4C is now TGS

We are excited to announce a significant milestone in 4C Offshore's journey. Our integration into the TGS family marks the beginning of a new era in offshore wind market intelligence.

Learn what this means for you!

Ofgem confirms Viking Link delay, issues Final Project Assessment

By: Tom Russell 30/09/2020 Ofgem

General Interconnectors

Ofgem has published its decision for the Final Project Assessment for the Viking Link project, setting a provisional cap level of £111.5 million per year and floor level of £61.7 million per year.

The Viking Link project is a 1.4 GW electricity interconnector between GB and Denmark with a length of 767km. On the GB side, the cable landfall is at Boygrift, followed by 68 km of onshore cable to an AC/DC converter station located at North Ing Drove. This is followed by approximately 2 km of AC cable, which connects to the grid at Bicker Fen substation. The Danish end of the HVDC cable lands at Blaaberg, followed by 76 km of onshore DC cable to a converter station in Revsing. It is being jointly developed by National Grid Viking Link Ltd (NGVL) and by Energinet, the Danish transmission system operator (TSO).

In its cap and floor scheme, Ofgem sets the cap on the maximum revenue a developer can earn and a floor for the minimum. If developers do not make enough from charges to use the link, their revenue will be ‘topped up’ to the floor level. The top-up funds ultimately come from small increases to the high voltage grid charges consumers pay as part of bills. Excess revenue above the cap is paid out to customers through small reductions in these charges.

Ofgem has published its Final Project Assessment for the Viking Link project, setting a provisional cap level of £111.5 million per year and floor level of £61.7 million per year. These levels are lower than those in Ofgem’s initial assessment (which were a cap of approximately £115.2 million and floor of £66.5 million). The decrease reflects a combination of its decisions on allowed costs and cost savings against the forecasts made by the developers. The cap and floor regime applies to National Grid’s 50% share of the Viking Link project.

Alongside the FPA submission, Ofgem received a force majeure request from NGVL. The request detailed three force majeure claims, which NGVL stated have delayed the project three years past the commissioning date submitted at the IPA stage (2020). NGVL requested that the regime start date should align with the earlier of the revised commission date in 2023 or 1st Jan 2024

For the purposes of this decision, Ofgem based the cap and floor levels on a 25-year regime starting on 1 January 2021, with a commissioning date of late 2023. It will confirm the regime start date once it has decided on NGVL’s force majeure request and intends on making this decision in the first quarter of 2021.

A final review of the project’s costs will be conducted at the Post Construction Review (PCR) stage. At the PCR stage Ofgem expects that NGVL’s post-construction costs would be much more firm. Therefore, alongside a review of the final capex costs, it will undertake a detailed assessment of NGVL’s post-construction costs at the Post Construction Review. It will then determine the final cap and floor levels for Viking Link.

The Viking Link project is one of several new interconnectors that have been proposed to link Great Britain with neighbouring countries.

Akshay Kaul, Networks Director at Ofgem, said: “Interconnectors boost competition and increase security of supply by allowing us to import from a wider, deeper and cheaper pool of electricity available in neighbouring countries. Ofgem regulates interconnector revenues, making them attractive to investors while encouraging competition from a more diverse range of market participants.”

For more information on interconnector projects worldwide, click here. You can view cable routes for interconnectors and wind farms using 4C Offshore's Interactive Map.

Premium

4C Offshore Premium, our most popular subscription, gives you full access to use the 4C Offshore WebApp which includes exclusive offshore wind, transmission and vessel reports, news and downloads.

Request a 30 minute Demo

Ofgem confirms Viking Link delay, issues Final Project Assessment

Back to News

Trending News!