A submarine cable. Illustrative image. Credit: DR
Classified from “ national importance » and now included in the British energy strategy, Xlinks, the underwater electricity cable project linking Morocco to Great Britain, is expected to cost more than expected. This is what the company leading the project, Xlinks First, said in its latest update on the project and first communication around the guidelines on construction costs and the purchase price made public on April 16.
According to the latest figures for this month of April, the company announces that the new construction cost is expected to amount to 22 to 24 billion pounds sterling (billion pounds), or between 27 and 30 billion dollars (billion $). This represents a significant increase compared to the cost initially planned and which was estimated at £20 billion, or $22 billion. In turn, the price range for purchasing electricity carried by this cable from Guelmim-Oued Noun, where it is planned to install a wind and solar farm, to Great Britain is now being revised upwards. . According to Xlinks First, this range would oscillate between £70 and £80/MWh. The new estimates thus show an increase of almost 67% compared to the price of £48/MWh previously forecast.
This cost revision announced by Xlinks First can be explained according to the company by the pressure “ significant » on the cost of all energy projects. On the one hand, “this is driven by macroeconomic effects” supports the company highlighting the impact of global events on the supply chain, which “ accounts for about 60% of the change, driven by a multitude of factors, including general increases in raw material and energy costs, as well as growing global demand for renewable energy “. On the other hand, “40% of the change concerns direct macroeconomic effects,” adds the same Source, citing interest rates as the main factors.
This update comes after the UK government increased the maximum price that offshore wind and other renewable energy projects can receive in the next Contracts for Difference (CdD) scheme auction. This program, which grants renewable energy projects a government-guaranteed price for the electricity they produce, aims to encourage continued investment in the United Kingdom, explains a press release from the British Department of Energy, also cited by Xlinks First. Under this decision, explains the authority in this press release, the maximum purchase price was increased by 66% for offshore wind projects, from £44/MWh to £73/MWh, and by 52% for offshore wind projects. floating offshore wind projects, increasing from £116/MWh to £176/MWh in anticipation of the sixth allocation next year. These increases, which are expected to help the UK meet its target of producing 48% of its electricity from domestic renewable energy projects in the first quarter of this year, are therefore directly reflected in Xlinks First prices. .
The company, which however assures that “ the impact of this has been minimal compared to the effect of macroeconomic changes » promises to continue to optimize the project as it progresses. It thus underlines that its newly revealed orientations are based on internal cost projections “ as they appear today “, the final purchase price ” to be determined by the UK Department for Energy Security and Net Zero “.
As a reminder, Xlinks First plans to build vast solar and wind farms in the Moroccan desert and transport the clean electricity thus generated to Europe via an HVDC submarine cable thousands of kilometers long. The project would provide 3.6 GW of electricity to the UK, which the company forecast could power more than seven million homes and meet around 8% of Britain’s electricity needs. So, despite economic headwinds, Xlinks has gained a lot of ground in recent months, especially after the latest recognition of its project by British authorities, attracting equity investments from Octopus Energy in the UK, as well as global giants energy companies such as Total Energies and Taqa.
However, despite mentioning it in its energy strategy, the UK government says it is still considering ” without commitment the viability and merits of the proposal to understand whether it could contribute to the UK’s energy security “. The company also had to face several uncertainties regarding the realization of this submarine cable. In addition to people jumping ship, there was also a lack of clear support from the British government for the initiative, despite the media hype from Xlinks promoters. They, through the British media, redoubled their efforts to convince the country’s authorities. These efforts continue, as indicated by James Humfrey, CEO of Xlinks First, who said the company maintains “ constructive dialogue with the UK Government and other key project stakeholders, as the company makes good progress in raising the necessary capital “.
