The £2.4 billion ($2 billion) NeuConnect subsea electricity cable project, the first direct power link between the United Kingdom and Germany, has reached financial close.
The project is privately owned by Meridiam of France, Allianz Capital Partners of Germany, and Japan's Kansai Electric Power.
Participating banks and financial institutions are Bank of China, SMBC, SMTB, BayernLB, Caixa, CIC, DZ Bank, European Investment Bank, Japan Bank for International Cooperation, Lloyds, Mizuho, Nippon Life, Norinchukin, Lloyds, Allied Irish Bank, NordLB, Rabobank, Société Générale, Shinsei, Siemens Financial Services through Siemens Bank, Talanx Group represented by Ampega Asset Management, and UK Infrastructure Bank.
The project will see two new substations built, on the Isle of Grain at the mouth of the River Thames, and in the Wilhelmshaven region in Lower Saxonia, northern Germany.
It will comprise over 725 kilometres of cables, 700 kilometres of which will subsea, travelling through British, Dutch and German waters. Work will start on site in the UK and Germany later this year, with the laying of subsea cables and building of substations starting in 2023.
Operation is scheduled to start in 2028. Up to 1.4 gigawatts of electricity will be able to flow in either direction between the UK and Germany.
“NeuConnect is an iconic project that will significantly contribute to the decarbonization of electric power while ensuring security of supply," says Mikio Matsumura, senior executive vice-president of Kansai Electric Power. "We are pleased to be working with such strong partners, and are committed to supporting the project with our own technological expertise cultivated over a long history as a major power utility in Japan. As an organization, Kansai has set clear and proactive goals, such as those detailed in our Zero Carbon 2050 strategy and our Medium-Term Management Plan, in order to help lead the global shift towards clean energy and a zero-carbon society.”
Given the project’s environmental objectives and commitment to sustainable development, NeuConnect’s financing framework is considered by Moody’s ESG Solutions as aligned with the four core components of the Loan Market Association’s Green Loan Principles 2021.
The UK has large and growing offshore wind capacity, and is viewed as an important partner by Germany, allowing the two energy grids to share excess power and ensuring that renewable energy is not wasted. The deal comes at a time when boosting energy security is high on the agenda for Europe as it seeks to move away from Russian gas supplies.
“In view of the continued strong expansion of renewable energies in the future and the associated need to strengthen the grid infrastructure, NeuConnect is making a very significant contribution to the success of the energy transition," says Christoph Holzer, managing director at Allianz Capital Partners, one of the world’s largest infrastructure investors.