Swedish utility Vattenfall gets UK distribution networks licence

By Lefteris Karagiannopoulos

OSLO, Nov 3 (Reuters) - Swedish energy utility Vattenfall has won a distribution networks operator licence from Britain's energy regulator Ofgem and will start operating in the competitive UK market in 2018, Vattenfall said.

Vattenfall, one of the biggest wind energy producers in Britain with capacity nearing 1 gigawatt (GW), formed a unit to own and operate the networks to meet the licence requirements.

The company would not seek to link up with existing distributors but, like them, it has to be careful with its cost structure in the British market, Annika Viklund, senior vice president of Vattenfall distribution, told Reuters.

A potential price cap on the retail energy sector in Britain would challenge energy firms to innovate, Viklund said. "We are not concerned. I think it will sharpen competition," she added.

The British government asked energy market regulator Ofgem this month to come up with a price cap on the retail energy sector that would last until 2020.

Having been awarded the licence to operate distribution networks, Vattenfall would now look at increasing its battery storage in Britain, spokesman Jason Ormiston said.

"We are currently investigating other opportunities and developing an overall battery storage strategy for the UK," he said.

One potential battery storage investment the firm is considering will be a 10 megawatt (MW) facility at the recently completed Ray wind farm in northern England.

Vattenfall is already building a 22 MW storage project at its Pen (Other OTC: PENC - news) y Cymoedd onshore wind farm in Wales, which is scheduled to be operational in February 2018. (Editing by Edmund Blair)