United Kingdom

United Kingdom

Ofgem to reconsider Greenlink interconnector

UK: Ofgem has reassessed its analysis of the 500MW Greenlink interconnector between the UK and Ireland following new evidence that predicts the link would be beneficial to UK consumers.

Greenlink is one of four projects Ofgem is consulting on
Greenlink is one of four projects Ofgem is consulting on

In March, the energy market regulator said it would consult on four proposed interconnectors between the UK and Europe to carry 3.4GW of electricity.

The interconnectors Ofgem said it would progress were the 1.4GW Fab and the 1GW IFA2 links between the UK and France; and the 1GW Viking cable link connecting the UK with Denmark.

Ofgem said the Greenlink cable between Ireland and the UK failed to demonstrate its cost effectiveness. It said it would still consult on the application but would not progress it.

Change in circumstances

However, since the decision in March, Ofgem received information regarding a possible change to the Irish electricity market, which would make the interconnector more cost-effective for UK consumers.

In an open letter, Ofgem said its original analysis predicted Ireland's single electricity market (SEM) "to have relatively high levels of wind penetration [and] there will be times when wind is effectively curtailed in the day-ahead market", with other more expensive generation switched on.

Ofgem said the analysis used assumed that the next-day electricity wholesale price in Ireland would reflect the cost of the expensive generation that is switched on.

Greenlink developer Element Power (EP) told Ofgem an alternative SEM design was being considered that would use an unconstrained wholesale market price in the day-ahead market "where wind is not curtailed and other generation is not [switched] on," Ofgem explained.

"This means that, compared with the analysis included in our March 2015 consultation, the Irish day-ahead market price is likely to be lower than the [UK] price more often, or with a larger differential in existing lower-priced periods," the letter read.

Ofgem said it "seems reasonable" to include the new analysis in its consultation but added the SEM committee in Ireland is yet to finalise designs on the market design and its analysis may change once a decision is made.

The UK regulator is now seeking feedback on its updated analysis.

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