National Grid to boost transmission investments by £2bn a year
National Grid said yesterday it has earmarked an extra £2 billion of capital investment in the UK transmission system up to 2012, above and beyond the £16 billion already announced.
In a presentation to its investors, the transmission system operator said the plan represented an annual spend of £3 billion on the electricity network for mainland Britain.
And beyond 2012, the company said “that investment will continue at least at that level for the foreseeable future”.
National Grid, which is operating on a profit of around £1.1 billion a year, said its plan aims at boosting the reliability of the UK transmission system as well as shaping up to tackle climate change and improve the UK’s security of energy supplies.
It is carrying out system studies to help direct the investment, and while historically the company has been prioritising cost reductions in its transmission services, it is now focussing on capital investment. This includes around £100 million a year purely to bring online more Scottish renewable energy generation capacity, National Grid said in its presentation.
During the investors’ day, Mike Anderson, director general of Defra’s Climate Change Group pointed to the “electrification” of the UK’s heat and transport as countering the reduction of energy demand in expected efficiency schemes.
With an increase in intermittent wind power, Mr Anderson said the UK would require a jump from the current 78GW of power capacity to more than 100GW.
Reinforcement
Getting more renewable energy down from Scotland could involve offshore high-voltage direct current cables running from Loch Ness around Galloway into the Irish Sea and from north-east Aberdeenshire down to Teesside.
The presentation also suggested strategic strengthening of the grid in the Humberside and Lincolnshire areas to enable links to a series of 1.8GW offshore substation platforms to link up Round Three offshore wind projects.
It also noted the developments in nuclear energy regarding transmission arrangements for up to eight new nuclear plants in the application stage of development. A £1 billion investment in the grid would be needed in the South West of England alone to cope with new nuclear plants at Hinkley Point and Oldbury.
Further reinforcements would be needed in Suffolk, Sussex and North-West Wales and Anglesey as two nuclear plants — 3.5GW of capacity — are developed by 2020 and seven plants (10GW) by 2030.
Along with investments in offshore grids for 25GW of wind power, that would see investments of £5 to £9 billion around England and Wales to cope with the new power generation sites. In the short-term, a “connect and manage” approach will attempt to connect up renewable energy projects more quickly than the current system where investment in transmission reinforcements waits until sufficient renewable energy proposals come forward in certain areas.
National Grid is also looking to the future towards more flexible grid management, including power storage systems, “smart meters” and dynamic demand systems.
Commenting on the investment plan, National Grid chief executive Steve Holliday said: “National Grid is extremely well positioned to deliver low risk, organic growth as it continues to invest and earn good returns from its regulated businesses. We are central to the delivery of the energy networks of the future and are working closely with government and regulators to meet this challenge.”
8 October 2008
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