GLASGOW-BASED ScottishPower and the National Grid are to pay a £158m fine after after a two-year delay to a high-voltage cable project that allows the export of renewable energy from Scotland.

The energy firms have agreed to pay the penalty package after an investigation by the industry regulator which is expected to lower household bills.

The cable issues meant that many of Scotland’s windfarms were paid to turn off on windy days because there was no way to transmit the renewable electricity to areas of high energy demand in the south of the UK.

Households had faced a huge hike in their energy bills because of subsidy payments incurred because of the issues over the cable project.

In the first two months of 2020 alone some £69m was paid out in compensation to energy firms for turning off turbines when the network was unable to cope with the power they produce.

The high-voltage submarine power cable taking renewable energy from to homes and businesses around England and Wales was supposed to help to cut those constraint payments by allowing energy to be exported south of the border and keeping the turbines on more regularly.

Between 2010 and 2020, the constraint payments amounted to £649m, with a record £130 million in 2019 alone.

The project, which was billed at the time as the world’s largest subsea interconnecting power cable, was originally due to be completed in late 2015 but electricity did not start flowing through until December 2017. It did not become fully operational until late 2018 and had been plagued with faults ever since.

Italian telecom systems firm Prysmian, which manufactured cables for the £1 billion Western Link project, said in January, 2020 that it had failed. It came back into operation on February 7 but it was the third failure in three years.

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After the outage of the 262-mile long Western Link which connects Scottish wind farms via Hunterston to England and Wales the energy regulator Ofgem launched an investigation into National Grid and ScottishPower, the Glasgow-based arm of Spain’s Iberdrola, over the subsea power cable's delivery and operation.

The regulator said that found that National Grid Electricity Transmission and Scottish Power Transmission were ultimately responsible for the lengthy delays to the Western Link project, which was finally completed in June 2019.

It said the delays made it hard for renewable energy generators in Scotland to export green electricity to England and Wales from windfarms and led to higher costs to households as alternative sources of energy were used to plug the gap.

Ofgem said £15 million of the fine will be paid into its redress fund for vulnerable energy customers, which is run by the Energy Saving Trust.

The remainder will go towards reducing system charges, which will be passed on to consumers through lower electricity bills.

Ofgem added that consumers have already benefited by a further £100 million returned by the companies and used to lower system charges after they delivered the project under-budget.

Cathryn Scott, Ofgem's director of enforcement and emerging issues, said: "To deliver the UK's climate change ambitions, more of our electricity will come from renewable generation.

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"This is already happening, with offshore wind and other projects in development.

"Innovative projects such as the Western Link are vital in moving clean energy from where it's produced to where it's needed.

"However, they must be delivered on time and to the standards agreed.

"Where they are not, as the energy regulator, we will hold the licensees accountable." The Western Link runs from Ayrshire to north Wales via a 239-mile under-sea route to the Wirral peninsula and a 20-mile stretch underground. It is designed to carry 2.2 gigawatts of electricity, enough to power four million homes.

Electrical links such as this are seen as being key to helping the Scotland and the UK reach its net-zero emissions targets.

Ofgem said that delays to the project were found to be down to supply chain issues with the manufacturing processes, installing the cables and commissioning tests.

The GMB trade union, has previously said that the payments are creating a "subsidy sandwich for a renewables industry" that is treating bill payers with contempt.

The cable started at less than full capacity in 2017 after problems during construction. The line has suffered six faults since then, taking it out of action for months at a time till March, 2020.

Ofgem said in January, 2020 that it would “review the performance” of National Grid and ScottishPower and whether they breached their operating licences through the late completion of the scheme. The regulator said it would also “examine potential breaches relating to the operation of the cable”.

It had the power to fine them up to 10 per cent of their turnover.

Ofgem said that National Grid and Scottish Power had been officially required to deliver the link by March 2017 but that it was made fully available only in December, before the latest fault.

National Grid and Scottish Power said: "Western Link is an example of the innovative infrastructure and bold vision required for Britain to reach its net zero goals, delivering green energy to where it’s needed and enabling a more efficient electricity system.

"Since becoming operational it has allowed the transfer of renewable electricity to supply the demand of more than two million homes every year. It’s expected to continue to deliver for decades to come, boosting the UK’s net zero ambitions at the same time as saving money for consumers.

"The scale of the project - 262 miles of cable, of which 239 miles is under water - as well as the cutting-edge technology involved meant a complex construction and delivery phase. From the outset the joint venture worked hard to protect consumers against delay and deliver the most efficient and economic approach, with the new technology utilized meaning fewer cables were required, minimizing costs and disruption to local communities.

"Despite these efforts, which have been recognised by Ofgem in their investigation - and the fact that the Link was in operation and providing benefit for significant parts of the period identified - the joint venture recognises it is ultimately accountable for the delay and has therefore agreed to the redress package.

"The package includes a £15 million payment into Ofgem’s redress fund and £143 million being returned to consumers in payments through mechanisms outlined in the price control, ensuring National Grid Electricity Transmission and Scottish Power Transmission will not benefit from the delay by resetting the allowances received to equal actual expenditure."