ENERGY GIANTS PAY £158 MILLION FOR DELAYS

National Grid Electricity Transmission plc and Scottish Power Transmission plc have agreed to pay a redress fee of £158 million for delays to the Western Link Project.

The two-year delay made it difficult at times for renewable energy generators in Scotland to export clean electricity to England and Wales. 

The consumer redress package holds both National Grid Electricity plc and Scottish Power Transmission plc responsible for the late delivery of this important transmission link. 

£15 million of the redress package 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 returned via reduced system charges. These charges are ultimately paid for by consumers as part of their overall electricity bills, so consumers will benefit from this redress package through lower bills.

Ofgem recognises that consumers have benefited by a further £100 million because of the companies’ financial management of the project and their contract management strategy.

Ofgem’s network price control ensures this is returned to customers through lower system charges.

Western Link is a transmission project worth around £1.2 billion, providing a major subsea electricity link between Scotland and Wales.

It provides an additional 2,250MW of capacity, equivalent to powering over two million homes, and is crucial to helping Britain reach its targets of net zero greenhouse gas emissions.

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. 

Because renewable generators in Scotland were unable to transport the energy they were generating, 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.

Cathryn Scott, Ofgem’s Director of Enforcement and Emerging Issues, said:  

“To deliver the UK’s climate change ambitions, more of our electricity will come from renewable generation.

“This is already happening, with offshore wind and other projects in development. Innovative projects such as the Western Link are 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.”