Cost of Morocco-UK green power mega-project jumps by billions
Rising cost of electricity from project mirrors similar increase seen in offshore wind, says developer
A plan to power seven million UK homes by piping green energy from the Sahara Desert has jumped in price by billions of dollars amid economic pressures, while the cost of electricity from the project has also risen dramatically.
Xlinks First, the company behind the plan, announced that the cost of delivering the project is now £22-24bn ($27-30bn) – up from around £20bn previously.
The cost of the electricity the project will generate has also risen to an estimated £70-80/MWh, an up to 67% increase on the previous estimate of £48MWh.
Xlinks First is planning to build vast solar and wind farms in the Moroccan desert and transport the clean electricity generated to Europe via an undersea HVDC cable thousands of kilometres long.
James Humfrey, CEO of Xlinks First, said the rising cost of power from the project is “broadly in line with what we are seeing in the wider market, and is caused by the impact of macroeconomic factors.”
Xlinks First pointed to the UK government raising the price of electricity for offshore wind projects from £44/MWh to £73/MWh, a 66% increase.
Xlinks First said around 60% of the price increase in its project has been driven by supply chain pressures, including increases in raw material and energy costs. The other 40% relates to direct economic pressures, particularly rising interest rates.
The final price of electricity for the project will be determined by the UK’s Department for Energy Security and Net Zero.
Humfrey said Xlinks First continues to have “constructive dialogue” with the UK government and other key stakeholders in the project, as the company makes “good progress” on raising the necessary capital.