National Grid Electricity Transmission and Scottish Power Transmission have agreed to pay £158 million as part of a redress package following delays to the Western Link project.
The link, which connects Scotland and Wales, was delayed by two years, and delivered in June 2019 instead of its expected date of March 2017.
An investigation by Ofgem found that the delay in the £1.2 billion project restricted renewable generation in Scotland from exporting electricity to England and Wales, as there was not enough capacity to do so.
National Grid ESO had to reduce the generation from windfarms at times due to the inability to transport the energy, which ultimately led to higher costs for consumers.
Ofgem found that the delays were caused by problems with the manufacturing processes, installing the cables and commissioning tests.
It acknowledged that National Grid and Scottish Power did not cause or exacerbate the delay, but holds the ultimately responsible as the license holders for the delay caused by their supply chain.
“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,” said a spokesperson for the Western Link joint venture (National Grid Electricity Transmission plc and SP Transmission plc).
“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 utilised meaning fewer cables were required, minimising costs and disruption to local communities.”
The spokesperson continues to highlight that the Link was in operation and providing benefit for significant parts of the delayed period identified by Ofgem, but that the joint venture “recognises it is ultimately accountable for the delay and has therefore agreed to the redress package.”
Of the total £158 million, £15 million will be paid into Ofgem’s Redress Fund, which is operated on its behalf by the Energy Savings Trust. The remainder of the redress package will be returned via reduced system charges, ultimately lowering consumer bills.
The Western Link has 2,250MW of capacity, and is viewed as key to helping Britain reach its targets for net zero by enable renewable generation capacity. The impact it has had on the energy system became clear in February 2020, when an outage on the link led to record Balancing Mechanism payments of £30.9 million.
“Innovative projects such as the Western Link are vital in moving clean energy from where it’s produced to where it’s needed,” said Cathryn Scott, Ofgem’s director of enforcement and emerging issues.
“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."