Xlinks’ planned cable link between Morocco and the UK that will transport solar and wind power is an “overwhelmingly compelling solution” to the UK’s need for baseload power, according to CEO Simon Morrish.
Speaking to Current±, Morrish said that with the UK already having quite a developed electricity market, with ambitions of greatly increasing its wind generation capacity, the country is “desperately in need of baseload power to be able to allow wind to continue to penetrate the energy supply”.
This is exacerbated by the baseload also set to come offline in the next 5-10 years including both nuclear and gas plants.
The need for baseload as the UK decarbonises is the driving force behind the Morocco – UK Power Project, announced earlier this year, which is to see solar and wind in Morocco with a total capacity of 10.5GW and a capability of exporting 3.6GW for an average of 20+ hours a day linked with the UK.
With an overall capex of £16 billion, the project is expected to reach financial close in the next two years. At this point, the company will have all the surveys done, all the permissions granted, all the bank financing sorted and all the equity lined up.
However, Morrish said that a key element in reaching that financial close is the Contracts for Difference (CfD) scheme, with the company asking for a CfD of £48/MWh, which it said is below the Department for Business, Energy and Industrial Strategy’s central price projections for the next 15 years.
“What that does is it gives us a guaranteed price, it takes out all the fluctuations in the market which makes financing so much harder otherwise. Equity and debt are happy to finance this project with a certain amount of certainty on the offtake,” Morrish said.
Morrish went on to claim that it’s “more valuable than wind at a similar or lower price” – with wind reaching record lows of £39.65/MWh in 2019 – as wind has the risk of not generating when the weather isn’t favourable. He therefore said a better comparison for the project’s CfD is the £92.50 of Hinkley, because the project will be generating for 20 hours a day.
Xlinks is currently talking to suppliers and running tenders for the project. “We're working full steam ahead in terms of lining everything up so that we have the suppliers selected and contracts all ready for financial close,” Morrish said.
“The biggest issue is the cable though. When we talk to the suppliers, they've got all between four and six year-long backlogs on this.”
That’s the main motivation behind Xlinks also setting up its own separate cable manufacturing business, which is set to provide around 1,350 new, permanent regional jobs by 2024, when production is set to start.
Agreements for factories located in Hunterston and Port Talbot have already been signed, with planning permission applications underway.
These new jobs play into the government’s 'levelling up' agenda, with the cable business bringing manufacturing capability to the UK in a high-tech industry it currently doesn’t have, Morrish said.
“From the government's perspective, this is a very, very strong project.
“This is helping to solve the energy crisis for the government; it will be bringing down electricity prices, it accelerates their route to net zero, and it is almost one of the only solutions to be able to get them to have a net zero electricity grid by 2035, which they’ve committed to, because the only other choices are nuclear, which will take too long, or fossil fuels, which they've said they're not going to do. This solves that for them," he finished.