The U.K.’s National Wealth Fund is investing more than £600 million ($797 million) in the country’s grid as part of a broader funding plan to bolster infrastructure needed for the clean-energy transition.
The money will be used to upgrade the electricity network to accommodate the expansion in coming years of renewable power generation, including wind farms in Scotland, according to a statement on May 8. The funding will go to Spanish utility Iberdrola through its subsidiary, ScottishPower, which operates across electricity transmission and distribution in the country.
The U.K. is aiming to have a clean power grid by 2030, and building out infrastructure will be key to getting green power to where it’s needed most. The government is looking to the National Wealth Fund to help raise capital for upgrading the power network.
The urgency for grid investment to keep up with the roll out of renewables was highlighted by last month’s blackout in Spain and Portugal, which left around 50 million people without power. The Spanish government is still investigating the exact cause of the outage but data from BloombergNEF points to underinvestment in grids compared with renewable generation.
ScottishPower is building a key link to transport of electricity from wind farms Scotland to the rest of the UK. The first phase of the high voltage electricity “superhighway” could cost £2 billion.
The latest move by the National Wealth Fund is part of a broader £1.35 billion package arranged by Bank of America, which is acting as the sole debt arranger. Other lenders involved in the financing include Bankinter, BNP Paribas, CaixaBank, Lloyds Banking Group, NatWest Group and Banco Sabadell.
