Europe | August 19, 2024

UK’s Electricity Superhighway: Progress Amidst Challenges

Set to be operational by 2029, this project will deliver 2 GW of capacity over a 436 km stretch, a nearly 30% increase in peak cross-border electricity availability.

 

Image for illustration purposes.

The UK has embarked on a significant infrastructure project with the approval of the £3.4 billion Eastern Green Link 2, an electricity “superhighway” designed to enhance power transport capacity between Scotland and Yorkshire. It is the first project to receive final funding approval from Ofgem under new rules aimed at accelerating infrastructure delivery.

Despite its scale, Eastern Green Link 2 represents only a fraction of the upgrades needed for the UK’s electricity grid to support the ongoing energy transition. National Grid has nearly doubled its investment plan to £60 billion, with almost 80% allocated to electricity networks. On a larger scale, Goldman Sachs projects that Europe will require nearly €800 billion in transmission and distribution investments over the next decade.

Two primary factors drive this massive investment need:

  1. Rising Electricity Demand: The increasing adoption of electric vehicles and heat pumps is expected to sharply elevate electricity demand.
  2. Shift in Generation Locations: Renewable energy sources, particularly wind power, are being generated in different locations than traditional fossil fuel power stations. Scotland, for instance, is generating more wind power than it can locally consume, with peak production potentially reaching 10-14 GW compared to a local peak consumption of 3 GW. An additional 10 GW of production capacity is anticipated by 2030.

 

Transport bottlenecks are a significant hurdle, compounded by the struggle to connect renewables to the grid. According to a June report by Octopus Energy, over 700 GW of potential capacity is stuck in a queue, with efforts to expedite connections yielding limited results.

Ofgem’s fast-track process for transport infrastructure provides a glimmer of hope. National Grid’s electricity system operator has five projects in this expedited lane, collectively offering 10 GW of transport capacity. Secured funding enhances the ability to procure scarce resources like cables and cable-laying ships.

Nevertheless, the ambitious investment plans announced by utilities, alongside the goal of decarbonising electricity grids, remain formidable challenges. The path forward requires not only substantial financial commitment but also strategic innovation to overcome existing barriers.

Source: Financial Times