ScottishPower and National Grid will pay a record £158 million compensation to consumers after wind farms were paid to switch off because of delays to a new subsea cable to export power from Scotland to Wales.
The regulator said the delays made it hard for renewable energy generators in Scotland to export green electricity to England and Wales from wind farms and led to higher costs to households as alternative sources of energy were used to plug the gap.
In the first two months of 2020 alone about £69m was paid out in compensation to energy firms for turning off turbines when the network was unable to cope with the power they produce.
The £1.2 billion Western Link runs from Ayrshire via a 239-mile subsea cable to the Wirral peninsula on Merseyside and then follows a 20-mile stretch underground to North Wales.
It can carry more than 2.2 gigawatts of electricity or enough to power two million homes and was meant to be up and running by late 2015.
The costs of building it are recouped from energy bills through regulated charges set by Ofgem, which stipulated that the cable must start up by March 2017 at the latest.
Electricity did not start flowing until December 2017. It did not become fully operational until late 2018 and continued to suffer faults.
The regulator said National Grid Electricity Transmission and Scottish Power Transmission were ultimately responsible for the lengthy delays to the project, which was finally completed in June 2019.
Ofgem said £15 million of the fine will be paid into its redress fund for vulnerable energy customers, which is run by the Energy Saving Trust.
The remainder will go towards reducing system charges, which will be passed on to consumers through lower electricity bills.
Ofgem added that consumers have already benefited by a further £100 million returned by the companies and used to lower system charges after they delivered the project under-budget.
Cathryn Scott, Ofgem’s director of enforcement and emerging issues, said: “To deliver the UK’s climate change ambitions, more of our electricity will come from renewable generation.
“This is already happening, with offshore wind and other projects in development.
“Innovative projects such as the Western Link are vital in moving clean energy from where it’s produced to where it’s needed.
“However, they must be delivered on time and to the standards agreed.
“Where they are not, as the energy regulator, we will hold the licensees accountable.”
National Grid and Scottish Power said: “Western Link is an example of the innovative infrastructure and bold vision required for Britain to reach its net zero goals, delivering green energy to where it’s needed and enabling a more efficient electricity system.
“Since becoming operational it has allowed the transfer of renewable electricity to supply the demand of more than two million homes every year.
“It’s expected to continue to deliver for decades to come, boosting the UK’s net zero ambitions at the same time as saving money for consumers.
“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.
“The package includes a £15 million payment into Ofgem’s redress fund and £143 million being returned to consumers in payments through mechanisms outlined in the price control, ensuring National Grid Electricity Transmission and Scottish Power Transmission will not benefit from the delay by resetting the allowances received to equal actual expenditure.”
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