Two energy companies will pay a record £158m fine after delays to a major subsea power cable bringing renewable energy from Scotland to England and Wales caused home energy bills to rise.
National Grid and Scottish Power agreed to pay the penalty after an investigation by the industry regulator found many of Scotland’s windfarms were paid to turn off on windy days because there was no way to transmit the clean electricity to areas of high energy demand in the south of the UK.
The £1.2bn power cable known as Western Link was expected to carry enough electricity to power 2m homes over 260 miles, mostly under water, from Scotland to England from late 2015, well ahead of its late 2017 deadline from the regulator.
But the project was dogged by delays and was only ready more than three years later, in the summer of 2019, to help the UK make better use of its renewable energy generation.
During the delay the cost of turning off windfarms, and running alternative power sources such as gas and coal plants, was ultimately shouldered by households through their energy bills.
Cathryn Scott, a director at Ofgem, the energy regulator, said projects like the Western Link cable were “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,” she said.
Ofgem said £15m of the total “redress” payment will be paid into the regulator’s redress fund which is used by the Energy Saving Trust to distribute cash to charities and other organisations which help energy consumers. The remainder of the £158m payment will be used to lower the cost of running the energy system, which is paid for through energy bills.
A spokesperson for the joint venture between National Grid and Scottish Power said it had “worked hard to protect consumers against delay” but “recognises it is ultimately accountable for the delay and has therefore agreed to the redress package”.