UK energy regulator Ofgem is proposing a major overhaul of the regulatory framework for the electricity transmission network to make it easier to connect renewable and other low-carbon energy sources.
A consultation document published at the end of last month proposed reforms that would provide financial incentives for electricity transmission companies to expand capacity ahead of demand from new generation sources.
Under current arrangements, transmission companies tend to wait for new generators to apply to connect to the grid before expanding capacity. This process can lead to delays in connecting new suppliers, as it can take 4-10 years to obtain planning consent for and construct new transmission lines.
“Getting the right electricity infrastructure in place so more renewable generators can connect is critical if the UK is to meet challenging new renewable targets,” says Ofgem chief executive Alistair Buchanan.
The new proposals, which could be introduced by the end of 2009 if approved, would offer transmission companies a higher level of return if they ensure new capacity is ready for new generators.
However, to protect customers, transmission companies can expect lower returns if new capacity is not used or costs go significantly over budget.
Ofgem will now undertake a consultation process to determine what rate of return should be awarded to companies that successfully build new grid capacity and connect new generators.