UK Government Launches Offshore Grid Connection Consultation

November 20th, 2006, Alex MacDonald, Dow Jones Newswires

U.K. energy regulator Ofgem on Monday launched a joint consultation with the Department of Trade and Industry on a licensing regime that will determine how offshore wind farms connect to the U.K. transmission grid, the bodies said in joint press release.

The consultation will determine the most cost-effective way to link new offshore wind farms and other offshore renewables to the U.K. transmission grid. Ofgem and the DTI are examining two options: the first option, known as the non-exclusive system, would allow licensed companies to compete with each other to provide offshore grid connections for wind farms anywhere along the U.K. continental shelf. The second option, known as the exclusive system, would license a number of transmission owners in different areas to provide offshore grid connections.

These companies are likely to be Scottish and Southern Energy PLC (SSE.LN), ScottishPower PLC (SPI) and National Grid PLC (NGG), three utilities which either own or operate grids in Scotland, one of the best sites for wind power generation in the European Union.

Lord Truscott, the Parliamentary Under Secretary for Energy said that setting a licensing regime would play a key role in helping the U.K. meet its renewable obligation target of sourcing 10% of its electricity supply from renewable energy sources by 2010. "A considerable amount of that (target) will come from offshore wind farms and potentially marine energy too. Therefore, it is vital that we put the systems in place to exploit the power from our seas," Truscott said.

Last year, Ofgem concluded it would use a price control regime to set the fee that offshore power generators must pay in order to connect to the grid. Ofgem already charges similar fees to onshore wind power generators through its five-year price control review. Ofgem is expected to deliver the final conclusions of its next five-year price control review on Dec. 4. The deadline for responses to the offshore consultation is Jan. 8. Ofgem and the DTI expect to publish their conclusions in early 2007.

Company Web site: http://www.ofgem.gov.uk http://www.dti.gov.uk By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; alex.macdonald@dowjones.com