Revenue generation for interconnectors
Use of Congestion
Congestion income, also known as congestion revenue, refers to the financial gains generated by the difference in electricity prices between interconnected markets or regions. Interconnectors are high-voltage cables that link the electricity networks of different countries or regions, enabling the transfer of electricity across borders.
Congestion income plays a crucial role in the economic viability of interconnectors.
Ofgem recently published a letter that sets out their decision to approve a methodology proposed by Great British electricity interconnector Transmission System Operators (TSOs) for the Use of Congestion Income of interconnectors.
Read the letter below:
Cap and Floor
The cap and floor regime is a regulatory framework introduced by Ofgem to encourage investment in certain types of infrastructure, such as electricity interconnectors. This regime aims to balance the need for investment with the protection of consumer interests.
Key components include:
- Cap: This is the upper limit on the revenues that the project can earn.
- Floor: This is the lower limit on the revenues.
To find out more about Ofgem's cap and floor regime for Interconnectors, please click below: