Ofgem agrees early investment and updated dates for proposed electricity superhighways

Three major projects which will help boost Great Britain’s energy security and clean power ambitions and deliver projected savings for consumers have taken a big step closer to fruition.   

Ofgem has approved updated delivery dates and early investment for: 

• Eastern Green Link 3 (EGL3) and Eastern Green Link 4 (EGL4) are two proposed subsea cables which would each provide 2GW of capacity to transport electricity generated from British offshore wind between Scotland and England via a network of onshore and offshore cables
• another proposed project GWNC, plans a new onshore 400Kv electricity link between Grimsby and Walpole in Lincolnshire, to help transport the energy to consumers

A Cost Benefit Analysis (CBA) by grid operator NESO indicated the redesigned projects are expected to deliver a £3-6 billion benefit to consumers compared to the original network design primarily due to the earlier achievable delivery dates and avoided network constraint costs.

The proposed projects involve building high-capacity, electricity transmission links that would enable consumers to access more homegrown clean power, with the additional capacity provided by the links also reducing payments made to windfarms to switch off, when there’s no capacity to transport their energy on the grid.

Ofgem has approved amendments to the scope of the projects, including forecast costs and later target delivery dates, after Transmission Operators (TOs) proposed major design changes to reduce the impact of the projects on the local environment and ensure additional renewable generation could also be connected.

Following our assessment of the extensive redesign of the projects, we have set new target dates of December 2033 for GWNC and August 2034 for EGL3 and EGL4. Prior to these changes there was a risk that TOs would not have delivered the projects until the late 2030s. TOs will be for incentivised for delivering the projects earlier than these dates, but any late delivery will result in significant payments for penalties for each day the project is delivered late.

Overall, these projects are now expected to deliver greater consumer benefits than their original designs, in the form of reduced constraint costs through timely delivery, connection of additional homegrown clean power and reduced community and environmental impact, which includes proposals for underground cables on parts of EGL3 and EGL4, thereby reducing the impact of new overhead lines.

Ofgem has also approved early construction and preconstruction funding (ECF and PCF) for EGL3 and EGL4, which will enable for the projects to proceed with enabling works such as strategic land purchases, surveys, design work and procurement of sought after components, equipment and materials.

Beatrice Filkin, Ofgem Director of Major Projects, said:

“Today’s decision puts these projects in a prime position to compete in the global race for sought after components such as HVDC cables and work towards seeking planning approval.

“We’re neither handing TOs blank cheques nor greenlighting the projects themselves – that is rightly for the relevant planning authorities to decide. Through intelligent use of early investment and setting realistic but ambitious timescales, we are helping shield consumers from unnecessary costs."

She added: “Our processes help minimise wasted expenditure, if projects are altered, cancelled or refused permission, with any unspent money returned to consumers. The TOs must also demonstrate that their expenditure delivers clear benefits for consumers – otherwise those costs can’t be passed on to billpayers.  

"When ASTI was implemented, it was recognised that the design and delivery dates of these projects might change, and our decision today ensures that the TOs face a suitably challenging date by which to deliver the updated design."

For more on the decisions see: Accelerated Strategic Transmission Investment: Material Scope Change and Early Construction Funding - EGL3, EGL4 and GWNC.

ASTI was launched by Ofgem in late 2022, to streamline the delivery of major strategic energy infrastructure projects. It identified 26 projects key to achieving Government decarbonisation targets and reducing Britain’s exposure to volatile international gas prices. The projects will enable more homegrown power to be harnessed and supplied to consumers, while also driving down the costs currently incurred when, for example, wind generators are paid to stop generating because there isn’t the grid capacity for their energy.     

Notes to editors

ASTI

Delivering the Government’s Clean Power ambitions requires a huge amount of new infrastructure. 

Ofgem’s Accelerated Strategic Transmission Investment (ASTI) framework was specifically designed to fast track its assessment of 26 strategically important electricity transmission projects needed to enhance the electricity network.

ASTI streamlines the onshore transmission regulatory approval process, accelerating project build schedules, whilst also ensuring robust consumer protection in a fast-track process to deliver the network infrastructure needed for clean power as soon as possible.

This will also help achieve government decarbonisation goals and reduce Great Britain’s exposure to volatile international gas prices. It will also help drive down the constraint costs which are incurred when wind generators are paid to stop generating, because there isn’t enough grid capacity to accommodate all the clean homegrown energy they are generating.   

Early Construction Funding (ECF) and Pre Construction Funding: What are they, how much is given and who pays? 

ECF enables TOs to lay the groundwork for big transmission projects with site surveys, design work and a range of procurement and early enabling activities. This can help developers swiftly proceed to delivering the proposed project if approved by the relevant planning authority.  Pre-Construction Funding (PCF) supports early-stage development activities such as design, planning, and stakeholder engagement before full construction begins. It helps ensure projects are well-prepared and can progress efficiently once construction funding is approved.

For commercial reasons, ECF and PCF figures are not published at this stage and only percentages of budgets are published.

Ofgem never sends money directly to TOs, TOs raise the funds themselves

The ECF and PCF process only determines if activities are eligible for early and preconstruction funding or not. 

A full efficiency assessment, including of costs allowed as part of ECF, will be carried out at project assessment stage. Ofgem will then decide how much the project should cost and what the TO will be able to recover. If we deem any costs – including incurred at ECF and PCF stage – to be inefficient, we will not allow the funding

If the costs are judged to be efficient Ofgem allows TOs to recover this money through their allowed revenues, which are covered through network charges, which form part of consumer bills.

Project approval

Granting of ECF and PCF does not constitute full funding approval for a project.

Ofgem doesn’t grant planning permission for transmission projects, or decide things such as location, route, design and whether electricity connections go above or below ground – these would be decisions for the relevant planning authorities and the transmission owners themselves.

Eastern Green Link 3 (EGL3) 

Eastern Green Link 3 (EGL3) is a proposed high-voltage direct current (HVDC) transmission project connecting Peterhead in Aberdeenshire, Scotland, to a new Walpole B substation in Norfolk, England. EGL3 is designed to deliver up to 2GW of transmission capacity via a combination of subsea and onshore HVDC and high voltage alternating current (HVAC) cables, supported by converter stations at each end.

EGL3 have been granted 8% of the updated project costs in ECF and 2.5% in PCF

Eastern Green Link 4 (EGL4) 

Eastern Green Link 4 (EGL4) is a HVDC transmission project that will connect Westfield in Fife, Scotland, to the same proposed Walpole B substation in Norfolk. It forms part of a coordinated effort in Great Britain to expand east coast transmission capacity. EGL4 comprises converter stations at both ends, subsea and onshore cable infrastructure, and shared landing and connection assets at Walpole. Once operational, EGL4 is expected to deliver up to 2 GW of firm transmission capacity, contributing to the decarbonisation of the UK’s energy mix and supporting regional economic development.

EGL4 has been granted 13% of updated projects in ECF and 2.5% in PCF.

Both EGL3 and EGL4 are joint ventures (JVs) between Transmission Operators (TOs) National Grid Electricity Transmission (NGET), Scottish Hydro Electric Transmission (SHET) and Scottish Power Transmission’s (SPT).

For more details see National Grid - Eastern Green Link 3 and Eastern Green Link 4.

GWNC

GWNC is a 400kV double circuit of around 140km OHL between Grimsby West and Walpole substations via Lincolnshire Connection Substation-A (LCS-A), Lincolnshire Connection Substation-B (LCS-B) and Weston Marsh substation. This integrated network reinforcement creates a better coordinated and holistic Grimsby to Walpole project compared to the original design. 

The NGET project is being developed to connect new sources of electricity planned in the area, including EGL3 and EGL4 as well as new offshore wind, solar, gas-fired generation, interconnectors and battery storage.

For more details see National Grid - Grimsby to Walpole.

Material Scope Change 

The Transmission Owners made a request to Ofgem to change to the delivery dates and funding arrangements for EGL3, EGL4 and GWNC following major changes to their proposals.

These included:

• adjustments to costs
• changes to delivery dates

The TOs have also amended their proposed designs with changes which will reduce both community and environmental impact including:

• the projects now avoiding The Wash, a highly sensitive coastal wetland with saltmarshes, mudflats, and sandbanks – this significantly reduces ecological disturbance and consenting risk
• a reduction in the amount of new Overhead Line (OHL) and instead proposing approximately 130 km of underground onshore cable, reducing landscape intrusion and improving visual amenity

The changes have necessitated changes to project delivery dates and costs.

The ASTI framework allows for updates to outputs and target dates where there is clear evidence that a material scope change has made the original delivery date unachievable. In this consultation, we assess whether the proposed new dates are suitably robust and continue to deliver value for consumers. 

Ofgem recognised that the proposed options have been tested and recommended by NESO, and that the Cost Benefit Analysis (CBA) indicates a £3-6 billion benefit to consumers compared to the original network design, based on the TOs’ central case assumptions.