National Grid and ScottishPower have agreed to pay £158m following a probe by the UK’s energy market watchdog into delays to a £1.2bn subsea power cable project, a record settlement for the regulator.
Ofgem’s investigation, launched in January 2020, into the Western Link project found that the two-year delay limited the ability of renewable energy generators in Scotland to export electricity to England and Wales, leading to higher costs for consumers.
The investigation found that the delays were largely caused by problems in manufacturing, cable laying and testing. While National Grid and Scottish Power “did not cause or exacerbate the delays . . . [they] are ultimately responsible, as license holders, for the delay caused by their supply chain”, Ofgem concluded.
A £15m tranche of the package will be paid into a redress fund, while the rest will be returned to customers via lower electricity bills.
The 422km undersea Western Link cable links electricity transmission between Scotland and Wales, often from renewable sources such as offshore wind. The additional 2,250MW of power capacity it provides is seen as essential to Britain achieving its net zero targets.
“Innovative projects such as the Western Link are vital in moving clean energy from where it’s produced to where it’s needed,” said Catherine Scott, Ofgem’s director of enforcement.
“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.”
The project has been criticised in recent years due to the costs to consumers that delays would entail, and wind farms in Scotland being paid to switch off until the cable was completed.
“The joint venture recognises it is ultimately accountable for the delay and has therefore agreed to the redress package,” National Grid said in a statement.