Ofgem may penalise National Grid-SP Energy JV for project delays
UK gas and electricity markets regulator Ofgem is considering imposing penalties on the National Grid Electricity Transmission and Iberdrola's SP Energy Networks joint venture (JV) for delays in the completion of the Eastern Green Link 1 (EGL1) project, as reported by Reuters.
The JV requested a 480-day penalty exemption for the delays, citing global supply and capacity issues.
However, Ofgem noted these challenges were not present during the EGL1 tender and said that the firms should have planned to manage them.
EGL1 is a 2GW 196km long high-voltage direct current (HVDC) link connecting Torness in East Lothian, Scotland, with Hawthorn Pit in County Durham.
The project includes a subsea and underground cable system linking Scotland to northeast England. It is vital for the UK's goal of decarbonising its electricity sector by 2030.
The multi-directional design of the transmission line will enhance network resilience and once operational, it will power two million homes.
In November 2024, Ofgem approved a £2bn ($2.57bn) funding package for the project, which began construction in February 2025.
The completion of the project is anticipated for April 2029 - 16 months behind schedule.
This delay could result in output delivery incentive penalties, designed to ensure efficient and timely project delivery, amounting to up to 10% of the project's expenditure.
If Ofgem's current stance holds, the JV could face penalties until 25 April 2030, extending beyond the current exemption until 31 December 2028.
An EGL1 spokesperson stated they would present further evidence on the supply chain issues during Ofgem's consultation period to support their case for exemption.
In March 2025, Ofgem relaxed procurement rules, allowing transmission operators to fast-track £4bn in electricity grid investment.
"Ofgem may penalise National Grid-SP Energy JV for project delays" was originally created and published by Power Technology, a GlobalData owned brand.
The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
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