A multibillion-euro 725 km interconnector between the UK and Germany has reached financial close, paving the way for construction works to begin in the coming months.
The £2.4bn (€2.8bn) NeuConnect interconnector will form an “invisible energy highway” with subsea cables allowing up to 1.4GW of electricity to flow in either direction between the UK and Germany and will help deliver a more secure and resilient energy supply, particularly as more renewable generation is added.
Independent analysis shows the project will create over £1.7bn in UK consumer benefits over 25 years.
NeuConnect is led by global investors Meridiam (France), Allianz Capital Partners on behalf of Allianz insurance companies (Germany) and Kansai Electric Power (Japan).
The privately-financed interconnector attracted “significant interest” from the international financial community, before reaching financial close with a consortium of more than 20 national and international banks and financial institutions.
The included the UK Infrastructure Bank, European Investment Bank (EIB), and Japan Bank for International Cooperation (JBIC).
The interconnector will help to ensure “better utilisation of offshore wind capacities on the coasts according to the respective local wind strength”, thereby supporting EU and German renewable energy policies, EIB stated.
Independent analysis shows that the project could deliver a net reduction in carbon emissions of over 13MtCO2 over 25 years.
Given the project’s environmental objectives and commitment to sustainable development, NeuConnect’s financing framework is considered by Moody’s ESG Solutions as being aligned with the four core components of the LMA’s Green Loan Principles 2021.
To help mark NeuConnect reaching financial close, the project’s investors met with the UK Government’s Energy and Climate Change Minister Greg Hands (pictured, centre left) and German Ambassador to the UK Miguel Berger (pictured, centre right).
Hands said: “Putin’s illegal invasion of Ukraine shows it is more important than ever that we strengthen close energy bonds with European partners who are rapidly moving away from using Russian gas.
“When it comes online, NeuConnect will open new opportunities for the UK to export clean, and cheaper, renewable energy and reduce our exposure to volatile global fossil fuel prices.”
Secretary of State for International Trade Anne-Marie Trevelyan MP said: “Investment creates jobs and is crucial for helping us meet our climate change targets as we work towards a cleaner, greener future. NeuConnect’s commitment underlines the huge investor confidence in the UK economy and the strength of working with our European partners on the road to net zero.”
Miguel Berger, German Ambassador to the United Kingdom, added: “Both countries Germany and the United Kingdom aim to accelerate their energy transition and to boost energy security.
“As a champion in offshore wind the UK is a crucial partner for us as we work towards our common goals. NeuConnect will allow our energy grids to share excess power – making sure renewable energy is not wasted.”