Electricity interconnectors

Electricity interconnectors are the physical links which allow the transfer of electricity across borders.

Interconnectors derive their revenues from congestion revenues. Congestion revenues are dependent on the existence of price differentials between markets at either end of the interconnector. European legislation governs how capacity is allocated. It requires all interconnection capacity to be allocated to the market via market based methods, i.e. auctions. It also includes specific conditions on how revenues are used.

Britain’s electricity market currently has 4GW of interconnector capacity:

• 2GW to France (IFA)
• 1GW to the Netherlands (BritNed)
• 500MW to Northern Ireland (Moyle)
• 500MW to the Republic of Ireland (East West).

Under the present regulatory regime based on EU and GB requirements, there are two general routes for interconnector investment:

1. a regulated route under the 'cap and floor' regime. This is a relatively new regime, we decided to roll out the cap and floor regulatory regime to new near-term electricity interconnectors in May 2014.Through the cap and floor approach developers identify, propose and build interconnectors and there is a cap and floor mechanism to regulate how much money a developer can earn once in operation. If applying for a cap and floor regime developers have to comply with all aspects of European legislation on cross border electricity infrastructure. More information about the design of the cap and floor regime can be found in the documents below.
    
2. as an alternative to the cap and floor model, developers can still seek exemptions from regulatory requirements. Under this route developers would face the full upside and downside of the investment and would usually apply for an exemption from certain aspects of European legislation in order to increase the safeguards for the business case of their investment.

Existing and future interconnector projects

Below is a list of existing and future interconnectors.

As with other major infrastructure projects future interconnectors face a range of challenges that can impact on timing of delivery. The estimated delivery dates shown below reflects our understanding of developers existing delivery plans for future interconnectors.