Energy UK response to Ofgem’s Call for Input on a Future Strategic Approach to Interconnection

Executive Summary

Energy UK supports Ofgem’s ambition to evolve the delivery of interconnectors toward a more strategic, coordinated model. We agree that reform is necessary to reflect the increasingly central role interconnectors play in delivering a secure, resilient, and decarbonised energy system. However, the success of the Future Delivery Approach (FDA) will depend on clearer prioritisation of objectives, effective integration with spatial planning, and strong alignment with European frameworks.

While the proposed Criteria for Success are broadly appropriate, Energy UK considers that they should be explicitly prioritised. Above all, interconnector delivery must provide value for money for consumers, alongside ensuring security of supply and system resilience. Objectives such as attracting investment, enabling competition, and fostering innovation should be treated as enablers of these core outcomes. The framework should also be more clearly anchored in Ofgem’s statutory duties and take a more systemic view of interconnection within the wider energy system.

We are concerned that Ofgem’s position to discount very early competition models may risk suboptimal development of project options. Introducing competition at the outset allows developer expertise to contribute to system optimisation and cost efficiency. Unlike other energy assets, the developer-led model for interconnectors has been one of main success stories of recent times in the energy system. There is nonetheless a need to marry the expertise of developers with more robust central planning. The FDA should therefore be closely integrated with the Strategic Spatial Energy Plan (SSEP) and Centralised Strategic Network Plan (CSNP), with early and ongoing coordination between NESO, European TSOs, and industry to ensure deliverable and well-located projects.

Clear and proportionate allocation of responsibilities between public bodies and developers will be critical. Energy UK supports NESO leading on system need identification and early-stage analysis, but considers that optioneering, design, procurement, delivery, and permitting should remain with developers. Public bodies should avoid overextension into later project stages, which risks undermining the benefits of competition and private sector expertise.

In terms of delivery routes, more coordinated approaches—such as Strategic Windows or well-designed tender processes—should be the norm going forward though a route for ad hoc projects should remain for projects of interest identified outside of SSEP/CSNP windows. Regardless of the model adopted, sufficient lead times, clear entry criteria, and alignment with connection processes will be essential to support effective participation and high-quality project development.

Given the inherently cross-border nature of interconnection, alignment with European regulatory, planning, and financing frameworks is essential and we fear the call for in out underestimates the complexity and depth of alignment and engagement required to develop deliverable cross-border projects. Energy UK emphasises the importance of coordinated spatial planning, credible cost- and revenue-sharing arrangements, and regulatory clarity across jurisdictions. Approaches such as ex ante cost-sharing with ex post adjustment for hybrid assets provide a promising balance between investment certainty and fairness. Strengthening cooperation with European institutions and frameworks will be key to enabling timely and investable projects.

Maintaining investor confidence during the transition to a more strategically planned system will require clear timelines, early regulatory certainty, and a well-defined end state. The cap and floor regime remains an effective foundation for financing interconnectors but should evolve to reflect increasing project complexity and risk. This includes greater flexibility in revenue floors, milestone-based regulatory adjustments, preliminary funding, and differentiated treatment for novel asset types such as hybrid interconnectors.

Energy UK also highlights a number of emerging challenges that require policy attention, including persistent HVDC supply chain constraints, increasing technical and geopolitical risks, and gaps in current approaches to permitting, decommissioning, and asset lifecycle management. There is also a need to maximise the utilisation of existing infrastructure and to better account for the full system value of interconnectors, including their contributions to resilience, decarbonisation, and wider economic benefits.

In summary, Energy UK supports the direction of travel toward a more strategic and coordinated approach to interconnection but cautions overreach by public bodies with less expertise than developers. To succeed, the FDA must prioritise consumer value and system resilience, integrate effectively with spatial planning processes, align with European frameworks, and strike the right balance between risk allocation and investor certainty.

Kind regards,

Tobias Burke
Policy Manager
tobias.burke@energy-uk.org.uk