Renewed momentum in electricity interconnection?

Following on from the flurry of recent Ofgem consultations in relation to electricity interconnection and the wider Integrated Transmission Planning and Regulation (ITPR) project, DECC has now issued its own update statement on these matters.

The aim of the statement is to set out government's views on further interconnection and proposals for improving identification of interconnection opportunities and assessing the impacts of proposed projects.

Market participants will be encouraged by the government's specific comments in support of the development of further interconnection capacity and the role it can play in helping the government to deliver its policy objectives of energy security, decarbonisation and affordability. DECC also acknowledges the current uncertainties in the market that are holding back investment decisions in this area and with further regulatory reform expected in 2014 it is hoped that this brings some much needed clarity.

However, the statement acts more as a summary of current activity as opposed to anything that moves policy forwards in this area. In the areas of network planning and assessing the impacts of proposed projects, DECC seems content for Ofgem to take the lead. In relation to the link with EMR support mechanisms, DECC is continuing to consider the role of non-GB generation and its potential participation in the Capacity Market. The statement is also interesting in its silence - it does not, for example, comment on DECC's policy in relation to renewable energy trading, which is clearly a work in progress.

The next step? Parties should be reviewing the current Ofgem consultations and considering whether they wish to respond at this stage. Participation in EMR working groups may also provide an opportunity to input into DECC's development of its policy in this area.

Responses from Ofgem's ITPR consultation are due in Spring 2014 and given the clear intention of the government to co-ordinate its activities with Ofgem, it is likely that we can expect further announcements from DECC in the same time period.

To view DECC's statement from 17 December please click here.

To view the accompanying report by Redpoint Energy Limited on the impacts of further electricity interconnection on Great Britain please click here.