THE energy regulator has launched a drive to ensure the UK develops the offshore networks required to make the most of the potential of renewable energy which it hopes will secure multi-billion pound private sector investment.
Ofgem said it is inviting bids to bring forward the huge investment needed to develop new electricity interconnectors to help boost energy security, hit the UK’s climate goals, and save money for energy consumers.
It said the subsea cables concerned could be used to import power when UK windfarm output is not strong enough to meet requirements or to export surpluses when weather conditions are favourable.
Ofgem expects the programme to feature the installation of a new kind of multi-purpose interconnector which could be used to link up clusters of windfarms.
It noted the UK Government has said it wants to double interconnector capacity by 2030. This will be required to help achieve the Government’s target of quadrupling offshore wind capacity by that date.
Ofgem said it will use a pricing regime that will enable firms to make a fair return on their investment without imposing excessive costs on consumers. Under this regime returns would be limited by the imposition of a maximum cap on revenues. They will be under-pinned by the use of a minimum floor level for revenues.
READ MORE: ScottishPower hit by gas price surge as windfarm output drops
ScottishPower and SSE both operate big networks businesses alongside extensive portfolios of renewable energy generation assets including offshore windfarms.
Last month Ofgem imposed £158m penalties on ScottishPower and National Grid for a two-year delay in the delivery of the £1.2 billion Western Link subsea connection between Scotland and Wales. ScottishPower is run from Glasgow.
Separately, Perth-based SSE said it had won clearance to install a 65 mile long undersea cable to carry power from the Seagreen windfarm it is developing off the Angus coast to Cockenzie in East Lothian.
Cockenzie was the site of a coal-fired power station that was shut down in 2013.
READ MORE: Scottish energy giant in war of words as investor calls for break up
SSE came under attack last week from activist investor Elliott Advisors which said the firm should be broken up. SSE said it made good sense to keep the group's generation and networks businesses under its ownership.
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