The UK’s National Wealth Fund, alongside a consortium of major banks, has agreed a £1.35 billion loan to ScottishPower to support the upgrade of power grid connections between Scotland and England.
This financing will enable the construction of key offshore cabling projects, designed to transmit electricity generated by Scottish wind farms across the North Sea to consumers and businesses in England.
About £600 million of the funding is being provided directly by the National Wealth Fund, a publicly-owned investment vehicle established by the Labour government last year. The remaining funds come from a group of banks led by Bank of America, and including BNP Paribas, Lloyds and NatWest1.
The projects, known as Eastern Green Link (EGL) one and four, will see new cables laid from Torness in south east Scotland to County Durham, and from Fife to Lincolnshire, respectively. These upgrades are considered vital for bringing cheaper, renewable electricity from Scotland to the rest of the UK, addressing longstanding grid bottlenecks that have resulted in significant energy waste1.
Currently, large volumes of wind-generated electricity are lost each year because the grid lacks the capacity to transfer power south of the border. When this happens, wind farms are paid to halt production and gas power stations are paid extra to fill the gap-a system known as curtailment, which cost around £1.23 billion last year, with the expense ultimately added to consumers’ energy bills.
Chancellor Rachel Reeves welcomed the deal, stating it would “bring down bills, put more money in working people’s pockets and enable businesses to expand.” Energy Secretary Ed Miliband added that the investment would “help to deliver clean power by 2030 by speeding up grid upgrades – bringing cheaper, homegrown renewable power into homes and businesses, while supporting skilled jobs across the country”.
Keith Anderson, chief executive of ScottishPower, described the collaboration as “an important catalyst for economic growth, as we make progress in bringing more renewables onto the system.” The funding will also contribute to additional grid upgrades, including new substations and overhead lines in Scotland1.
The UK’s National Energy System Operator estimates that up to £60 billion of investment is required over the next five years to achieve the country’s clean power ambitions. John Flint, chief executive of the National Wealth Fund, said the projects would “have a major impact on the transition to a renewables-based electricity system and help address the grid constraints that make electricity more expensive”1.
This latest move by the National Wealth Fund underscores the government’s commitment to accelerating the UK’s transition to renewable energy, reducing reliance on fossil fuels, and supporting economic growth through infrastructure investment.
