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UK Round 2 electricity interconnectors cap & floor is 2016

By: Chris Anderson 27/11/2015 OFGEM edited by 4C

General Interconnectors

A second application window for the cap and floor regime for electricity interconnectors (“the second window”) has been announcd today. Projects will need to meet certain eligibility criteria to be considered, require three months notification in writing before submitting an application. OFGEM offer Initial Project Assessment (IPA) decisions within six to nine months of the window closing.

The second window will be open from 31 March 2016 to 31 October 2016. However, OFGEM may accelerate analysis of projects that apply early within the window and appear more advanced which would mean their IPA decision may be published at an earlier date.

The cap and floor regime is now the regulated route for interconnector investment in the UK, which sits alongside the exemption route (whereby project developers apply for exemptions from aspects of European legislation).

OFGEM initially expected to open a second window in 2015. However in March this year stakeholders needed to confirm whether they intended to submit projects within the second window, and in light of the feedback the decision was taken to postpone the second window.

After a project has submitted an application in the second window, OFGEM will undertake eligibility checks within a month. Each application must satisfy the eligibility criteria in order to proceed to the IPA stage. OFGEM will make decision on how to group assessments based on:
 the timings of applications
 the likely interactions between the projects applying, and
 the maturity of a project and its immediate timescales.

Projects that apply will receive IPA decisions within six to nine months of the window closing or earlier, subject to consultation on our IPA decisions.

The eligibility criteria:
 a GB connection agreement for connection prior to the end of 2022
 an interconnector licence (either granted or application made), and
 all submission information for IPA stage complete

Where a project is delayed beyond its expected completion date, the 25-year regime period will start from the earlier of the actual commissioning date or 12 months after the expected completion date. Reducing the cap and floor period would therefore reduce accordingly.

There can be no material escalation in costs.

The first application window closed in September 2014. Five projects applied for cap and floor regulation in that window.

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UK Round 2 electricity interconnectors cap & floor is 2016

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