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Renewable energy offers the opportunity for any country to produce fossil-fuel free domestic electricity. Yet around the world, governments are casting the net wider.
Look at Xlinks. The £20bn project aims to bring green electricity from Morocco to Devon. It has yet to secure the UK contract for difference (CFD), required for UK renewables and gain financing. But the government last month designated the project of “national significance”. That will streamline planning.
Still, crossing Moroccan, Spanish and French waters with 3,800km of undersea electric cable sounds odd. Surely the UK is best served by producing its own wind power, or importing electricity from neighbouring countries?
The argument for projects such as Xlinks is that renewable energy production in extremely sunny or windy places creates big cost advantages. In Morocco, a combined solar and wind plant such as the one Xlinks plans to build, would deliver power at £15/MWh. A recent UK wind auction attracted no bidders at £60/MWh in today’s prices.
Moreover, the UK’s wind turbines mostly spin at the same time. During calm weather, the network needs other sources of electricity to kick in. That piles on additional costs for networks, storage and back-up capacity. The UK’s Climate Change Committee, a government adviser, estimates that so-called “integration costs” add a further £10/MWh. Costs rise as the proportion of renewables in the grid increases.
The UK’s assessment therefore hinges on the cost of transporting electricity from the Sahara. Will Xlinks’s extra-long cable eliminate the price differential between Moroccan sun and Scottish wind? It accounts for nearly half of project capex and would lose an estimated 15 per cent of its electricity en route. The calculation is complicated by the fact that the gap would shrink if capital expenditure for renewables falls over time.
Even so, savings are considerable. This suggests long interconnectors will be an enduring facet of the energy transition. China has already built 22 ultra-high-voltage above-ground megalinks.
That is good news for African and Middle Eastern economies, along with the cable companies planning projects that should benefit from them.
