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Cost of Xlinks interconnector could reach USD 30 bn: UK-based investment company Xlinks First has updated guidance on construction costs and the strike price for the Morocco-UK interconnector which will now cost an estimatedGBP 22-24 bn (USD 27-30 bn), according to a statement. The company also adjusted the project’s strike price to an estimated range of GBP 70-80 per MWh based on 2012 pricing. The project was originally projected to cost USD 18 bn.
SOUND SMART- What is the strike price? A strike price is the predetermined price at which the holder of an option can buy or sell the underlying asset when the option is exercised. The strike price typically refers to the price at which a renewable energy project will sell its generated electricity to the government or a utility company. It is usually agreed upon in advance, and it plays a crucial role in determining the project’s profitability and viability.
Behind the numbers: About 60% of the cost increase is attributed to supply chain disruptions and 40% is due to direct macroeconomic effects, the statement notes. The price adjustments are not expected to interfere with the project’s development.
The numbers could still shift: These figures are based on internal projections from Xlinks First, and the final strike price will be determined by the UK’s Department for Energy Security and Net Zero.
About the project: Backed by the Abu Dhabi National Energy Company (Taqa) and TotalEnergies, the interconnection project will comprise a 3.8k km high-voltage direct current (HVDC) subsea cable transporting 3.6 GW of renewable energy — nearly 8% of the UK’s current requirements — from a 10.5 GW solar and wind farm in Morocco’s Guelmim-Oued Noun region to Britain’s power grid in Devon. It will also include a 20 MW battery storage system. Xlinks was scheduled to begin construction on its interconnection project last April.
Xlinks is considering a German expansion: Xlinks may be extending the network to Germany as well. The company is yet to decide whether to integrate Germany’s electricity network into the project, stick with the original plan of solely a UK connection, or scrap the plan altogether and connect only to Germany.
