Ofgem has today set out proposals to allow £1.1 billion funding for a new subsea link in the north of Scotland.
The regulator’s proposal is £173.9 million less than the funding request from Scottish Hydro Electricity Transmission (SHE Transmission) to ensure consumers pay no more than necessary.
The new link will connect 1.2GW of new renewable electricity generation following completion in 2018. This additional capacity will increase the resilience of Britain’s energy infrastructure. It will connect the electricity grid on either side of the Moray Firth.
The proposals are now under consultation for four weeks. Final decision on funding will be made in December.
SHE Transmission’s estimated project costs were £1,236.2 million. Based on its assessment, Ofgem’s proposed efficient cost of the project is £1,062.3 million.
Ofgem’s lower cost assessment is based on a range of analysis including unit cost benchmarking, a detailed review of some costs, comparisons to similar projects, and a review of SHE Transmission’s procurement strategy and processes.