OREANDA-NEWS. National Grid's Interconnector business has welcomed the news that Ofgem is opening a consultation on the regulatory framework for electricity interconnectors.

Speaking after the announcement of the consultation, Peter Boreham, National Grid's Director of European Business Development, said: “This is the step change we have been waiting for. It sends a strong message about the importance of interconnectors in the future of the UK energy market and will unlock new investment in the next generation of cross border infrastructure.

“We agree with Ofgem's conclusion that Interconnectors can bring huge benefits to UK consumers from low-cost, low carbon electricity. For those connections that could be up and running by 2020, this consultation will develop the right framework for them to be built. It's now up to everyone involved to make sure we continue to push forward to meet those deadlines.”

As a minimum, undersea links with Norway, France and Denmark, currently under development by National Grid and its partners, would all be eligible for consideration under the rules of the consultation, which sets out the UK framework under which future cross-border investment will sit.

National Grid Interconnector Holdings will respond to the eight-week consultation which opened on Friday May 23 submitting an economic case to Ofgem for each of the schemes to be considered individually, where cost of construction, charging and economic benefits will all be scrutinised. Ofgem will consider all applications providing they meet certain criteria, which includes a pre-2020 connection date. If approved under the proposed framework, the schemes would operate on a similar basis to the National Grid Nemo link with Belgium, which is expected to begin construction next year.

The UK currently has four interconnectors with a total of 4GW capacity. Research published earlier this year on behalf of National Grid Interconnectors showed that if interconnector capacity doubled to 8-9GW, there could be potential savings of around ?1bn a year. This would also take Great Britain closer to the European benchmark of having interconnectors making up 10% of generation capacity.

It is estimated that each 1GW of interconnection could reduce Britain's wholesale power prices by 1-2% as the UK is opened up to European markets and thus more competition.

Peter Boreham, added: “If the UK were to take its interconnector capacity nearer to 10% of all generation then this could see a wholesale electricity price reduction of around ?1 billion per year by 2020.

“This consultation is the enabler we and our partners needed to take this forward. Suddenly that aspiration of 8-9GW by 2020 seems like a very real possibility.”