National Wealth Fund commits £600m to Iberdrola for UK’s power grid

The UK National Wealth Fund (NWF) has committed £600m ($800.1m) to Scottish Power, a subsidiary of Iberdrola, to support the upgrade of the UK’s power grid.

The investment is part of a larger £1.35bn ($1.8bn) financing package to bolster the country’s electricity infrastructure and facilitate the transition to clean energy.

The remaining financing is being provided by the Bank of America as sole debt arranger, along with Bank of America, BankInter, BNP Paribas, Caixabank, Lloyds Bank, NatWest and Banco Sabadell.

The funding will provide Scottish Power with the required capital to deliver seven transmission grid upgrade projects.

These projects will play a significant role in integrating more renewable energy into the system, reducing congestion costs, and lowering electricity prices for both businesses and consumers.

The upgrades are set to stimulate growth across the UK, supporting hundreds of jobs in the process.

National Wealth Fund CEO John Flint stated: “Upgrading the power grid is one of the most significant barriers to decarbonising our economy, and the scale of investment needed to address this challenge is substantial.

“Our financing will support some of the most vital grid upgrades that 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 for businesses and consumers.”

The National Energy System Operator (NESO) has projected that up to £60bn is needed by 2030 to meet the objectives of the UK government’s Clean Power 2030 Action Plan, which underscores that substantial investment is required to transition to a clean power system.

Scottish Power’s upgrades, backed by NWF’s funding, include the development of the Eastern Green Link (EGL) projects 1 and 4.

These interconnectors, stretching from Scotland to the northeast of England and Norfolk, are designed to scale up the UK’s capacity to transport clean energy efficiently.

NESO has highlighted EGL1 as a pivotal project for achieving the Clean Power 2030 goals.

Considered as a major constrained transmission boundary in Great Britain, its enhancement will address a significant bottleneck in the UK’s clean energy landscape, allowing for more effective redistribution of surplus renewable energy to match rising demand forecasts.

ScottishPower CEO Keith Anderson stated: “Today’s announcement is a welcome step forward in the delivery of the government’s Clean Power 2030 pathway.

“Working together to drive forward these critical investments is an important catalyst for economic growth, as we make progress in bringing more renewables onto the system to meet the increasing demand for electrification.”

In addition to the interconnectors, the investment will fund grid upgrades at five strategic locations in Scotland.

These upgrades include constructing new substations, reconfiguring overhead lines and improving transmission cables to boost both capacity and resilience of the power network.