Great Britain gains edge in race to secure sought-after components as Ofgem greenlight early construction funding for key energy projects

Great Britain’s energy security and clean power ambitions have received a boost today (Tuesday 12 May) after Ofgem greenlit early construction funding (ECF) for a series of large electricity transmission projects in Scotland.

These projects are upgrading Scotland’s electricity network so more clean, homegrown power can reach homes and businesses: a new Denny to Wishaw power line will carry enough renewable electricity to supply around 1 million homes, upgrades between Tealing and Kincardine will boost capacity and support major new links like electricity “superhighways”, and early funding for eight further projects means work can start sooner, helping reduce delays and bring reliable, low-carbon energy to consumers faster.

The projects are being progressed under Ofgem’s Accelerated Strategic Transmission Investment (ASTI) programme, launched in 2022 to accelerate delivery of key power transmission projects. ASTI projects will help meet the Government’s clean power targets, reduce reliance on volatile foreign energy markets and give British consumers access to more homegrown energy.

The new transmission capacity these projects will deliver will also generate consumer savings by reducing the amount of constraint costs currently added to bills, when wind farms are paid not to generate, due to lack of grid capacity.

The decision means Ofgem has now granted early funding to all 26 projects in the ASTI programme.

ECF is used by Transmission Operators (TOs) to finance early procurement of highly sought after materials such as substation components and HVDC cables, as well as strategic land purchases and associated enabling works including design work, surveys and early construction activities. This gives Great Britain a critical edge in the global race to secure key components at a time when many other countries are also seeking to decarbonise their grids, which helps reduce the risk of costly procurement delays.

Subject to planning consents, and construction programmes running to time, the projects are expected to proceed at pace with a view to start delivering benefits to consumers by 2030.

Beatrice Filkin, Ofgem’s Director of Major Projects said:     

“The last few years have shown how quickly global events can result in energy price shocks which push up bills for British consumers.

“By unlocking early funding for these projects, we aim to accelerate their delivery. This is crucial for strengthening Britain’s energy security and cutting constraint costs and exposure to volatile international gas prices by providing more grid capacity.

“Early funding helps transmission operators secure scarce components, avoid supply-chain delays, and deliver the grid upgrades needed to power homes and businesses with more clean, homegrown energy.”

She added: “However this isn’t planning consent for the schemes which will be considered by the relevant planning authorities.

“As financial regulator of these projects, we’ll protect consumers by ensuring any early spend is targeted, any unused funding is returned, and costs can only be recovered where there’s a clear benefit for billpayers.”

For more on the decisions see:

Denny to Wishaw 400kV Reinforcement Project: Early Construction Funding

Tealing-Kincardine Upgrade Project Early Construction Funding and licence consultation

Eight SHET Early Construction Funding applications

Notes to editors

Summary of ASTI projects involved

Denny to Wishaw 400kV Reinforcement Project (DWNO)

This proposed SP Transmission Ltd (SPT) project involves the establishment of a new north-to-south overhead power line corridor. allowing 1,000MW of clean power to flow through Scotland’s central belt.

It comprises a new proposed 400kV overhead line between Bonnybridge and an existing overhead line north of Glenmavis. It also involves the extension and reinforcement of existing substations along the route, including works at Wishaw and Bonnybridge to support 400kV operation. The project would also involve reconductoring and uprating of existing overhead line routes between Easterhouse, Newarthill and Wishaw.

The project has been awarded 55% of the project cost as set out in SPT’s licence.

The Tealing–Kincardine Upgrade Project (TKUP)

TKUP is a proposed SPT upgrade to existing electricity transmission infrastructure which will help enable other ASTI projects, including planned electricity superhighway Eastern Greenlink 4 (EGL4) The proposed SPT project consists of new 400kV GIS substations at Westfield and at Mossmorran, a new 400kV AIS (Air Insulated Substation) at Conland (Glenrothes), the reconfiguration of existing 132kV AIS Devonside substation, the refurbishment and re-insulating the existing Tealing to Longannet 275kV power line through Glenrothes, Westfield and Mossmorran to upgrade it for 400kV operation. The project will link in with the wider East Coast Onshore 400 kV Phase 2 reinforcement.

TKUP has been awarded 53% of the project cost as set out in SPT’s licence.

The eight Scottish Hydro Electric Transmission Plc (SHET) projects (six onshore, two offshore)

• Arnish to Beauly (Western Isles) HVDC link is an offshore electricity transmission project which will enable 1.8GW of renewable generation from wind farms on the Isle of Lewis in the Western Isles to be transported to the Beauly area in the North of Scotland.  The project has been awarded 23% of the project cost as set out in SHET’s licence.
• Spittal to Peterhead HVDC Subsea link (PSDC) will enable energy generated by ScotWind to be transported from the far north of Scotland to the east coast of Peterhead. It involves constructing a 2GW HVDC subsea link from a new 400kV substation at Spittal to a 400kV substation at Peterhead. It will also involve the construction of 2GW HVDC converter stations within the Spittal and Peterhead areas.  PSDC has been awarded 19% of of the project cost as set out in SHET’s licence .
• Beauly to Loch Buidhe 400Kv (BLNV) Reinforcement and Loch Buidhe to Spittal 400V reinforcement (SLU4). These two projects involve constructing a new 170km 400kV double circuit overhead line between Spittal 400kV substation and Beauly 400kV substation, a new 400kV substation at Loch Buidhe and a new 400 kV double busbar substation at Spittal, along with reinforcing existing substations at Loch Buidhe and Spittal. The upgrade is needed to increase grid capacity to enable more onshore and offshore renewable energy to be fed into the grid. BLN4 has been awarded 30% of the project cost as set out in SHET’s licence and SLU4 has been awarded 34% of the project cost as set out in SHET’s licence.
• Beauly to Blackhillock 400kV Double Circuit (BBNC) and Blackhillock and Peterhead 400kV Double Circuit (BPNC). These two projects involve constructing a new 110km 400kV double circuit overhead line between new 400kV substations to be constructed at Beauly, Blackhillock, New Deer and Peterhead. The upgrade is needed to enable more renewable energy to be fed into the grid.  BBNC has been awarded 14% of the project cost as set out in SHET’s licence and BPNC has been awarded 27% of the project cost as set out in SHET’s licence.
• Beauly to Denny 275kV Circuit to 400kV (BDUP). This project involves installing new infrastructure to enable the existing Beauly Denny overhead line’s second circuit to change operation from 275kV to 400kV. Plans involve constructing new 400kV substations at Beauly 2, Fasnakyle, Fort Augustus, and Braco West, and extend substations at Kinardochy, Errochty and Tummel. The upgrade is needed to enable energy generated by ScotWind wind farms and Coire Glas pumped storage, to be fed into the grid.  BDUP has been awarded 44% of of the project cost as set out in SHET’s licence.
• East Coast Onshore 400kV (TKUP). This project involves constructing 400kV substations at Tealing and Fiddes and extending the existing Kintore substation and construct a new 106km 400kV double circuit overhead line between the Kintore, Fiddes and Tealing substations, and refurbish and upgrade an existing 38km of overhead line to accommodate 400kV double circuit operation between Tealing and Glenrothes.  SHET’s TKUP has been awarded 20% of the project cost as set out in SHET’s licence.

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) 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.

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

Funding of energy transmission projects

Ofgem never sends money directly to TOs.

TOs raise finance for electricity transmission projects by funding upfront capital investment through a mix of debt and equity, supported by Ofgem’s RIIO price control framework.

Under RIIO, investors receive regulated returns (based on an allowed cost of capital) and the efficient costs of the assets are recovered over time through allowed revenues ultimately paid via network charges on consumer bills.

For certain strategic programmes, such as ASTI, can also allow earlier or additional funding through mechanisms such as pre-construction (PCF)/early construction funding (ECF).

This process only determines if projects are eligible for ECF/PCF. A full efficiency assessment, including of costs allowed as part of ECF, will be carried out at the full 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.

A list of the of all ASTI projects can be found on our website Decision on accelerating onshore electricity transmission investment.