National Grid Electricity Transmission and Scottish Power Transmission have agreed to pay a redress package of £158 million for delays to the Western Link Project, following an investigation by Ofgem, the UK’s energy regulator. NGET and SPT own the licence for the project and contracted to deliver it. The link fell two years behind its expected delivery date of March 2017 to June 2019.
£15m of the £158m will be paid into Ofgem’s Redress Fund. This is operated on its behalf by the Energy Saving Trust and allows companies to pay a sum of money to appropriate charities, trusts, organisations or consumers as a result of breaches of licence conditions.
The remainder of the redress package will be in the form of reduced system charges. These charges are ultimately paid for by consumers as part of their overall electricity bills, so in theory consumers will benefit from this redress package through lower bills.
Western Link is a transmission project worth around £1.2 billion, providing a major subsea electricity link between Scotland and Wales. The link is 422 km (262 miles) long, of which 385 km (239 miles) is under the sea, and was designed to transport electricity, often from green sources, between the two countries. It provides an additional 2250 MW of capacity and is crucial to helping Britain reach its targets of net zero greenhouse gas emissions.
However, the two-year delay restricted renewable generators in Scotland exporting electricity to England and Wales, because at times there was not enough capacity to do so. This meant that National Grid ESO would have sometimes had to reduce the output from windfarm generators to protect the electricity system. This ultimately led to higher costs for consumers.
Ofgem’s investigation found that the root causes of the delay were problems with manufacturing processes, installing the cables and commissioning tests. It acknowledged that NGET and SPT did not cause or exacerbate the delay, but it holds NGET and SPT ultimately responsible, as licence holders, for the delay caused by their supply chain.