Interconnector ‘cap and floor’ application window opens 1 September

Ofgem will open an application window on 1 September for new interconnectors between the GB network and other countries to be financed under a ‘cap and floor’ regime, it has announced. The application window will close on 31 October. Alongside, it will pilot a cap and floor regulatory framework for multi-purpose interconnectors (MPIs), that link.
The interconnector window is for links that will go into operation by the end of 2032.
The government and Ofgem want to have at least 18GW of interconnector capacity in operation by 2030. Existing projects approved will increase GB interconnection capacity to 15.9GW.
The so-called ‘cap and floor’ regime incentivises development of electricity interconnection by limiting developers’ exposure to electricity market price risk. In this application window, which follows previous windows in 2014 and 2016, Ofgem has made some changes to the regime that require projects submitted to be at a more mature stage so they are more likely to be delivered as planned; give each a 25-year agreement; and widen its assessment of energy system impacts when evaluating applications.

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