LONDON (Reuters) - Private investment firm Aquind is confident of raising the cash needed to build its planned 1.1 billion pound ($1.4 billion) power link between Britain and France, despite Britain’s move to leave the European Union, a board member told Reuters.
Last June’s “Brexit” vote has raised questions about Britain’s continued participation in Europe’s energy market and whether investors will be prepared to put money into more physical energy links with the continent.
However, Aquind non-executive director Martin Callanan said he expected to find plenty of interest since the economic case for the project - in particular Britain’s demand for power and normally higher electricity prices - stood regardless of Brexit.
“Given the price differentials on both sides of the Channel, we believe there will still be a strong economic case,” he said.
“Even if tariffs were applied (to Britain’s cross border electricity trades following Brexit), those tariffs would apply both ways,” he added.
Britain currently imports around 5 percent of its electricity from France but is seeking ways to increase its power sources to help replace aging coal and nuclear plants set to close in the 2020s.
Once completed in 2022, the interconnector would be able to deliver up to 2 gigawatts of electricity, enough to power around four million homes.
Callanan said Aquind expected to raise cash from fellow private equity investors and hoped to begin construction in 2019.
Britain currently imports power from France though the IFA interconnector, owned by Britain’s National Grid (NG.L), and French grid operator RTE.
Electricity is able to flow both ways, but due to higher electricity prices in Britain it is usually an importer.
Wholesale spot electricity prices averaged around 42 pounds ($51.50) per megawatt hour (MWh) in Britain in 2016 TRGBBD1, Reuters data show, compared with around 39 euros ($41.26)/MWh in France TRFRBD1.
Aquind also said on Monday it had signed an agreement with RTE that would allow it to connect to the French grid at RTE’s Barnabos substation in the Haute-Normandie region.
It already has an agreement with National Grid to connect with Britain’s grid on the south coast of England.
Three other interconnectors with France are also in development: National Grid and RTE’s IFA 2, Transmission Investment and RTE’s FAB link, and Groupe Eurotunnel’s (GETP.PA) ElecLink.
Reporting by Susanna Twidale; Editing by Mark Potter