EMEA: Allianz joins Meridiam in major interconnector project

13 February 2018 - 12:00 am UTC

Allianz is understood to have joined Meridiam as a co-sponsor of NeuConnect, a planned subsea electricity interconnector linking the UK and Germany.

According to a filing with Germany’s national competition regulator Bundeskartellamt, the German insurer last month had requested to acquire a 26.2% stake in the company. Allianz and Meridiam declined to comment on the deal.

Allianz and Meridiam are expected to financially support what will be the first electricity interconnector between Germany and the UK.

The NeuConnect consortium also includes Greenage Power and Frontier Power, backed by former National Grid directors, as operators specialised in the power sector.

The project is expected to have a capacity of 1.4GW and a total cable length of 650km.

According to 2017 estimates, Its cost is expected to amount to some GBP 1.5bn, and the new infrastructure should come into operation during 2022.

The project received a final interim project approval by UK energy regulator Ofgem on 9 January 2018.

Proposed new interconnector projects which also received Ofgem’s approval last month were Grid Link, a 1.4GW interconnector running between the UK and France; and North Connect, a 1.4GW interconnector joining Scotland and Norway.  

In its decision, Ofgem said that “these three interconnector projects are likely to be in the interests of GB consumers” as they “represent a 4.2GW increase in GB electricity interconnector capacity”.

For this reason, it decided to grant the GridLink, NeuConnect and NorthConnect projects “a cap and floor regime in principle”. As previously reported, under the cap and floor mechanism, the owners of the interconnectors would agree a cap and floor price at which they would supply energy to the grid over a 25-year period. This would be reviewed every five years.

If the market price fell below the floor level, the owners would be paid the difference through an addition to consumer bills. If the market price were to rise above the pre-agreed cap, the difference would be returned to consumers through the National Grid.

Grid Link is being developed Elan Energy and iCON Infrastructure.

North Connect is being developed by a consortium of Lyse Produksjon, E-CO Energi, Vattenfall and Agder Energi.

Ofgem had provisionally greenlighted the three projects in June 2017.