22 June 2021
NeuConnect’s updated UK interconnector licence confirmed by Ofgem as project continues to make good progress
NeuConnect – a vital new electricity interconnector between the UK and Germany – has been granted an updated UK Interconnector Licence by regulators Ofgem, keeping the project on-track to reach financial close this year.
NeuConnect is a privately-financed £1.4bn interconnector that will create the first direct link between UK and German electricity networks. By connecting two of Europe’s largest energy markets for the first time and integrating renewable energy sources in Germany and the UK, NeuConnect will allow 1.4GW of electricity to flow in either direction, helping deliver a more diverse, resilient and sustainable electricity supply, while also helping to lower costs for consumers.
NeuConnect was first awarded an interconnector licence in 2018 but, as a ‘new entrant’ to the energy market and one of the very first interconnectors to be delivered using project-finance, it was also necessary for the project to seek ‘variations’ to Ofgem’s existing ‘Cap and Floor’ regulations. In May 2020 Ofgem approved changes to the existing ‘Cap and Floor’ regulations to enable the delivery of project-financed schemes like NeuConnect – in line with this, NeuConnect’s UK Interconnector Licence has now been updated by Ofgem to include these important regulatory changes.
News of NeuConnect’s UK Interconnector Licence builds on a period of strong progress for the project over the past 12 months including:
- Securing planning approval for UK onshore works – the approval will allow the construction of a converter station and onshore cabling works at the Isle of Grain in Kent
- New analysis showing that NeuConnect will deliver significant carbon benefits, with the project helping deliver a 16 million tonne reduction in CO2 – the equivalent of planting 28 million new trees or removing 400,000 cars off the road in a year (further details here)
- A £1bn+ procurement programme nearing completion following significant market interest – major contract awards are expected in the next few months
- NeuConnect included by the German Parliament as one of a series of projects that will form Germany’s network expansion plans (further details here)
- The UK Government’s Investment Minister highlighting NeuConnect as one of the “top notch green investments” supporting the UK’s net zero ambitions (further details here)
Building on this strong progress, NeuConnect is now targeting reaching financial close this year, allowing major construction work on the new link to begin in 2022.
NeuConnect CEO Christophe Vanhove said:
“Securing an updated UK interconnector licence by Ofgem is another important milestone in the delivery of this vital new energy link. With all major planning and procurement processes finished or nearing completion, NeuConnect continues to make strong progress as we target reaching financial close this year and the start of construction in 2022.”
NeuConnect is being developed by an international, experienced consortium that includes Meridiam, Allianz Capital Partners on behalf of Allianz Group and Kansai Electric Power, with the project also supported by Greenage Power and Frontier Power as developers. The key partners bring a proven track record in delivering large-scale energy infrastructure.