Ofgem seeks to reduce Hinkley Point network grid upgrade cost

UK-based energy regulator Ofgem is seeking to reduce the cost of a proposed £840m network grid upgrade programme that aims to connect the new Hinkley Point C nuclear power station in Somerset.

The National Grid submitted an upgrade proposal to Ofgem in March this year. The regulator agreed that an upgrade to the high-voltage grid was desirable, but at a 20% reduction to the expense proposed.

Ofgem said in a statement: “As well as driving down the costs of the upgrade, Ofgem has put forward two additional options for using the benefits of competition to deliver further potential savings for consumers, over and above what could be delivered under the existing delivery and funding mechanisms for large projects under our transmission price controls.

“The options are for the National Grid to put the financing, construction, and operation of the infrastructure upgrade out to competitive tender for a third-party to deliver on National Grid’s behalf.

“Alternatively, Ofgem could estimate National Grid’s revenue for building and operating the infrastructure based on if the upgrade had been tendered on a fully competitive basis.”

Ofgem has launched a consultation to consider cost reduction options for the upgrade. The authority is set to make a final decision on the feasibility and delivery of the project by the end of this year.