Getty ImagesThe GB energy regulator, Ofgem, will decide later this month whether or not to support a new electricity link between Scotland and Northern Ireland.
Transmission Investment says its project, known as LirlC, aims to provide up to 700MW of capacity between the Irish Single Electricity Market and the Great Britain wholesale electricity market.
The company says this would improve security of supply at a time when NI’s electricity system is set for major change.
But the project has been complicated by a post-Brexit blind spot in energy regulation.
Getty ImagesThe scheme would involve building two convertor stations, one in Northern Ireland and one in Scotland, and a cable of about 80 miles linking the two, depending on the final route.
Normally interconnectors which include a link to GB are developed under Ofgem’s “cap and floor” regime, which provides a guarantee of how much money they will make.
It gives developers a minimum return (floor) and a limit on the potential upside (cap) for a 25-year period.
Earlier this year Ofgem made an initial assessment of eight different interconnector schemes which want to operate under the ‘cap and floor’ regime.
It rejected seven of them, including the LirlC project.
It concluded that as prices are generally higher in the Single Electricity Market, which covers Northern Ireland and the Republic of Ireland, most of the flow on the interconnector would be from Scotland to NI.
That would lead to an increase in demand for the power being generated in GB, so increasing costs for GB consumers.
On that basis Ofgem said the project fails its social and economic welfare test.
PA Media‘Complicated’
The developer, Transmission Investment, contests Ofgem’s conclusions and has submitted its own economic modelling ahead of final determination.
But that interim ruling demonstrates how, as a GB regulator, Ofgem is not in a position to consider whether the project might be good for NI.
“The regulatory environment is complicated,” says Professor David Rooney, the director of the Centre for Advanced Sustainable Energy at Queens University, Belfast.
“While Ofgem are required to support the UK’s wider net zero ambitions they focus on supporting projects in GB to improve the market and ultimately customers.”
He added that while Northern Ireland does not have an interconnection policy, the Department for the Economy is working on one in partnership with the NI Utility Regulator.
One industry source told the BBC the position has been further complicated by Brexit with no overarching body able to guide projects which cut across different UK regulators.
“That’s the missing piece since we left the EU because that role was provided by ACER (Agency for the Cooperation of Energy Regulators).
“That mechanism doesn’t exist for a UK piece of infrastructure. Nobody is there saying ‘this is good overall for the UK, so how do we spread the burdens and benefits?’,” the source said.
‘Substantial economic benefits’
In a statement Transmission Investment said: “Credible independent analysis has shown that the LirIC interconnector project will deliver substantial economic benefits for Northern Ireland and GB whilst also enhancing security of supply and enabling net zero.”
It added that the project continues as they await decisions from Ofgem and the Utility Regulator.
“We look forward to moving at pace with governments and regulatory authorities to ensure that the frameworks are in place to enable the UK to achieve its net zero ambitions,” the statement said.
A spokesperson for Stormont’s Department for the Economy said it is on track to deliver research on interconnectors and storage as detailed in its 2024 Energy Strategy Action Plan.
“We are working to ensure that the North South interconnector is constructed by 2028 and seeking to optimise the capacity of the existing Moyle interconnector through reinforcement work in the Belfast area,” they added.
They said it would be inappropriate to comment on the LirIC project while the work of the independent regulator is ongoing.
