Under its latest proposals, Ofgem is to allow transmission companies to invest £560 million in reinforcements to accommodate the expected rise in wind capacity, most of which will be in Scotland. Ofgem's proposal for connections to the transmission system follows a £500 million package of incentives to encourage distribution network operators to take a proactive approach to distributed renewable generators wanting to connect to their wires.
The proposals allow transmission companies Scottish and Southern, ScottishPower and National Grid Company to invest in their wires before their next price review -- not due until 2007 -- so that wind development will not be delayed unnecessarily. "This action, combined with the opening of the new GB-wide electricity market next April, will ensure that neither a lack of network capacity nor a marketplace will act as a barrier to the efficient development of renewable sources in Scotland," says Ofgem chief executive Alistair Buchanan. "We remain committed to enabling transmission companies to make the right investment to respond to the growth in renewable generation, but it must be made in the most efficient way and not place an undue burden on customers."
According to forecasts by ScottishPower and Scottish and Southern, some 9 GW of renewables is proposing to connect to the transmission system north of the border by 2010. Ofgem adopts a more conservative estimate of around 5 GW of wind capacity in Scotland, and 0.5 GW in north-west England, stressing that difficulties remain for wind projects in obtaining planning consent.
Nonetheless, Ofgem has given the go ahead to an extra £200 million of investment on top of £360 million approved in August -- due to increased estimates of the amount of wind capacity waiting to connect onto the system, and to allow the electricity to be transmitted south to England. The new money will allow two more grid reinforcements to go ahead in addition to two already sanctioned -- subject to planning approvals for all the new transmission lines.
The money will fund a £332 million 400 kV line from Beauly in the Highlands to Denny near Falkirk, a £168 million upgrade of the east and west coast interconnectors between Scotland and England, a £40 million line to Kendoon in south-west Scotland, and £21 million of reinforcements in the Sloy area of west Scotland.
Yet this funding still falls short of the £800 million the transmission companies originally asked to be able to invest. Ofgem says it is approving only projects that are currently cost effective. Any further investments can be considered in the 2007 review, it says.