€713.5M to back two Eastern Green Links and five other UK grid upgrade projects

The National Wealth Fund (NWF), the UK’s sovereign wealth fund, has backed ScottishPower with £600 million to support the delivery of seven priority transmission grid upgrade projects anticipated to help facilitate more renewable energy onto the system, reduce congestion costs, lower the cost of electricity for businesses and consumers, and unlock growth across the UK.

NWF said its commitment will help mobilize private finance in support of Iberdrola’s plans to invest £24 billion up to 2028 through ScottishPower in the UK’s electricity network and renewable generation infrastructure that helps to ensure the country is on track to meet the UK Government’s Clean Power 2030 Action Plan.

The investment is part of a wider £1.35 billion financing package, with NWF committing £600 million (around €713.5 million) and the rest being provided by several commercial banks, led by Bank of America as the Sole Debt Arranger.

In its independent advice to the UK Government for realizing the Clean Power 2030 Action Plan, the National Energy System Operator (NESO) estimates that up to £60 billion of investment is required in the years to 2030 to support the delivery of a clean power system.

NWF’s investment is supporting ScottishPower’s development of the Eastern Green Link (EGL) 1 and 4 interconnectors that will link Scotland to the North-East of England and Norfolk.

The financing will also deliver grid upgrades in five locations across Scotland, including the construction of new substations, overhead line reconfiguration and the improvement of overhead transmission cables.

“Upgrading the power grid is one of the most significant barriers to decarbonising our economy, and the scale of investment needed to address this challenge is substantial. Our financing will support some of the most vital grid upgrades that will have a major impact on the transition to a renewables-based electricity system and help address the grid constraints that make electricity more expensive for businesses and consumers,” said John Flint, NWF’s CEO.

A total of four EGL links form part of planned electricity grid reinforcements to boost the capability of the existing UK transmission network and facilitate increased flows of planned renewable generation in the North to demand centers to the South, supporting the ambition of enabling 50 GW of offshore wind generation by 2030 and achieving a net-zero economy by 2050.

Construction on EGL1 began in February. It was last month published that UK energy market regulator Ofgem was considering whether to grant a penalty exemption for the joint venture (JV) developing EGL1 due to a 16-month delay said to be caused by supply chain constraints.