National Grid Electricity Transmission (NGET) and SP Transmission have agreed to pay £158m in redress for a two-year delay to the Western Link subsea cable, following an Ofgem investigation.
The two-year delay made it difficult at times for renewable energy generators in Scotland to export clean electricity to England and Wales, said Ofgem.
The consumer redress package holds both NGET and SP Transmission responsible for the late delivery of the 2.25GW transmission link.
Western Link is a transmission project worth around £1.2bn, providing a major subsea electricity link between Scotland and Wales.
The link is designed to transport electricity, often from green sources like offshore wind, between Scotland and Wales.
According to the redress package £15m 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 bill, so consumers will benefit from this redress package through lower bills.
Ofgem also recognised that consumers have benefited by a further £100m because of the companies’ efficient financial management of the project and their contract management strategy.
Ofgem’s network price control ensures this is returned to consumers by lower system charges.
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 wind farm generators to protect the electricity system.
This ultimately led to higher costs for consumers.
NGET and SPT own the licence for the project and contracted with a contractor to deliver it. The link fell two years behind its expected delivery date of March 2017 to June 2019.
A spokesperson for the Western Link joint venture (NGET and SP Transmission) said: “The scale of the project (262 miles of cable, of which 239 miles is under water) as well as the cutting-edge technology involved meant a complex construction and delivery phase.
“From the outset the joint venture worked hard to protect consumers against delay and deliver the most efficient and economic approach, with the new technology utilized meaning fewer cables were required, minimising costs and disruption to local communities.
“Despite these efforts, which have been recognised by Ofgem in their investigation – and the fact that the Link was in operation and providing benefit for significant parts of the period identified – the joint venture recognises it is ultimately accountable for the delay and has therefore agreed to the redress package.”