Will Northern Ireland get new electricity link from Scotland?

UK energy regulator Ofgem will decide later this month whether to support a new electricity connection between Scotland and Northern Ireland.

Transmission Investment said its project, called LirlC, aims to provide up to 700MW of capacity between the Irish single electricity market and the UK wholesale electricity market.

The company says this will improve supply security at a time when major changes to NI’s power system are imminent.

But the project is complicated by blind spots in post-Brexit energy regulation.

The plans will involve the construction of two converter stations, one in Northern Ireland and one in Scotland, and a cable of approximately 80 miles long to connect the two stations, depending on the final route.

Typically, interconnectors containing links to GB are developed under Ofgem’s “cap and floor” regime, which provides a guarantee of how much money they will make.

It provides developers with a minimum return (floor) and potential upside (ceiling) limit over a 25-year period.

Earlier this year, the Office for Gas and Electricity Markets carried out a preliminary assessment of eight different interconnection options that would like to operate under a “cap and floor” regime.

It rejected seven of them, including LirlC project.

The conclusion is that most of the power on the interconnector will flow from Scotland to Northern Ireland due to generally higher prices in the single electricity market covering Northern Ireland and the Republic of Ireland.

This will lead to increased demand for electricity generation in the UK, thereby increasing costs for UK consumers.

On this basis, the Office for Gas and Electricity Markets said the project failed social and economic welfare tests.

Developer Transmission Investment challenged Ofgem’s conclusions and submitted its own economic modeling ahead of a final decision.

But the interim ruling showed that, as the UK regulator, Ofgem was unable to consider whether the project would be beneficial to NI.

“The regulatory environment is complex,” said Professor David Rooney, director of the Center for Advanced Sustainable Energy at Queen’s University Belfast.

“While Ofgem is required to support the UK’s wider net zero ambitions, they are focused on supporting projects in the UK that improve markets and ultimately customers.”

He added that while Northern Ireland does not have an interconnection policy, the Department for the Economy is working with the NI Utilities Regulator to develop one.

An industry source told the BBC that Brexit has made the situation further complicated, with no overarching body able to guide projects across the UK’s different regulators.

“This is the piece that has been missing since we left the EU because this role was provided by ACER (Cooperation Agency for Energy Regulators).

“This mechanism does not exist for UK infrastructure. No one is saying ‘this is a good thing for the UK overall, so how do we share the burden and the benefits?'” the source said.

Transmission Investment said in a statement: “Reliable independent analysis shows the LirIC interconnector project will deliver significant economic benefits to Northern Ireland and the UK, while also enhancing security of supply and delivering net zero emissions.”

It added that the project was continuing pending decisions from Ofgem and the utility regulator.

“We look forward to working with governments and regulators to ensure the framework is in place to enable the UK to achieve its net zero emissions target,” the statement said.

A spokesman for Stormont’s Department of Economic Affairs said the company was working on interconnectors and storage as planned, as detailed in its 2024 energy strategic action plan.

They added: “We are working hard to ensure the North and South Interconnector is completed by 2028 and looking to optimize the capacity of the existing Moyle Interconnector through strengthening work in the Belfast area.”

They said it would be inappropriate to comment on the LirIC project while the independent regulator’s work is ongoing.