National Wealth Fund backs major grid upgrade in the north of Scotland with £800m guarantee for SSEN Transmission

The guarantee is being provided against a £1bn facility with participation from a syndicate of banks, led by Bank of America, as the National Wealth Fund Coordinator and Sole Bookrunner, and including BBVA, HSBC UK, JP Morgan, Lloyds, MUFG, NatWest and Banco Santander. The four projects are set to create or support around 3,400 jobs. The National Wealth Fund guarantee enables SSEN Transmission to access longer-dated bank loans that better align the debt profile with the life of the assets being financed.

The Government’s Clean Power 2030 Action Plan states the need for the UK’s electricity transmission network to double its infrastructure build-out by 2030, compared to the previous decade, driven by the rapid growth in renewable energy generation. A substantial share of wind generation is situated in the north of Scotland transmission network, which has the capacity to meet a fifth of Great Britain’s demand for clean power.

The financial guarantee announced today is ringfenced to support four SSEN Transmission projects: Skye Reinforcement, Argyll and Kintyre 275kV Strategy, and Orkney Connection, along with the Eastern Green Link 2 (EGL2) subsea High-Voltage Direct Current (HVDC) project, a jointly developed venture. These projects will see Orkney connected to the transmission grid for the first time, while the transmission infrastructure serving communities including Skye, Fort Augustus, Argyll and Kintyre will be significantly strengthened.

EGL2 is the largest ever single investment in the UK transmission system and will play a critical role in delivering the UK and Scottish governments’ clean power and energy security targets - supporting thousands of jobs and boosting local and national economies.

With Ofgem predicting an investment requirement of up to £70bn in the transmission grid between now and 2030 to achieve energy security and clean power, remove constraint payments and unlock economic growth, it is crucial to widen the pools of capital available. The National Wealth Fund’s financial guarantee offers longer-dated lending, aligning more closely with the life of grid assets and ensuring the swift progression of these four critical upgrade projects, which have been independently assessed as required by both the independent National Energy System Operator (NESO) and the energy regulator, Ofgem.

Chancellor of the Exchequer, Rachel Reeves, said:

“We are investing in grid upgrades and homegrown, clean energy to get us off the global energy price rollercoaster, creating thousands of new, skilled jobs in the process, and boosting growth. This builds on our action at the Budget to take an average £150 off energy bills. This backing from the National Wealth Fund will help deliver the infrastructure upgrades needed to capitalise on Scotland’s renewable energy production and help strengthen the energy security of the whole UK.”

Energy Secretary Ed Miliband said:

"We are supporting 3400 good jobs for Scotland, reversing years of underinvestment in our energy grid to connect more clean homegrown power to get bills down. Our clean power mission is about growth, jobs and energy security – and this £800 million guarantee from the National Wealth Fund for Scotland’s electricity grid delivers on all three.”

Douglas Alexander, Scottish Secretary, said:

"This £800 million guarantee is a major vote of confidence in Scotland's leading role in delivering Britain's energy transition. It shows the strength of the U.K.’s support for Scotland as this National Wealth fund guarantee will support up to 3,400 jobs, strengthen our energy security, help reduce bills, and ensure the renewable power generated in Scottish communities can reach homes and businesses across the country." 

Oliver Holbourn, CEO, National Wealth Fund, said:

“The UK is a leader in renewable energy generation, and to help consumers and businesses achieve greater benefits vital grid upgrades need to move forward. Our financing unlocks private capital to support four critical grid projects in the north of Scotland, helping to ensure the clean energy produced can be connected efficiently to consumers.”

Barry O’Regan, SSE’s Chief Financial Officer, said:

“This new Bank Facility supported by the National Wealth Fund financial guarantee provides an excellent source of funding diversification, and with a three-year availability window helping to manage liquidity for SSEN Transmission. It demonstrates the importance of grid upgrades both in achieving the country’s clean power and energy security goals, and in unlocking economic growth throughout the nations and regions of Britain.”

Jeff Tannenbaum, Head of EMEA Corporate and Investment Banking, Bank of America said:

“Bank of America is proud to support the National Wealth Fund on this landmark transaction. This strategic financing solution will help SSEN Transmission deliver essential upgrades to Scotland’s grid, strengthening resilience and connectivity for decades to come.”