The UK Office of the Gas and Electricity Markets (OFGEM) has approved the Scottish Hydro Electricity's Moray Firth subsea transmission link in Scotland, which represents the largest investment in the region's electricity network since the 1950s.
The total investment is estimated at £1.2 billion (US$1.94 billion). It is expected to connect 1.2 GW of new renewable electricity through the link between Caithness and Moray in Scotland. The subsea network is expected to be operational by 2018.
SHE Transmission has already submitted more details on the project, and OFGEM is currently analysing them to check that the spending, technical and delivery plans for the upgrade are appropriate and offer value for money for consumers. If OFGEM finds that the project could be delivered for less, then it will lower the amount of funding allowed to complete it.
Martin Crouch, Senior Partner, Transmission stated:
This is a major step forward for an essential upgrade to the high voltage grid so that more renewable energy can connect to the networks. Today's decision means that the company can move forward with work on the upgrade. We have already started on the next phase of checking SHE's spending plans and we will ensure it completes the work as efficiently as possible so that consumers pay a fair price for this.
The changes to transmission charging are the result of an extensive consultation process and detailed analysis. The new arrangements more accurately reflect the costs of Britain's diverse energy generation and will lead to lower costs overall for consumers.
OFGEM has also announced changes to the methodology for calculating what generators pay to use the electricity transmission network. This change is being made to better reflect the costs that different generators have on the system. It will come into effect on 1 April 2016. Ofgem analysis indicates the changes will lead to a more efficient system which will benefit consumers.