The upgrade of the high-voltage grid needed to connect the new nuclear plant at Hinkley Point C could be put out to tender, the energy industry regulator has said.
National Grid submitted a case for a £840M upgrade to connect EDF’s Hinkley Point C in Somerset, however Ofgem is challenging about 20% of the proposed costs.
The watchdog is particularly questioning costs in relation to the treatment of how severe weather could delay construction of the grid updates.
The infrastructure upgrade could be put out to tender to a third party to deliver on behalf of National Grid to create consumer savings. The project would then be taken on by a legal entity specifically set up to deliver the project.
The winning organisation would finance, build and operate the link on behalf of National Grid for 25 years.
The alternative is for Ofgem to estimate National Grid’s costs for building and operating the infrastructure based on if it had been tendered on a competitive basis.
National Grid T-pylon
As well as weather-related costs, Ofgem is also querying the suggested use of more expensive T-pylons compared to conventional lattice pylons.
The mega-project involves replacing 65km of existing 132,000 volt overhead line between Bridgwater and Avonmouth substations and putting up 46km of 400,000 volt overhead line. More than 8km of the new connection will be underground either side of the Mendip Hills Area of Outstanding Natural Beauty (AONB), removing pylons from the area.
As the new pylons will carry more electricity, National Grid says they will need to be larger and so the shorter T-pylons will help mitigate their visual impact.
The project already has a Development Consent Order.
Ofgem has launched a consultation on the options and the proposed cost and will decide on whether an upgrade will be made and how it will be delivered by December this year.
A statement from National Grid said: ”We will be reading the detail of Ofgem’s consultation and responding in due course.
”The Hinkley Point C Connection project is a vital element of plans for the new nuclear power station. We undertook a rigorous programme of consultation to find the right balance between keeping costs down for bill payers, reducing the impact on local communities and meeting the needs of our customer, EDF. Our plans were granted planning permission from the Government in January 2016.
”Ofgem has undertaken to explore the potential introduction of onshore competition where it is in the interest of consumers. However, we believe electricity transmission assets are critical national infrastructure and it is important that the opportunities and risks associated with introducing competition are fully assessed on a project specific basis. It will therefore be very important to take the time to properly understand the details of Ofgem’s proposals for the construction of the Hinkley Point C Connection, which is such a crucial element of the major investment being made in the nuclear power station.”
A decision on what costs will be allowed will be made late next year or early 2019.