(Updated with statements by the DG of CRE to Archyde.com and details)
by Benjamin Mallett
PARIS, 2 mars (Archyde.com) –
France and Spain on Thursday approved a submarine electrical interconnection project in the Bay of Biscay, relaunched by the energy crisis linked to the war in Ukraine despite a sharp rise in costs.
The decision was jointly announced by the French Energy Regulatory Commission (CRE) and the Spanish National Markets and Competition Commission (CNMC).
The new agreement confirms the significant upward revision of the cost of the site, re-evaluated at 2.85 billion euros together with a risk envelope of 250 million once morest 1.75 billion initially, and provides for a contribution from France to its funding larger than expected.
The date of commissioning of the interconnection has been set at 2028, instead of 2025 previously.
Announced in 2017, the “Gulf of Biscay” project, a 400 km cable link between the northern coast of Spain and the western coast of France, was designed to double the existing electricity transmission capacity between the two countries and should enable Spain to inject its abundant renewable energy into a wider European grid.
However, the costs have risen sharply in six years, a rise linked to an unforeseen instability of the seabed on the French side which requires expensive diversion, as well as the increase in the cost of raw materials.
Spain is producing more and more renewable energy, which it exports to France, and wanted its neighbor to bear most of the additional costs.
According to CRE, the new cost sharing provides for 50% project support for each country up to 2.4 billion euros; 62.5% for Spain and 37.5% for France for a cost of between 2.4 and 2.7 billion; and once more at 50% each beyond. The cost might exceed 3 billion euros.
“There was an unforeseeable hazard at the time, this resulted in very significant additional costs and delays which led the two parties in good faith to get back around the table. It is true that, if we had applied stricto sensu the initial agreement, it would have cost more to Spain”, explained Dominique Jamme, director general of the CRE, to Archyde.com.
“This is a project of European interest, in both directions. Spain will have this new connection to send all of its photovoltaic production back to France and to Europe. And it will be able to continue to benefit from the French nuclear power,” he added. “Despite the additional costs, the Europe-wide operation remains extremely profitable.”
The CRE and the CNMC assured that alongside the costs, “the expected benefits of the project are also rising sharply, due to the evolution of forecasts for the energy mix and electricity consumption in European countries, in a context of acceleration of the energy transition”.
The project also benefits from a European grant of 578 million euros, they added. (Report Benjamin Mallet, written by Jean-Stéphane Brosse, edited by Matthieu Protard)
