National Grid Electricity Transmission (NGET) and Scottish Power Transmission (SPT) have agreed to pay a £158m ($211m) penalty package for a two-year delay to the £1.2bn ($1.6bn) Western Link project.
The subsea power cable project to transport electricity from Scotland to Wales and England was expected to be delivered in March 2017, but was completed in mid-2019.
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An investigation carried out by energy regulator Ofgem found that the delay was due to problems with the manufacturing processes, cable installation and commissioning tests.
While Ofgem recognised that the two firms did not cause or worsen the delay, it holds them responsible as the project’s licence holders.
Ofgem director of enforcement and emerging issues Cathryn Scott 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 project are vital in moving clean energy from where it’s produced to where it’s needed.
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By GlobalData“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.”
Of the redress package, £15m will be paid into Ofgem’s Redress Fund, which is run on its behalf by the Energy Saving Trust.
The remaining £143m of the redress package will be passed on to customers through lower electricity bills.
Ofgem said that consumers have benefitted from an additional £100m due to the Western Link project’s financial management and its developers’ contract management strategy.
The 422km-long link, 385km of which is underwater, provides 2.25GW of electricity from green power sources such as offshore wind.
This capacity is enough to power two million homes and will help the UK achieve its net-zero greenhouse gas emissions.
NGET is a subsidiary of the UK’s National Grid, while SPT is owned by Spain-based energy company Iberdrola.
