Energy regulator Ofgem has announced a £95 million investment package over the next two years to increase the capacity of Scotland’s power networks

This is the next stage in funding the major program of extra investment in the period to 2020 being developed by the transmission companies to help meet carbon targets. It follows the decision announced this month to fund an initial tranche of investment, totalling £319 million, by the transmission companies in their current price control (2007-2013).

More than £80 million of the funding will be spent by National Grid Electricity Transmission plc and Scottish Power Transmission Ltd on a package of projects to increase the amount of electricity that can flow between the high-voltage networks of England and Scotland. This will help the export of renewable electricity from Scotland.

Scottish Hydro Electric Transmission Ltd will spend a further £11.5 million on upgrading its network to connect generation in the north of Scotland. Ofgem has also allowed National Grid to spend £1 million on initial development work on a proposed new power cable linking Pembroke and Wylfa in Wales. This link may be required to accommodate new nuclear generation in north Wales and offshore wind generation in the Irish Sea.

Stuart Cook, Ofgem’s senior partner for Smarter Grids and Governance, said: "Upgrading Scotland’s electricity networks so they can handle connections from more renewable generators is crucial to helping meet Britain’s climate change targets.

"Our decision means that we have approved more than £400 million extra investment in the high voltage grids across Britain in less than a year. We are now assessing the business case for other network upgrades needed so Britain can reach its renewable energy potential."

As part of the current transmission price control, Ofgem agreed that Britain’s transmission companies National Grid Electricity Transmission plc, Scottish Power Transmission Limited and Scottish Hydro-Electric Transmission Limited could invest £3.8 billion.

Last year, Ofgem introduced a framework for providing additional funding, in tranches, for critical investments over and above the £3.8 billion in the current price control. Ofgem has since been working with the transmission companies to examine the business case for individual projects, and approve the funding when it is justified. So far, Ofgem has approved more than £400 million of this additional funding, including the £95 million package.