The estimate for the construction cost of a new electricity link between between GB and Norway has been reduced.

The new link will be owned and operated by National Grid Interconnector Holdings (NGIH) and by Statnett, the Norwegian transmission system operator. It will be a 1.4GW interconnector between Blyth, Northumberland in England and Kvilldal in Norway.

Ofgem now thinks the interconnector will require capital expenditure of £604 million – a third lower than early estimates of £900 million and 13% lower than the developer’s final project assessment submission of £697 million.

The regulator is proposing to allow the developers  a guaranteed return of  £53 million per year and maximum of £94 million per year. Ofgem said the levels are lower than those in its initial assessment (which were a floor of £75 million and cap of  £140 million).

The NSL link is still to be built, so the final cap and floor levels will only be determined once Ofgem has completed a post-construction assessment.

Ofgem is consulting on its proposal and has invited responses by 15 November.