NeuConnect welcomes Ofgem decision on interconnector regulations
NeuConnect today welcomed Ofgem’s decision to approve changes to the existing ‘Cap and Floor’ regulations for interconnectors to enable the delivery of project-financed schemes like NeuConnect.
Ofgem previously published new guidance allowing developers to seek ‘variations’ to the existing ‘Cap and Floor’ regulations, stating that “enabling alternative sources of finance such as project finance is in the interests of GB consumers as it provides access to a broader pool of capital, as well as promotes competition in the interconnector market”.
As a project-financed interconnector and a ‘new entrant’ to the energy market, NeuConnect submitted a ‘variations’ proposal to Ofgem which highlighted the competition and consumer benefits that the project could deliver. Following a detailed assessment and an 8-week period of public consultation, Ofgem have now issued its decision to change aspects of the existing ‘Cap and Floor’ regulations. Ofgem also reiterated that “We remain of the view that the NeuConnect [is] likely to be in the interests of GB consumers”.
NeuConnect CEO Christophe Vanhove said: “We welcome Ofgem’s decision which is another important step in the delivery of this vital new energy link. Work is continuing across the NeuConnect project and we continue to make good progress, keeping us firmly on track.”
The NeuConnect interconnector will create the first direct link between UK and German electricity networks. Connecting two of Europe’s largest energy markets for the first time will help deliver a more resilient and sustainable electricity supply, while also helping to lower costs for consumers. NeuConnect also represents a significant £1.4bn / €1.6bn of private investment in UK infrastructure, led by an international consortium including Meridiam, Allianz Capital Partners and Kansai Electric Power.
The NeuConnect project continues to make good progress with a major £1bn procurement programme well underway, local planning processes started in the UK and Germany, and 700km of seabed surveys completed. In March, NeuConnect also received the positive news that it is has now officially received Project of Common Interest (PCI) status from the European Commission, placing it on the list of Europe’s priority energy projects.