Cap and floor regime: Initial Project Assessment for the FAB Link, IFA2, Viking Link and Greenlink interconnectors

Publication date
6th March 2015
Closing date
2nd May 2015
Policy area
Status

Electricity interconnectors can offer significant benefits to existing and future consumers, but interconnection between GB and other markets remains limited. To facilitate the delivery of more interconnection in a way that’s economic, efficient and timely we put in place our cap and floor regime for new electricity interconnectors.

Our first cap and floor application window closed in September 2014. We received five eligible project applications. We consulted on the Initial Project Assessment (IPA) for the NSN project to Norway in December 2014. This consultation covers the remaining four projects – FAB Link, IFA2, Viking Link and Greenlink.

Our minded-to positions

We are minded-to award FAB Link, IFA2 and Viking Link a cap and floor regime in principle. This is because we expect these projects to be in the interests of GB consumers and GB as a whole.

We are minded not to award Greenlink a cap and floor regime. This is because the project does not seem to be in the interests of GB consumers or GB as a whole based on the information available.

We are now seeking views on these minded-to positions.

About each project

The FAB Link project is a proposed 1.4GW interconnector between France and GB via the island of Alderney. It is being jointly developed by Transmission Investment and RTE, the French transmission system operator.

The IFA2 project is also planning to further connect the French and GB transmission systems. The project would have a capacity of 1GW and is being developed by National Grid Interconnector Holdings (NGIH) and RTE.

The Viking project is a proposed 1GW interconnector between GB and Denmark, developed by NGIH and Energinet.dk, the Danish transmission system operator.

The Greenlink project is a proposed 500MW interconnector between GB and Ireland, being developed by Element Power.

What our assessment shows

Our assessment shows a wide range of potential benefits as well as highlighting costs, but overall gives us confidence that for three of the four projects (FAB Link, IFA2 and Viking Link) there are likely to be significant net benefits for GB consumers.

Our assessment shows that Greenlink is unlikely to deliver benefits for GB consumers.  The project is expected to increase the cost of operating the transmission system in GB, and offers limited strategic benefits as it connects to a smaller market with a more similar generation mix and more correlated wind output.

About this consultation

The IPA stage assesses each project’s impact on GB consumers and GB welfare, including how the projects interact. This consultation document forms our impact assessment for the FAB Link, IFA2, Viking Link and Greenlink projects.

Next steps

Following this consultation we will assess responses. Subject to these responses, we aim to make a decision on the IPA for these four projects in summer 2015. Developers that pass the IPA stage will then need to submit detailed cost information at the FPA stage, nearer to an investment decision.