The UK’s National Wealth Fund (NWF) has announced a £600 million commitment to Iberdrola to upgrade the British power grid through its subsidiary Scottish Power – supporting hundreds of jobs and helping to pave the way for a new era of clean electricity.
The investment forms part of a £1.35 billion 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 will ensure the swift deployment of capital needed to deliver seven of ScottishPower’s priority transmission grid upgrade projects,” said the National Wealth Fund.
“These 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.
“The scale of investment required to upgrade the UK electricity grid in support of the Government’s Clean Power 2030 Action Plan is significant.
“In its independent advice to the Government on the pathway towards the 2030 ambition, the National Energy System Operator (NESO) estimates that up to £60 billion of investment is required in the years to 2030 to support the delivery of a clean power system.
“Acting as the bridge between Scotland and England, ScottishPower’s development of the Eastern Green Link (EGL) projects 1 and 4, which NWF’s investment is supporting, will help to unlock renewable energy reserves by scaling up the UK’s capacity to transport clean energy from where it is generated to where it is needed, via interconnectors from Scotland to the North-East of England and Norfolk.
“NESO has identified EGL1 as a crucial project for the delivery of the government’s Clean Power 2030 ambitions.
“As the most constrained transmission boundary in Great Britain, its development will address a major challenge facing the UK’s clean energy mission, reducing congestions costs by ensuring surplus renewable energy can be re-distributed efficiently to meet increased forecast demand.
“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.”
The NWF said its commitment will help to mobilise private finance in support of Iberdrola’s plans to invest £24 billion up to 2028 through ScottishPower in the UK’s electricity network and renewable generation infrastructure “that helps to ensure the country is on track to meet the Government’s clean power mission.”
UK finance minister 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.”
National Wealth Fund CEO John Flin 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.”
ScottishPower CEO Keith Anderson 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.”