Ofgem consults on grid upgrade for renewables

Energy regulator Ofgem is proposing to boost investment in the high-voltage electricity grid by adjusting the financial regulation of the three transmission companies - National Grid Transco, Scottish Power and Scottish and Southern.1

A report for the DTI this summer said that strengthening the grid to allow 6GW of renewables development in Scotland could cost £1.5 billion (ENDS Report 341, pp 11-13 ).

Ofgem now estimates that the likely investment needed in 2004/05 totals £21 million, rising to £164 million in 2005/06. But current price controls give the companies no means of recovering these costs.

Ofgem says that maintaining the status quo may delay renewables development and risk frustrating Government policy, but is not minded to reopen the price controls before they expire in 2006. It has therefore proposed to add a relatively simple cost recovery mechanism for the next couple of years before a permanent solution is found.

A more detailed consultation will follow shortly, in advance of a possible licence modification in 2004.

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