24/11/18
Q&A: If you break it down, it is tried, tested: Xlinks
Q&A: If you break it down, it is tried, tested: Xlinks
London, 18 November (Argus) — Start-up developer Xlinks plans to connect 11.5GW
of Moroccan wind and solar capacity, and a 5GW battery energy storage system,
with the UK through two 1.8GW sub-sea cables, an ambitious project using "tried
and tested" technologies. Argus spoke to chief executive James Humfrey about the
project's timeline and progress. Edited highlights follow: For those who may not
know, can you describe the Xlinks project? We are excited to bring clean energy
from the Moroccan Sahara to north Devon. This will be a transformational surge
of reliable, clean power, and we will bring it during the hours the UK needs
electricity most, supporting Britain's ambitions to decarbonise, which you see
in the news and most recently in Baku [at Cop 29]. The project will benefit the
broader economy by displacing expensive, volatile imported gas and reducing
wholesale power prices. It will also help balance the grid, feeding into the
south of England, which has very high demand without significant grid upgrades.
The independent Afry consultancy group calculated the project's socioeconomic
benefit to be at least £17bn. It will also offer a reliable wind and solar
energy supply, with nearly two times the solar radiation factor. [Moroccan] wind
generation is slightly negatively correlated to UK output, helping overcome the
dunkelflaute [dark lull] scenario, which is the advantage of moving electrons in
time and space. This reliability complements the UK domestic renewables
pipeline, primarily offshore and onshore wind, while aligning with Morocco's
green export ambitions. Can you provide our subscribers with an update on the
project, its timeline and any key milestones? It will be ready next decade. We
are supporting the domestic supply chain through XLCC's HDVC cable expansion in
Hunterston, Scotland . And we are set up to rapidly mobilise and deliver the
project. We have a strong team of people who have worked on these projects
before. For example, our HVDC cable team, led by Nigel Williams, built the North
Sea Link between Blythe and Norway, tackling more complex problems than we face.
They've built lots of interconnectors and know how to do it. I realise that
Xlinks holds connection agreements for two 1.8GW connections with National Grid.
Has Xlinks progressed with other national authorities, particularly those
through which the cable will transit? We have worked with the Moroccan
government, including [plans] around the land and conducting one of the world's
longest [wind and solar] measurement campaigns. So, we've got excellent resource
data regarding wind and solar energy. We have already obtained permits from [the
transit countries] for route surveys and we have vessels in the water at the
moment, undertaking geophys and geotech. Next year, we'll apply for the final
installation permits, based on the environmental studies and other benefit data.
We've taken a longer but less challenging route, with lower water depths, making
it technically easier. It is, for example, less deep than the North Sea Link,
which was a deliberate technical decision. The previous government marked Xlinks
as a project of national significance . Do you expect any change under the new
administration, and in what way has this classification affected progress ? No,
it hasn't affected us. We completed the public consultations over the summer and
are about to submit our DCO [development consent order] application, which is a
large amount of work. We have finished that, with no changes [since the change
of government]. It is probably worth saying that our land route in Devon is all
underground. We don't have any pylons, which is much less intrusive. Has this
improved Xlink's ability to generate capital interest? Is there any specific
attempt to generate interest from sovereign wealth funds or other institutional
investors? We've been fortunate that our blue-chip investors [Octopus,
TotalEnergies, Taqa, GE Vernova and Africa Finance] are very keen on the
project, and it matches their strategic plans. They want to go all the way
through to construction. We may have further investors at the close, but they
are our primary focus right now. Do you have an update on the contract for
difference (CfD) process? Xlinks has published a desire to reach a £70-80/MWh
strike price at 2012 prices. Yes, that remains our guidance. We are working
through the CfD and Treasury Green Book process with the Department of Energy.
It is quite a structured process. How do you reconcile that strike price with
far lower prices reached in recent allocation rounds (AR), namely AR6, although
the technologies are not directly comparable? Firstly, in the NESO report, the
forecasts for offshore wind [prices] rise quite a bit as they move out to 2030,
so AR6 is a reference, but there are figures in the NESO report that are above
our £70-80 [strike price]. Importantly, it is not a comparison between apples
and apples. Our profile is completely different from that of offshore wind. We
offer firm power for 19 hours a day, optimised for peak hour demand and very
high reliability, akin to nuclear. Given our flexibility, we can also provide
various other services, including frequency and even black start services. The
development contains ambitious plans for vast-scale battery storage of up to
5GW. Given the difficulties faced by several European battery manufacturers, do
you foresee any significant supply chain challenges? We have an ongoing battery
procurement process, and the invitations to tender have gone out. We've had good
interest at competitive levels and are confident in it. We are not seeing any
challenges, and it's going very well. And what does the flexibility and
opportunity a battery offers at this scale mean for a project like Xlinks? It
allows us to optimise during the diagonal shift of solar power, when the UK grid
needs us most. Additionally, it gives us a sub-second response, giving us
flexibility and opening the door to the frequency services we mentioned earlier.
It is very valuable and allows us to provide benefit at scale and at speed. Does
the UK's ambition, corroborated by NESO's latest report to become a net power
exporter beyond 2030, change the project's economic viability or impact it in
any way? No, the report does not change our viability or where we fit in the
future system. In fact, it further emphasises the part we can play. If you look
at demand, it is very likely to increase again by another 23pc in 2030-35, and
considering our generation profile, producing in periods of low domestic wind
production, [it fits well]. Additionally, when we compare it to other sources of
clean [baseload] generation, such as nuclear, you see solar, wind and
transmission projects have extremely good predictability of outcome and a
shorter delivery timeline. Xlinks has stated an ambition to investigate a
Morocco-German link. What might this look like? Would it involve an entirely new
generation facility, too? First, the Morocco-UK power project is very much our
first priority. We're focused on that and we think bringing this to a financial
close will help unlock a range of projects across the industry. And demonstrate
the art of the possible. We do have some early feasibility work going on. It
would be entirely separate, and that would include generation as well. Do you
have any closing thoughts that you would like to leave our subscribers? What is
different about this is its scale. But when you break it down, these are all
tried-and-tested technologies. There is nothing unusual about them, whether wind
and solar in Morocco or large-scale batteries. We are not an interconnector, but
long-distance transmission has a long history in the UK. When you look at the
water depths, it is less complicated than North Sea Link. It has all been done
before, in its parts — just the scale is different. By Daniel Craig Send
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