Ofgem targets savings for National Grid's proposed £840m grid upgrade for Hinkley Point

Courtney Goldsmith
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Debate Continues into Future of UK Energy Generation
Hinkely Point C is the new nuclear power station being built in Somerset (Source: Getty)

The energy industry watchdog is looking to reduce costs on a proposed £840m upgrade to the high-voltage grid needed to connect the new Hinkley Point C nuclear power station.

Ofgem said costs from National Grid's original proposal in March could be reduced by around 20 per cent, particularly in respect to the treatment of how severe weather could delay the upgrade.

The regulator also aims to increase potential savings to customers by introducing competition.

Read more: Energy regulator Ofgem reduces prepayment cap to help 3m customers

Ofgem said it could require the National Grid to put the financing, construction and operation of the infrastructure upgrade out to competitive tender for a third-party. Alternatively, it 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.

A consultation was launched on these options today, as well as the proposed costs for the upgrade.

Ofgem will make its final decision on whether the upgrade is needed and how it should be delivered by the end of this year, while a decision on what costs will be allowed for the upgrade would be made in late 2018 or early 2019.

Read more: Ofgem threatens electricity distribution networks with £13.9m in fines

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