UKIB steps up mission to boost energy security by financing first ever UK-Germany energy

21 July 2022

The UK Infrastructure Bank has today announced that it will support the £2.4 billion NeuConnect project to develop the first undersea energy link between the UK and Germany.

Dubbed an "invisible energy highway", the link will facilitate the movement of electricity between two of Europe's largest energy markets, enabling the exchange of surplus energy from renewable sources such as solar and wind. Once built, this new source of power will support the UK to reach its net zero targets and provide greater energy security for the country, an issue which is the focus of the energy security bill recently introduced into parliament.

The deal is structured into two parts - the UK Infrastructure Bank will provide the UK side of the project with £150 million, alongside £1bn from other UK lenders. The German side of the deal is structured in a similar way and is supported by the European Investment Bank.

Once built, the link will become one of the largest "interconnectors" in the world and will have a capacity of 1.4GW. In addition, consumers could benefit from lower energy costs in both the UK and Germany as there will be an increased supply of low-cost renewable electricity.

John Flint, CEO of the UK Infrastructure Bank said:

"We are pleased to be playing an important part to facilitate this deal of national significance. It will provide power for homes across the whole of the country, support trade between the UK and Germany and protect our renewable energy system for the future.

"It’s exactly the type of project we were set up to fund and providing a secure supply of clean energy has never been more important due to the rising cost of energy and the war in Ukraine."

Secretary of State for International Trade Anne-Marie Trevelyan MP said:

"Investment creates jobs and is crucial for helping us meet our climate change targets as we work towards a cleaner, greener future.

"The UK Infrastructure Bank’s involvement in this deal is of great importance. It signals to the market the Bank’s commitment to investing in renewable energy, which will help us meet our net zero ambitions; something that can be attained through funding resilient infrastructure, and continued trade with the world’s biggest economies."

The deal follows the launch of the Bank’s first strategy in which it announced that improving energy security and supply remain a top priority. Clean energy is where the Bank expects to deploy the majority of its initial £22bn financing capacity.

You can read more about the importance of this deal in our first blog: Infra Bank in Focus

Further information

• The NeuConnect Electricity Interconnector project (“NeuConnect” or the “Project”) will link the German and British power markets through a 720km high-voltage direct current (“HVDC”) cable, with a capacity of 1.4GW. It will be the first interconnector to transport electricity directly between the two countries and will support the UK government’s goal of more than doubling existing interconnector capacity by 2030.
• The UK Infrastructure Bank opened for business in June 2021 to help tackle climate change and boost growth across the United Kingdom. The Bank has now announced eight deals worth £710 million – mobilising over £4.5 billion of private capital, with a range of investments in line with its mandate, strategic objectives, and investment principles, which can be found on the UK Infrastructure Bank website.
• The Bank is committed to invest in a wide range of sectors which meet its strategic objectives, and investment principles, which can be found on this site.
• The Bank is wholly owned by HM Treasury but is operationally independent from government. The Bank identifies, selects and assesses projects and approves them through its Investment Committee.