UK Law and Practice Contributed by: Tom Sprange KC, Andrea Stauber, Martina Antosova and Lucy Pearson, King & Spalding International LLP
Under the current regulatory framework, there are two general routes for interconnector invest- ment, as follows. • A regulated route under the UK’s “cap and floor” regime, which allows developers to identify, propose and build interconnectors, subject to Ofgem approval. A cap and floor mechanism regulates how much money a developer can earn once in operation, provid- ing developers with a minimum return (floor) and a limit on the potential upside (cap) for a 25-year period. • As an alternative to the cap and floor model, developers can seek exemptions from regula- tory requirements. Under this route, develop- ers would face the full upside and downside of the investment and would usually apply for an exemption from certain regulatory require- ments to better enable the business case of their investment. All interconnection capacity is allocated to the market via market-based methods (ie, auctions) and the trading arrangements on electricity inter- connectors are governed by access rules and charging methodologies contained within each interconnector’s licence. Imports and exports typically occur when there is surplus renewable electricity. The National Grid states that, by 2030, 90% of the energy imported by interconnectors will be from zero- carbon energy sources. 2.3 Supply Mix of Electricity In April 2025, Great Britain’s supply mix was:
• solar – 10.5%; • imports – 18.2%; • hydro – 0.9%; and • storage – 1.5%. 46% of electricity came from zero-carbon sourc- es. In Northern Ireland, for the 12-month period from January 2024 to December 2024, 43.5% of total electricity consumption was generated from renewable sources. This represented a decrease of two percentage points from the previous 12-month period. The vast majority (81.7%) of renewable energy generated within Northern Ireland came from wind sources. 2.4 Market Concentration Limits The CMA has the jurisdiction to examine a merg- er where two or more businesses cease to be distinct and either: • the UK turnover of the acquired enterprise exceeds GBP100 million; • the two businesses supply or acquire at least 25% of the same goods or services supplied in the UK and the merger increases that share of supply and at least one of the merging enterprises has a UK turnover of more than GBP10 million; or • at least one of the merging parties has an existing share of supply of 33% in the UK or in a part of the UK, the total value of the turn- over in the UK of that party exceeds GBP350 million, and the other party has a UK nexus. The CMA and Ofgem both enforce prohibitions on abuse of a dominant position. For further details of their shared powers with regard to the gas and electricity industries, please see
• gas – 26.1%; • wind – 22.4%; • nuclear – 13.1%; • biomass – 7.3%;
287 CHAMBERS.COM
Powered by FlippingBook