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.
The project would see 3.6GW of electricity delivered to the UK, which Xlinks First claims could power over seven million homes and meet around 8% of British electricity needs. The UK government has named the plan a nationally significant infrastructure project.
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.
That rise came after offshore wind developers abandoned the UK’s last green energy auction, saying the price on offer for electricity was unsustainable amid economic pressures.
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.
Humfrey is a former Shell executive who was appointed as CEO of Xlinks First earlier this year.
The parent company, Xlinks, is exploring opportunities for similar cable links to other countries, including Germany.
Despite the economic headwinds, Xlinks has gained considerable traction in recent months, attracting equity investments from Octopus Energy in the UK, as well as global energy giants TotalEnergies and the Abu Dhabi National Energy Company.
