“Two European Union-backed projects to export French electricity to Britain via subsea power cables have been thrown into doubt after officials in France raised concerns about the impact of Brexit on their profitability.
The projects to build 1,000 megawatt and 1,400 megawatt interconnectors running beneath the English Channel between Normandy to Hampshire and Devon [Budleigh Salterton] are a key plank of UK plans to ensure reliable future electricity supplies.
Once built, together they will supply Britain with the equivalent of the output of two Sizewell B nuclear power stations, enough to meet the needs of 2.5 million homes. The projects will cost more than £1 billion to build, for which they have received €13 million of EU funding. The links could also be used to export UK electricity to France.
However, Clive Moffatt, an energy consultant, said that there was “definite uncertainty” over how Brexit would affect the cost of importing or exporting electricity. He said that developers were increasingly concerned about possible trade restrictions that might make it “commercially unviable” to build the links. “These issues have not been resolved,” he said. “It’s going to take a while.”
A final decision was due by the end of December, with contracts awarded for the first 240km link to Fareham near Portsmouth, known as IFA2, by its developers, National Grid and RTE, the French electric grid operator. But National Grid has confirmed that a final decision on the £590 million scheme has been delayed until next year, after French officials expressed concern about the implications of Brexit for the terms of the project.
CRE, the French energy market regulator, said this month that it was launching a consultation on legal issues related to Brexit. “The approval of the IFA2 project will be the subject of a specific decision in January 2017,” CRE said.
National Grid said the IFA2 project was still expected to proceed, but it acknowledged that the French regulator had asked for more time to reach a decision.
“The UK vote to leave the EU in June 2016 happened after the incentive regulation application that RTE made for IFA2 and so it is understandable and reasonable that CRE, given its responsibilities, would now consult stakeholders on how Brexit could impact the regulatory incentives for the project in the coming years.” The IFA2 interconnector was due to enter operation by 2020.”
Meanwhile, a 220km scheme, FAB Link, will link France with Budleigh Salterton in east Devon via the Channel island of Alderney. It is due to enter service by 2022.
James Dickson, project director for FAB Link at Transmission Investment, the scheme’s UK developer, expressed confidence that the scheme would continue, but he acknowledged that Brexit had created an “unprecedented situation with all sorts of uncertainties”.
He said that the key question was whether or not the UK would remain inside the EU common energy market and, if so, what new terms would be introduced governing the cross-border trade in electricity. These will determine the profitability of the investment.
Mr Moffatt said that the British government had not yet reached a final decision.
Officials at the Department for Business, Energy and Industrial Strategy have identified the lack of legal clarity around interconnectors as one of their biggest challenges and the matter has been raised in meetings with ministers, The Times understands.
Mr Dickson played down the concerns, saying: “We expect there to be little impact. It’s business as usual.”
Source: The Times (paywall)
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