UK’s National Wealth Fund seals £1.35bn loan to build North Sea power cables

The UK’s National Wealth Fund and several banks are handing energy firm ScottishPower a £1.35 billion loan to upgrade the power grid between Scotland and England.

The financing package will help pay for work on several major offshore cabling projects carrying electricity from wind farms in Scotland into England, via the North Sea.

The Eastern Green Link (EGL) project one will carry electricity from Torness in south-east Scotland to Hawthorn Pit substation in County Durham.

Another line, the EGL four, will carry power from Fife to Lincolnshire. Chancellor Rachel Reeves said the project would help “bring down bills, put more money in working people’s pockets and enable businesses to expand”.

About £600 million of the funding is coming from the National Wealth Fund, a publicly-owned investment vehicle set up by the Labour government last year.

The rest is coming from a series of banks, led by Bank of America and including BNP Paribas, Lloyds and NatWest.

Keith Anderson, chief of ScottishPower, said working together with the financing organisations is “an important catalyst for economic growth, as we make progress in bringing more renewables onto the system”.

The financing will also help pay for grid upgrades including new substations and overhead lines in Scotland.

The UK’s National Energy System Operator has estimated that up to £60 billion of investment is needed over the next five years to meet its clean power goals.

John Flint, CEO of the National Wealth Fund, said the projects will “have a major impact on the transition to a renewables-based electricity system and help address the grid constraints that make electricity more expensive”.