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The electricity transmission arms of National Grid and SP Energy Networks (SPEN) have agreed to pay £158 million in redress for a two-year delay to the £1.2 billion Western Link project – a subsea power line connecting Scotland and Wales.
Ofgem said the delay to the 2,250MW high voltage direct current link prevented renewable generators in Scotland from exporting electricity to England and Wales when the transmission network was congested, forcing National Grid Electricity System Operator (ESO) to limit their output and raising costs for consumers.
The regulator said completion of the project was delayed by more than two years from March 2017 to June 2019 due to problems with the manufacturing, installation and commissioning of the cables. It acknowledged that National Grid and SPEN did not cause or exacerbate the delay, which was the fault of their contractor, but said as the licence holders for the project, they are ultimately responsible.
The companies have agreed to pay £15 million into Ofgem’s voluntary redress fund, which provides grants to charities, trusts, organisations or consumers and is operated on the regulator’s behalf by the Energy Savings Trust. The rest of the £158 million of redress will be returned to consumers through lower network charges.
Ofgem noted that consumers will benefit by a further £100 million due to underspends on the project by National Grid and SPEN whose allowances for the project will be adjusted accordingly.
Cathryn Scott, director of enforcement and emerging issue at Ofgem, said: “To deliver the UK’s climate change ambitions, more of our electricity will come from renewable generation. This is already happening, with offshore wind and other projects in development. Innovative projects such as the Western Link are vital in moving clean energy from where it’s produced to where it’s needed.
“However, they must be delivered on time and to the standards agreed. Where they are not, as the energy regulator, we will hold the licensees accountable.”
A spokesperson for the Western Link joint venture between National Grid and SPEN said: “Western Link is an example of the innovative infrastructure and bold vision required for Britain to reach its net zero goals, delivering green energy to where it’s needed and enabling a more efficient electricity system.
“Since becoming operational it has allowed the transfer of renewable electricity to supply the demand of more than two million homes every year. It’s expected to continue to deliver for decades to come, boosting the UK’s net zero ambitions at the same time as saving money for consumers.”
They added: “The scale of the project (262 miles of cable, of which 239 miles is under water) as well as the cutting-edge technology involved meant a complex construction and delivery phase. From the outset the joint venture worked hard to protect consumers against delay and deliver the most efficient and economic approach, with the new technology utilized meaning fewer cables were required, minimizing costs and disruption to local communities.
“Despite these efforts, which have been recognised by Ofgem in their investigation – and the fact that the link was in operation and providing benefit for significant parts of the period identified – the joint venture recognises it is ultimately accountable for the delay and has therefore agreed to the redress package.”
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