Government backs electricity grid revamp

Saturday, April 25, 2009

A proposed £4.7bn ($6.7bn) investment in the electricity grid to connect up new wind farms and nuclear power stations has been backed by the government, which hailed the plan as a big opportunity that would support employment.

The proposals include two large new undersea cables running off the east and west coasts to bring electricity from Scotland to England.

But most of the money will not be spent until 2012 at the earliest, according to the energy regulator, and environmental groups complained that progress in modernising the grid to take more renewable energy was still too slow.

The blueprint for grid investment was drawn up by a joint group backed by the government, the industry, and Ofgem, the energy regulator. It marks a break with the previous policy, under which the regulator would sanction investment to connect up a location only if there were a firm plan for new generation capacity to be built there.

The new model, which has been proposed by Ofgem but not yet adopted, would allow the electricity network companies to invest in grid connections for areas where they expect new power stations or wind farms to be built. This approach, known as “anticipatory investment”, has long been urged by the renewable energy industry, which has argued that problems in securing grid connections are one of the greatest obstacles to investment in wind power.

The £4.7bn of extra investment was proposed by the government-backed Electricity Networks Strategy Group as necessary by 2020 to hit the European target that 15 per cent of Britain’s energy should come from renewable sources by 2015.

It would also allow connections for the nuclear power stations that by the end of the next decade are expected to be either completed or under construction at Sizewell in Suffolk, Hinkley Point in Somerset and Wylfa on Anglesey. The money would be spent by National Grid, which owns the electricity transmission network in England and Wales, and by ScottishPower and Scottish and Southern Energy, which own the network in Scotland.

An ambitious part of the plan is the £1.5bn proposal for the undersea cables, which would bring electricity to customers in England from wind farms offshore and onshore in Scotland.

Mike O’Brien, the energy minister, said there was an “urgent” need to bring down the barriers to connecting up new renewable and nuclear energy to the grid.

“There’s an aggressive timetable to meet and I want this report to galvanise the necessary action right across the energy sector,” he said.

Friends of the Earth, the environmental campaign group, welcomed the planned investment, but Andy Atkins, its executive director, added: “The government must now show that it has the bold political vision to make it a reality.”

This story was featured on The Financial Times Website.

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