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£1 billion could be saved from electrcity costs if UK doubles interconnector capacity by 2020

31/03/2014

New analysis prepared for National Grid’s Interconnector business points to benefits for the economy, the consumer and the environment if the UK could double its interconnector capacity by 2020.

  • Potential to reduce wholesale prices because of more trading with European markets
  • More interconnectors make a positive contribution to energy security
  • Greater interconnection would allow low carbon electricity to flow across borders more easily 

New analysis prepared for National Grid’s Interconnector business points to benefits for the economy, the consumer and the environment if the UK could double its interconnector capacity by 2020.

At the moment the UK has 4 interconnectors with 4GW capacity – the equivalent of about 5 large power stations.  If interconnector capacity could double to 8-9 GW there are potential savings of £1bn a year.   This would also take GB closer to the European benchmark of having interconnectors making up 10% of generation capacity. 

It is estimated that each 1GW of interconnection could reduce Britain’s wholesale power prices by 1-2%.    These benefits would be a result of British wholesale prices remaining higher than those in neighbouring countries, which experts think will be the case until the early 2020s.

 Peter Boreham, National Grid’s Director of European Business Development said

“This analysis makes a compelling case for the UK to press ahead with more interconnection with benefits for the economy, consumers and the environment.  There’s broad support from the UK Government, European institutions and energy regulators, and a willingness from developers like us to make the necessary investment”.

Ed Davey, Secretary of State, Department for Energy and Climate Change said 

"Today's report from National Grid is welcome.  Increasing the number of interconnectors to Europe is one of my priorities, as it will help reduce consumer bills and add to Britain's energy security. 

These power links to Europe will make an energy single market a reality, which is something successive British Governments have pushed for but with only limited success to date.”  

The report points out that if the savings on wholesale prices were passed on, this could result in lower energy bills for domestic consumers and industry thus helping with their competitiveness.   If further links from the UK were to go ahead the economy would also benefit from new jobs in planning, construction, operation and maintenance.

 Ends  

 National Grid Media Relations
+44 (0) 1926 655275
 isobel.rowley@nationalgrid.com 

 
For more information, please see
the report  Getting More Connected



Notes to Editors: 

The report  Getting More Connected  has been prepared by National Grid Interconnector Holdings Limited (NGIH Limited) which pursues European business development activities  alongside National Grid’s RIIO regulated businesses. National Grid Electricity Transmission Ltd (NGET) owns the high voltage electricity transmission network in England and Wales, and operates it across Great Britain.  Electricity interconnectors can connect the GB network to other networks in other countries.  NGET is subject to regulation which prevents it from owning and operating interconnectors, but this does not prevent other parts of the National Grid group from investing in these assets, which are important to open up new sources of supply to the GB market
 

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