The National Wealth Fund (NWF) has announced £600m to Iberdrola to upgrade the British power grid through its subsidiary ScottishPower.
The investment forms part of a £1.35bn financing package, led by Bank of America as Sole Debt Arranger and including Bank of America, BankInter, BNP Paribas, Caixabank, Lloyds Bank, NatWest and Banco Sabadell as lenders.
NWF’s financing aims to ensure the deployment of capital needed to deliver seven of ScottishPower’s priority transmission grid upgrade projects.
The projects will help to facilitate more renewable energy onto the system, reduce congestion costs, lower the cost of electricity for businesses and consumers, and unlock growth across the UK, it said.
According to the UK Government’s Clean Power 2030 Action Plan the scale of investment needed to upgrade the grid is “significant”. In its independent advice to the Government on the 2030 pathway, the National Energy System Operator (NESO) estimates that up to £60bn of investment is required.
The investment is supporting the development of the Eastern Green Link projects between Scotland and England, and developing renewable energy reserves by scaling up the UK’s capacity to transport it from generation to where it is required. This is achieved through interconnectors from Scotland to the North-East of England and Norfolk.
NESO has identified EGL1 as a “crucial project” for the delivery of the 2030 ambitions goals and as “the most constrained transmission boundary in Great Britain”, its development will “address a major challenge facing the UK’s clean energy mission”, it said.
The financing will also deliver grid upgrades in five key locations across Scotland including the building of new substations, overhead line reconfiguration and the improvement of overhead transmission cables to increase both capacity and resilience.
Chancellor of the Exchequer, Rachel Reeves, said:
“Upgrading our energy infrastructure is good news for businesses, households, and the economy. It will bring down bills, put more money in working people’s pockets and enable businesses to expand. That is why I am so pleased to see the National Wealth Fund securing deals such as this.
“This is our Plan for Change in action, delivering long term economic growth and the jobs of the future whilst making Britain a clean energy superpower.”
Energy Secretary Ed Miliband said:
“We need to get Britain building so we can deliver on our Plan for Change to protect billpayers, unleash growth and create jobs.
“This investment will 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.”
Scottish Secretary Ian Murray said:
“This significant investment in Scotland’s power grid demonstrates our government’s unwavering commitment to becoming a clean energy superpower. By expanding grid capacity through these crucial infrastructure projects, we’re not only addressing one of our biggest barriers to decarbonisation but positioning Scotland as a powerhouse of Britain’s clean energy revolution.
“The National Wealth Fund’s investment in ScottishPower’s transmission projects represents our Plan for Change in action – delivering the modern energy infrastructure Scotland and the UK need to thrive in a clean energy future.”
John Flint, CEO at National Wealth Fund, said:
“Upgrading the power grid is one of the most significant barriers to decarbonising our economy, and the scale of investment needed to address this challenge is substantial. Our financing will support some of the most vital grid upgrades that will have a major impact on the transition to a renewables-based electricity system and help address the grid constraints that make electricity more expensive for businesses and consumers.”
Keith Anderson, CEO of ScottishPower, said:
“Today’s announcement is a welcome step forward in the delivery of the Government’s Clean Power 2030 pathway.
“Working together to drive forward these critical investments is an important catalyst for economic growth, as we make progress in bringing more renewables onto the system to meet the increasing demand for electrification.”
Bernard Mensah, President of International, Bank of America, said:
“Bank of America is pleased to partner with the National Wealth Fund on this significant investment. This innovative, tailored co-lending structure will help support Scottish Power with boosting both UK grid capacity and connectivity.”
Image courtesy of ScottishPower
