National Grid to use subsea cable cash to help struggling energy users
Households in Great Britain struggling with soaring energy bills are to benefit after National Grid agreed to bring forward a £200m payment to customers generated from its electricity cables to Europe.
Under an agreement with the watchdog, Ofgem, the energy network operator must pay back revenues made from subsea cables – which connect the electricity systems of neighbouring countries – over a five-year period above a cap.
Now National Grid will return the funds gained from two undersea cables four years early – and from another a year early – in order to “reduce consumer bills” for customers in Great Britain.
The cables enable excess power, such as that generated from wind and solar farms, to be traded and shared between countries meaning the waste from renewable energy is minimised. National Grid is allowed to earn £226.8m a year from three of the subsea cables under the cap.
The company’s revenues from the cables have improved because of volatility in the energy market. Uncertainty caused by gas shortages and the war in Ukraine have led to significant swings in commodity prices.
National Grid operates several cables connecting Britain to Europe, including links to Belgium, France and Norway. A further cable to Denmark – called the Viking Link – is due to open in 2024.
National Grid, which operates the electricity network in England, Scotland and Wales, is investing more than £2bn in interconnector capacity, which it said will increase the UK’s energy security by smoothing peaks in supply and demand. By 2024, the company hopes about 8m homes can be powered by the cables.
National Grid’s chief executive, John Pettigrew, said: “While National Grid’s impact on customer bills is relatively small, we strive every day to keep our
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