The Policy Exchange said that allowing foreign power suppliers to bid for Contracts for Difference (CfD), the UK Government’s new energy subsidies, would also help to cut Britain’s energy bills.
Interconnectors are up to five-times cheaper than offshore wind in terms of cutting the UK’s carbon dioxide emissions, the report concluded. Laying further undersea power cables would allow foreign suppliers to take part in the coalition government’s new capacity market, the think tank said.
Simon Moore, the report’s author, said: “Installing more power lines between the UK and Europe could help the UK cut energy bills and meet our aggressive carbon targets more cost-effectively.
“But misguided regulation from the European Union is getting in the way of interconnectors being built to Britain. This needs to be overturned.”
“The government must focus on delivering the cheapest, greenest electricity for people and businesses. It must not be distracted by secondary goals like ‘green jobs’ that risk pushing up the cost of electricity.
Policy Exchange said offshore wind currently costs the UK £85 per tonne of carbon that is saved, while an interconnector between Great Britain and Norway would cost just £17.
EU rules currently limit the profits that can be made on interconnectors, which the think tank said was putting off investors. Great Britain already has four operational interconnectors – to France, the Netherlands Ireland and Northern Ireland. At least eight more interconnectors are in various stages of development.
Moore added: “Both the British government and the EU have stated their support for greater interconnection between European electricity markets in recent months.”