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.

PROJECT NAME DEVELOPERS CONNECTING COUNTRY CAPACITY CAP AND FLOOR REGIME? EXEMPTION? DELIVERY DATE/ ESTIMATED DELIVERY DATE
IFA National Grid Interconnector Holdings (NGIH) and RTE France 2000MW No No 1986
Moyle Mutual Energy Ireland 500MW* No No 2002
BritNed NGIH and TenneT Netherlands 1000MW No Yes (Second Package) 2011
EWIC EirGrid Ireland 500MW No No 2012
ElecLink Star Capital Partners Limited and Groupe Eurotunnel France 1000MW No Yes (Third Package) 2019
NEMO NGIH and Elia Belgium 1000MW Yes No 2019
NSN NGIH and Statnett Norway 1400MW Yes No 2020
FAB Link Transmission Investment and RTE France 1400MW Yes No 2022
IFA2 NGIH and RTE France 1000MW Yes No 2020
Viking NGIH and Energinet.dk Denmark 1400MW Yes No 2022
Greenlink Element Power Ireland 500MW Yes No 2021

* Moyle has been operating at around half of its normal 500MW capacity due to subsea cable faults since 2012.

Publications and updates

  • Published: 16th Dec 2015
  • Guidance, Open letters and correspondence
  • 2 Associated documents
This letter sets out our guidance to interconnector developers who are considering requests for variations(s) to the cap and floor regime related to financing.

  • Published: 27th Nov 2015
  • Decisions
  • 2 Associated documents
This letter confirms that we will open a second application window for the cap and floor regime for electricity interconnectors. The window will be open from 31 March 2016 to 31 October 2016.

  • Published: 14th Oct 2015
  • Closed: 9th Dec 2015
  • Consultations and responses
  • 13 Associated documents
This open letter is seeking interested parties’ view’s on moving from RPI to CPI as an index applicable to future OFTO and electricity interconnector licences.

  • Published: 30th Sep 2015
  • Decisions
  • 1 Associated documents
This is our decision on the Initial Project Assessment of the Greenlink interconnector.

  • Published: 10th Aug 2015
  • Closed: 11th Sep 2015
  • Consultations and responses
  • 14 Associated documents
This open letter provides an update on our assessment of the Greenlink interconnector to Ireland. We have considered new information submitted in response to our March 2015 Initial Project Assessment consultation.

  • Published: 21st Jul 2015
  • Decisions
  • 1 Associated documents
This is our decision on the Initial Project Assessment of the FAB Link, IFA2 and Viking Link interconnectors.

  • Published: 14th Jul 2015
  • Open letters and correspondence
  • 1 Associated documents
This letter confirms that we have decided not to hold a second window this year and we will continue to consider the optimal timing of the second window.

  • Published: 26th May 2015
  • Open letters and correspondence
  • 1 Associated documents
This is an open letter inviting interested parties to engage with us on the financing of electricity interconnectors under the cap and floor regulatory regime.

  • Published: 25th Mar 2015
  • Open letters and correspondence
  • 1 Associated documents
This letter invites electricity interconnector developers to provide us with notice of their intent to submit projects in the second cap and floor window by 1 May 2015.

  • Published: 12th Mar 2015
  • News and blogs
  • 1 Associated documents
This issue of our Electricity Transmission Newsletter covers recent internal developments at Ofgem, alongside the usual round-up.

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