19 June 2018 - Greenlink Interconnector Limited, the developer of the 500MW electricity interconnector project between Ireland and the UK [1], has welcomed the consultation paper published yesterday by the Commission for Regulation of Utilities (CRU) [2] detailing expected Irish consumer benefits from the project and setting out a clear path to the project’s regulatory approval.
The CRU has reviewed Greenlink’s Cost Benefit Analysis (CBA) and in its paper notes the ‘significant’ positive impacts forecast for Irish electricity consumers. The CRU notes that Greenlink’s CBA is complex and that it intends to undertake further analysis before making its initial minded-to decision in September 2018. If the CRU confirms the net benefits to Irish consumers, it will consider developing a ‘Cap and Floor’ regime on the basis that the project is in the public interest, it says.
A decision to implement Cap and Floor, a regulatory regime that caps revenues and limits consumer exposure [3], would be in line with the in-principle decision already taken by the UK regulator, Ofgem. The CRU notes the value of symmetry with Ofgem and states that it will work closely with them in developing the detail of any Cap and Floor regime.
Simon Ludlam, Project Director for Greenlink, said;
“This is a key step in approving Greenlink’s application for regulatory support and we welcome the regulator’s positive response to the project’s Cost Benefit Analysis. Introducing a Cap and Floor regime will ensure that risk is reduced for consumers and that they get best value for money from the project. The analysis shows that, overall, Irish consumers are likely to benefit to the tune of €800million over the life of the project if the Greenlink interconnector goes ahead.”
The CRU’s consultation paper follows its Information Paper in March and invites the public and stakeholders to review and comment on the project.
The CRU’s public consultation runs until 13 August 2018. The CRU will continue to work on Greenlink’s application for regulatory support over the summer, including conducting its own CBA, and will issue a decision paper in September, the ‘Initial Project Assessment’ (IPA).
According to today’s paper, it expects to conduct detailed assessments on the design of a Cap and Floor regime in 2019-2020 in cooperation with Ofgem. The project is scheduled to start construction in 2020 and be operational by 2023.
Mike O’Neill, Chairman of Greenlink Interconnector Ltd, added;
“We are pleased that the potential benefits to Ireland of the Greenlink interconnector are recognised by the CRU, and we welcome the clear program for them to complete their analysis. Greenlink will not only bring private inward investment and jobs to Wexford during the project’s construction, but will also enhance Ireland’s energy security through access to UK and connected EU and Nordic electricity markets, will lower costs to electricity consumers and will support the integration of low carbon energy generation. We are delighted that the CRU continues to provide a roadmap for the ongoing investment in the project.”
The project has already been awarded the status of an EU Project of Common Interest (PCI) [4] making it one of the most important infrastructure projects in Europe.
CONTACT FOR MEDIA ENQUIRIES:
Anna Stanford, Communications Consultant anna.stanford@elpower.com +44 (0)7961 234634
NOTES TO EDITORS:
Greenlink will be a c.200km interconnector stretching from the Great Island substation in Co. Wexford to the Pembroke substation in Wales. The link is planned with a capacity of 500MW, equivalent to powering 380,000 homes and is a €400m privately-financed infrastructure project developed by Element Power. More information at: www.greenlinkinterconnector.eu
The Cap and Floor regime operates to limit consumers’ financial exposure to interconnection projects. If the interconnector’s revenues exceed a maximum (the cap) then the excess is returned to consumers. Similarly, in the unlikely event that revenues fall below a minimum (the floor) then consumers top up the developer’s revenues to the level of the floor. This system is already in place under the UK’s energy regulator, Ofgem, and can be used to attract long-term private capital and hence lower costs, and avoid any burden on the government.
As an EU Project of Common Interest (PCI), it is considered to have a significant impact on energy markets and market integration in EU countries, boost competition in energy markets and help the EU’s energy security by diversifying sources, and contribute to the EU's climate and energy goals by integrating renewables.
ABOUT ELEMENT POWER: Element Power is a European based energy company that develops, acquires, builds, finances and operates large-scale renewable generation, interconnection, storage and other flexible grid services. Greenlink Interconnector Limited is a wholly owned subsidiary of Element Power. Active in seven countries with a deep pipeline of projects in development, the Element Power group has extensive experience and a successful track record in delivering energy projects in the low carbon sector. Element Power also manages the operation of over 280 MW of renewable energy assets for some of the leading investors in the sector. www.elpower.com