Ofgem proposes £1 billion for two-year electric grid project

Electricity network operators from the UK are planning for an extra project investment that costs over £1 billion to link renewable energy sources to electric grids by 2012, said Ofgem, a UK-based energy regulator. Ofgem claimed that the agreement could deliver a fifth of the total fund by 2012, amounting to a 20 per cent initial payment if all projects meet planning and funding criteria.

About 90 per cent of the fund is allotted for Scotland, where most wind parks are installed. The UK’s top three electricity transmission companies, namely the National Grid, SP and Scottish Hydro-Electric, expect to invest £5 billion in electricity system projects over the next decade.

National Grid welcomed the £1 billion project approval from Ofgem, but the company argued that doubts still remain for project investments that are to be constructed starting from 2011 to 2012.The company also urged Ofgem to provide transmission companies with a detailed framework on incentives to help them evaluate the most economical and efficient investment.

Ofgem is already near to concluding its assessment of the 20-year-old incentive policy that ties inflation to expenditure, intended to limit the cost to power consumers. The energy regulator is also worried that the electric companies might postpone on investing the needed infrastructure for wind parks and green initiatives until current controls on their project spending will end in 2012.

Alistair Buchanan, Chief Executive of Ofgem, informed that the new project is urgently needed to handle the growing demand for wind energy and other renewable power sources, arising from the UK’s drive to curb greenhouse gas emissions.

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