Northern Ireland’s electricity links with the Republic and in the future Europe could be cemented further if Britain’s energy regulator makes a final decision refusing to back a proposed £700m interconnector with Scotland.
Britain’s consumers would end up paying up to £1bn in extra costs over 25 years if the developers of the interconnector are allowed to participate in a “regime” designed to encourage and protect the flow of electricity across borders, according to an initial assessment by Ofgem.
Ofgem is also “minded to” block the developer of a second interconnector between Wales and Dublin participating in the “cap and floor regime”, which limits profits but also guarantees British consumers will pay if revenues drop below a certain level.
The regulator, due to make final decisions soon, calculated the two projects will potentially cost British consumers £2.2bn over the quarter century.
“We are minded to not offer a cap and floor regime...based upon the negative total welfare impact on GB of the project,” Ofgem stated in its initial assessment of both proposals.
It said any decarbonisation or security of supply benefits were modest compared to “negative welfare” impact on British consumers.
Transmission Investment announced its 700 megawatt (MW) LirIC project last year, proposing to lay 130km of cable sub-sea between Kilroot and Kilmarnock and build two convertor stations. It applied last year to the north’s Utilities Regulator for a transmission licence.
At the time, Keith Morrison, LirIC project director, said: “The application for a transmission licence is an early milestone in a long process, but it’s significant in that it moves us one stage closer towards delivering this very exciting project.
“LirlC will increase the opportunities for home-grown renewables to export power to other markets, reduce the curtailment of wind generators, lower the wholesale power price in wholesale markets, which on average is forecast to be higher in Northern Ireland, as well as deliver social economic welfare benefits.”
The company could still move forward if denied access to “cap and floor” but it would expose investors to hefty financial risk. Transmission Investment did not immediately respond to a request for comment on the Ofgem assessment.
A spokesperson for Foresight, which is behind the proposed Dublin-Wales connection, said: “MaresConnect is hugely beneficial to Irish consumers and will materially contribute to Ireland’s decarbonisation and energy security. We disagree with the calculation of the potential cost to GB consumers and the project has addressed Ofgem’s concerns during the consultation period.
“Ofgem is now reviewing consultation responses from all stakeholders and we hope to receive a positive decision in the Autumn on this key infrastructure project.”
It is possible at some future point that Stormont, through the Department for the Economy, might intervene and underwrite the project based on need and security of supply.
A DfE spokesperson said: “DfE has no role in Ofgem’s decision making in respect of individual interconnection proposals. The North-South interconnector remains an essential element of the Path to Net Zero energy strategy.”
However, with preliminary work continuing on the north-south interconnector and construction started on a €1.6 billion (£1.35bn) 575km link between Ireland and France, the current direction is to and from north to south and Europe.
Ofgem initially rejected another four out of a total seven applications from developers proposing links between Britain and Europe, and the north, and wanting to participate in “cap and floor”.
Its broad position is that Britain, which benefited in the past from the cross-border links, on price, security of supply and renewables, will no longer need so many connections due to its own ability to produce in the future, particularly with the ramping up of supply from offshore wind.
