UK seen saving 1 bln pounds/year if imports more European power

Mon Mar 31, 2014 8:51am EDT

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* Importing more could save 3 mln pounds/day -National Grid

* Could cut household bills by 13 pounds/year by 2020

LONDON, March 31 (Reuters) - Britain could save 1 billion pounds ($1.7 billion) a year in electricity costs by 2020 by doubling its interconnector capacity with Europe, network operator National Grid said on Monday.

Its report came days after an outcry over soaring bills prompted a review of competition in Britain's electricity sector and as politicians have focussed on how to keep a lid on costs for consumers.

Britain now has around 4 gigawatts of capacity available on interconnectors, cables that allow electricity to flow between countries, with France, Ireland, the Netherlands and Northern Ireland. Doubling this figure by 2020 could help bring down energy costs, a report by National Grid said.

"It is estimated that each 1 GW of new interconnector capacity could reduce Britain's wholesale power prices up to 1-2 percent," the report said.

Wholesale power prices are higher in Britain than some other European countries in part because of Britain's domestic carbon tax and also its increasing imports of natural gas.

Adding 4-5 GW of inerconnector capacity could lead to savings of nearly 3 million pounds a day, which could cut household energy bills by around 13 pounds per year, the report said.

In response to the report, Secretary of State for Energy and Climate Change Ed Davey said increasing Britain's energy links with Europe was one of his top priorities.

"These power links to Europe will make an energy single market a reality, which is something successive British governments have pushed for but with only limited success to date," he said.

In 2012 Britain announced plans to investigate building an interconnector with Iceland to transport some of its geothermal and hydropower-generated power to British homes.

The so-called IceLink could bring around 1.2 GW of capacity to Britain by 2023 and is expected to cost around 4 billion pounds.

Another five new interconnector projects with Belgium, France, Norway and Ireland are in development and could provide as much as 6.2 GW of capacity by 2020. ($1 = 0.6011 British Pounds) (Reporting By Susanna Twidale; editing by Jane Baird)

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