future With The Next Generation Of Interconnectors
13th November 2024
In a major boost for energy security and the shift to clean power, Ofgem yesterday approved five major new undersea energy links which will further harness the vast potential of North Sea wind and help power millions of homes.
With Great Britain expected to be a net exporter of energy by 2030* the greenlit projects will capitalise on the growing amount of homegrown wind power by providing additional channels for exporting in times of energy surplus and importing during times of more limited domestic supply.
Two of the projects will also create Great Britain's first ever Offshore Hybrid Assets (OHAs) which can directly feed energy generated by offshore wind farms into both our own and European grids.
The new connections will keep consumer costs as low as possible through Ofgem’s cap and floor rules which limit revenue for interconnectors.
Additionally, the new OHAs will:
maximise the efficiency of both interconnection and transmission by providing one-stop connections which can transmit electricity from windfarms to grids when they are generating, and which can provide more interconnector capacity at other times
cut down on the footprint of infrastructure needed by combining both interconnection and offshore wind connection into a single asset, thereby reducing community and environmental impacts as well as costs
make Great Britain a world leader in this emerging new energy technology
Akshay Kaul, Director General for Infrastructure at Ofgem, yesterday said:
"We’ve carefully assessed all the proposed projects and only approved those ones which deliver for consumers in terms of value, viability and energy security.
“As we shift to a clean power system more reliant on intermittent wind and solar energy, these new connections will help harness the vast potential of the North Sea and play a key role in making our energy supply cheaper and less reliant on volatile foreign gas markets and associated price spikes.
He added:
“With Britain expected to become a net energy exporter in the 2030s, these connections will equip us with world leading technology to export more of our surplus clean power overseas. They will also provide greater access to energy imports, which together with domestic low carbon energy sources such as nuclear and biomass, will provide vital back-up energy sources when renewable generation is more limited here."
The greenlit new projects are:
Interconnectors:
Tarchon Energy Interconnector this 610km subsea cable between East Anglia and Niederlangen, Germany would deliver upto 1.4GW of electricity capacity.
Mares Connect this 190km subsea cable between Bodelwyddan, North Wales, to the Republic of Ireland, which will deliver 0.75GW of additional electricity capacity
LirIC this approximately 142km subsea electricity interconnector between Kilroot in Northern Ireland to Hunterston in Ayrshire, Scotland will deliver 0.7GW of additional electricity capacity
OHA (Offshore Hybrid Assets):
LionLink this OHA will connect Dutch offshore windfarms to the GB grid with an onshore landing point in Suffolk and providing upto 1.8GW of clean electricity to each country
Nautilus, this OHA will connect Belgium offshore windfarms to the GB grid, coming ashore at the Isle of Grain in Kent, and providing upto 1.4GW of offshore wind to each country through subsea electricity cables.
The new projects are all expected to be complete and operational by the end of 2032.
Notes to editors
Boost to interconnection capacity
Delivering three new electricity interconnector cables linking Great Britain to overseas energy markets along with GB’s first two Offshore Hybrid Assets (OHAs), combining interconnection with transmission links to offshore wind farms, the decision will boost energy export and import capacity by over 6GW, taking GB’s capacity to over 18GW by 2032, provided all Ofgem approved interconnectors are completed on schedule (for context one gigawatt (GW) is equivalent to one billion watts, and one gigawatt hour (GWh) of electricity is enough to power one million homes for one hour) .
(*) Great Britain as a net exporter of energy
Analysis by both Ofgem and the National Energy System Operator (NESO) has concluded that GB will become a net energy exporter by 2030 due to the growing amount of renewable generation
Interconnectors
Interconnectors are subsea high voltage cables connecting GB’s electricity transmission network to European markets via point-to-point connection, allowing power to be both exported and imported. This means rather than GB having to pay generators to turn off, during times of excess generation here, British generators have the potential to instead export excess electricity overseas. Conversely during times of less generation, they give us more options for importing electricity from a range of markets.
Offshore Hybrid Assets (OHA)
OHAs combine interconnection with the transmission of electricity generated by offshore windfarms and create direct links between power grids and windfarms. OHAs can improve coordination of offshore wind and interconnection and are an important first step towards a more strategic meshed electricity system in the North Sea. They can reduce build and operation costs, and by coordinating infrastructure they have the potential to reduce impacts on the environment and on communities.
Currently there is only one OHA operational in the world Kriegers Flak in the Baltic Sea, which connects Germany’s Baltic II wind farm with the electricity grids of both Germany and Denmark, enabling clean energy to be shared between the two nations.
With the approval of Lion Link and Nautilus, GB will be positioned to be a world leader in OHA interconnection technology.
Interconnection and clean power
GB’s increasing reliance on intermittent sources of energy such as wind and solar, mean more flexibility is needed to help ensure demand is met when the wind is not blowing, and the sun is not shining.
More interconnection alongside more domestic nuclear, biomass and CCUS (Carbon Capture Utilization and Storage) generation and battery storage is needed to help ensure the grid flexibility needed in a clean power energy system.
Cost to consumers of projects
Ofgem sets very high standards for approving projects - if projects are not likely to be successful, it is households and businesses who pay for it on their bills – and Ofgem will only back projects which can demonstrate they benefit to consumers.
Ofgem is committed to keeping costs for the projects as low as possible. The costs of these projects are funded by developers,
We expect GB electricity prices to fall significantly as the number of domestic windfarms increase. However, as we will be exporting electricity in the future, this means that the wholesale price of electricity in GB will be slightly higher than otherwise would have been the case without these projects. The cost to consumers of all five projects will be between £2 to £5 a year on individual consumer electricity bills over the years 2030 to 2055. However Ofgem considers that the new interconnectors also provide other consumer benefits such as increased security of supply (importing energy when the wind doesn’t blow) and by providing routes to export we also support our offshore wind industry which makes us less reliant on importing hydrocarbons, such as gas, which are subject to global price volatility, as shown by the recent gas crisis.
The Cap and Floor regime
Ofgem’s cap and floor regime provides the regulated route for interconnector development in GB, designed to facilitate the delivery of interconnection in a way that is economic, efficient and timely whilst protecting consumers’ interests. A cap and floor mechanism regulates how much money a developer can earn once in operation, providing developers with a minimum return (floor) and a limit on the potential upside (cap) for a 25-year period.
Ofgem’s cap and floor regime has been successful in both attracting investment in interconnectors and in protecting consumers.
Since its launch in 2014 the regime has through capping revenues, it has delivered £200m back to consumers through reduced bills over the past decade. Since its inception floor payments have never needed to be made, thereby ensuring excellent value for money for consumers, as well as demonstrating the commercial viability of interconnectors.
This is the third cap and floor window and follows on from previous windows in 2014 and 2016.
Separately, Ofgem has also launched a new pilot cap and floor scheme for the development of Offshore Hybrid Assets (OHAs), which works on the same principle to the interconnector cap and floor regime.
How many interconnectors does GB currently have?
Currently GB has nine operational interconnectors, four of which are operating under Ofgem’s cap and floor regime (Nemo, IFA2, NSL, Viking Link). Those operational interconnectors are:
4GW to France (IFA, IFA2 and ElecLink)
1GW to the Netherlands (BritNed)
1GW to Belgium (Nemo Link)
500MW to Northern Ireland (Moyle)
500MW to the Republic of Ireland (East West)
1.4 GW to Norway (NSL)
1.4GW to Denmark (Viking Link)
There are also two interconnectors under the cap and floor regime being constructed- GreenLink to the Republic of Ireland, and NeuConnect to Germany.
By 2032 GB could have 18 operational interconnectors, able to import over 18GW of capacity if all those Ofgem projects with regulatory approval complete on schedule (for context a gigawatt (GW) is equivalent to one billion watts, and one gigawatt hour (GWh) of electricity is enough to power one million homes for one hour).
How long does it take to build an interconnector? When will the Window 3 interconnectors and OHA pilot schemes become operational?
On average it can take 6-10 years for an interconnector to go from planning to operation, and application to the cap and floor regime comes early into an interconnector’s development. Construction often takes 3-5 years. Ofgem don’t have a direct role in planning, but project developers will need to work closely with offshore and onshore planning and consenting authorities in the UK and in connecting countries.
Cap and floor projects are vulnerable to delay at the point of securing regulatory approval in the connecting country and securing material for the cable. For Window 3 we’ve asked developer to demonstrate higher maturity than in previous windows to reduce the likelihood of these delays from the outset.
Interconnectors approved under Window 3 and the OHA pilot scheme are committed to connect before the end of 2032.
Onshore interconnector related transmission connections projects
The design of new transmission projects how or where they should be built or if they comply with planning requirements are decisions for the Transmission Operator and the relevant planning authorities, this includes pylon design and type. Ofgem’s role is to decide whether the overall funding case is efficient and delivers value for the bill payer.
