Interconnectors to Take Part in Capacity Market from 2015

Interconnectors linking Britain to Belgium will be able to participate in the second four-year-ahead Capacity Market auction in 2015, which will ensure a secure energy supply in the winter of 2019/2020 from a diverse range of energy sources.

Improving UK connection to Europe’s energy markets means their energy companies can buy electricity from wherever it’s cheapest. It will give British bill payers a better deal, strengthen their energy security and create more opportunities for growth at home. It will also increase the potential for low-carbon electricity to be used across the UK. And by ensuring as many resources as possible can take part in the Capacity Market, competition will be increased, driving down costs to bill payers.

Energy and Climate Change Secretary Ed Davey said:

“We’re working tirelessly to get the best possible deal for British bill payers, and that includes linking us to other countries so that energy companies can buy low-carbon electricity from wherever it’s cheapest.

“Including interconnectors in the Capacity Market from next year shows the strongest signal yet to potential investors – building on the recent announcement of funding for interconnectors that will create new links to Norway, Belgium and France to almost double the power we can source from overseas, particularly from low carbon energy sources such as hydro, wind and nuclear.”

The Capacity Market will help keep the lights on by driving new investment in electricity infrastructure, as well as getting the most out of  existing power stations as UK move to a low carbon electricity system. UK is on track to hold the first auction at the end of the year, which is expected to be highly competitive following a successful prequalification process.

By including interconnectors in the Capacity Market, UK is providing the clearest signal yet to developers and investors. There are currently several interconnector projects in the pipeline representing about £5 billion of private sector investment by 2020. By providing cheaper energy, interconnectors could save consumers up to £9 billion out to 2040.

The European Commission recently announced €40 million funding towards the longest subsea cable in the world, which will link the UK to Norwegian hydropower, and two interconnectors to France. One will use the Channel Tunnel, while the other has the potential to connect to future tidal generation being developed off the coast of Alderney, one of the Channel Islands. Together these three projects will almost double the power the UK is able to receive via interconnectors, with further projects also in the pipeline.