Maximum revenues set for UK-Denmark interconnector: The 1.4GW Viking Link project Final Project Assessment has been published by Ofgem, which will connect the UK from Lincolnshire to Denmark.
The regulator under its cap and floor scheme, sets the cap on the maximum revenue a developer can earn and a floor for the minimum.
Currently standing at £111.5 million per year is the provisional cap level and floor level at £61.7 million per year – lower than Ofgem’s initial assessment which were a floor of £66.5 million and a cap of around £115.2 million.
Their revenue will be ‘topped up’ to the floor level if developers don’t make enough from charges to use the interconnector, which comes from small increases to the high voltage grid charges consumers pay as part of their energy bills.
Customers twill be paid out if excess revenue tops the cap through small reductions in these charges.
A 765-kilometre high-voltage cable, the Viking Link will be the world’s longest subsea interconnector and will enable the transfer of clean energy to power the equivalent of 1.4 million UK homes.
The project will likely see £5.2 billion in consumer benefits over 25 years Ofgem believes.
Akshay Kaul, Networks Director said: “Interconnectors boost competition and increase security of supply by allowing us to import from a wider, deeper and cheaper pool of electricity available in neighbouring countries.
“Ofgem regulates interconnector revenues, making them attractive to investors while encouraging competition from a diverse range of market participants.”
The project is expected to be delivered by 2023 under a loan National Grid has secured for $743 million (£590m) earlier this year.
Maximum revenues set for UK-Denmark interconnector