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National Grid needs £4.7bn investment before 2020

The UK's National Grid will need up to £4.7bn worth of investment before 2020 if it is to be able to accommodate additional power generation, according to a report published yesterday by the Electricity Networks Strategy Group (ENSG).

The study concludes that some 1,000km of new cables will be required in the biggest expansion of the grid since the 1960s to ensure new renewable energy capacity and nuclear power stations are connected to the electricity grid.

It comes just a month after the Crown Estate predicted that the cost of connecting the third round of offshore wind farms to the grid will top £10bn.

The new report also warns that work to prepare the grid for connecting the expected 35GW of renewables and 10GW of new nuclear power necessary to meet emissions targets must begin immediately if the risk of project delays and power shortages are to be avoided.

It proposes the use of new technologies - such as high voltage subsea cables capable of transferring power large distances with reduced losses - to link power plants and renewables sites in the north with population centres in the south while avoiding the need to secure planning permission for onshore lines.

Energy and Climate Change Minister Mike O'Brien said the government was committed to acting on the report's recommendations. "This report marks the start of the electricity grid's makeover to accommodate new low carbon power generation which is needed by 2020," he said. "This is a massive long term investment opportunity and this upgrade work will help support jobs across the low carbon economy."

Energy regulator Ofgem has said it will approve the funds needed to begin the pre-construction work on specific transmission projects that are due to start work soon.

Alistair Buchanan, chief executive of Ofgem, said the regulator was working overtime to make the necessary changes to get projects connected.

"Ofgem has been proactive in this area by approving major increases in investment in the electricity networks, including the £5bn for network upgrades and renewal between 2007 and 2012," he said.

Since last year's Transmission Acccess Review, Ofgem has also been working to cut red tape so projects can connect to the grid faster.

The watchdog is investigating a "connect and manage" approach so an early connection date can be offered to projects that already have planning consent.

It is also considering speeding up development by breaking up the National Grid's monopoly on all new build work and opening up projects to build new grid infrastructure to competition.

Nick Winser, executive director of transmission at National Grid, said all stakeholders must work together if the necessary goals were to be achieved.

"With the move to a low carbon economy being critical to all our futures, this work shows just how important it is for government, Ofgem and the energy industry to all work together with common purpose," he said.

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