Ofgem Considers Denying Exemption Request for National Grid’s Electric Transmission Project
Britain’s energy regulator Ofgem has cast doubt on the exemption request made by National Grid Electricity Transmission and SP Energy Networks for their electricity transmission project. The joint venture, responsible for the Eastern Green Link 1 (EGL1) project, sought a 480-day exemption from penalties related to completion delays citing global supply chain issues and capacity shortages.
EGL1, a project involving subsea and underground cables connecting Scotland to north-east England, plays a crucial role in the UK’s goal to decarbonize its electricity sector by 2030. However, Ofgem has raised concerns about the validity of the companies’ reasons for the delay, stating that the supply issues were not present during the tender process and that measures should have been taken to mitigate any potential constraints.
Approved in November with a £2 billion funding package, the construction of EGL1 began in March and is now expected to be completed in April 2029, 16 months behind schedule. This delay would incur Output Delivery Incentive penalties for four months, as per Ofgem’s regulations aimed at ensuring timely project delivery.
Failure to adhere to project timelines can result in penalties of up to 10% of the total project expenditure. The joint venture had initially been granted an exemption from penalties until December 31, 2028, and sought an extension until April 25, 2030.
Speaking on behalf of EGL1, a spokesperson mentioned plans to provide further evidence on the supply chain challenges and their impact on delivery timelines during Ofgem’s consultation period.
It remains to be seen how Ofgem will proceed with the exemption request and whether National Grid Electricity Transmission and SP Energy Networks will be held accountable for the delays in the EGL1 project.