Apr 11, 2025
Ofgem might impose penalties on the National Grid-SP Energy joint venture due to delays in the project.
UK gas and electricity markets regulator Ofgem is contemplating penalties against the joint venture (JV) of National Grid Electricity Transmission and Iberdrola’s SP Energy Networks due to delays in finishing the Eastern Green Link 1 (EGL1) project, according to Reuters.
The JV has requested a 480-day exemption from penalties, attributing the delays to global supply and capacity challenges.
However, Ofgem pointed out that these issues were absent during the EGL1 tender and suggested that the companies should have been better prepared to manage them. EGL1 is a 2GW, 196km high-voltage direct current (HVDC) link connecting Torness in East Lothian, Scotland, with Hawthorn Pit in County Durham.
The project comprises a subsea and underground cable system linking Scotland to northeast England and is crucial for the UK’s 2030 decarbonisation goals in the electricity sector. The multi-directional design of the transmission line will improve network resilience and, once operational, is expected to supply power to two million homes.
In November 2024, Ofgem approved a £2bn ($2.57bn) funding package for the project, which commenced construction in February 2025. Completion is now projected for April 2029, 16 months later than originally planned.
This delay may trigger output delivery incentive penalties, aimed at ensuring efficient project delivery, potentially amounting to up to 10% of the project’s total expenditure. If Ofgem maintains its current position, the JV could be subject to penalties until 25 April 2030, extending beyond the present exemption that lasts until 31 December 2028.
An EGL1 spokesperson mentioned that they would present additional evidence regarding supply chain issues during Ofgem’s consultation period to bolster their case for exemption.
In March 2025, Ofgem relaxed procurement rules, allowing transmission operators to expedite £4bn in electricity grid investments.
The JV has requested a 480-day exemption from penalties, attributing the delays to global supply and capacity challenges.
However, Ofgem pointed out that these issues were absent during the EGL1 tender and suggested that the companies should have been better prepared to manage them. EGL1 is a 2GW, 196km high-voltage direct current (HVDC) link connecting Torness in East Lothian, Scotland, with Hawthorn Pit in County Durham.
The project comprises a subsea and underground cable system linking Scotland to northeast England and is crucial for the UK’s 2030 decarbonisation goals in the electricity sector. The multi-directional design of the transmission line will improve network resilience and, once operational, is expected to supply power to two million homes.
In November 2024, Ofgem approved a £2bn ($2.57bn) funding package for the project, which commenced construction in February 2025. Completion is now projected for April 2029, 16 months later than originally planned.
This delay may trigger output delivery incentive penalties, aimed at ensuring efficient project delivery, potentially amounting to up to 10% of the project’s total expenditure. If Ofgem maintains its current position, the JV could be subject to penalties until 25 April 2030, extending beyond the present exemption that lasts until 31 December 2028.
An EGL1 spokesperson mentioned that they would present additional evidence regarding supply chain issues during Ofgem’s consultation period to bolster their case for exemption.
In March 2025, Ofgem relaxed procurement rules, allowing transmission operators to expedite £4bn in electricity grid investments.