The government is snubbing a £25bn renewable energy project which promised to import enough solar and wind power from Morocco to meet nearly a tenth of the UK’s electricity demand.
Sky News has learnt that Ed Miliband, the energy security and net zero secretary, has decided not to proceed to formal negotiations with Xlinks, a privately owned company, about a 25-year price guarantee agreement.
A ministerial statement is expected to be made confirming the decision later on Thursday.
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The government’s move to snub Xlinks after protracted talks with the company will come as a surprise to energy industry executives given the company’s pledge to deliver large quantities of power at a price roughly half of that to be generated by new nuclear power stations.
Xlinks, which is chaired by the former Tesco chief executive Sir Dave Lewis, had been seeking to agree a 25-year contract for difference with the Department for Energy Security and Net Zero (DESNZ), which would have guaranteed a price for the power generated by the project.
One Whitehall insider said its decision was partly motivated by a desire to focus on “homegrown” energy supplies – an assertion queried by industry sources.
Sir Dave told The Sunday Telegraph earlier this year that Xlinks would switch its focus to another country if the UK government did not agree to support the project.
The company is now expected to explore other commercial opportunities.
Xlinks had not been seeking taxpayer funding for it, and claimed it could help solve the “intermittency problem” of variable supply to UK households and businesses.
Reducing manufacturers’ energy costs was the centrepiece of the government’s industrial strategy launched earlier this week.
Sources said that market-testing of the financing for Xlinks’ construction of a 4,000-kilometre cable between Morocco and the Devon coast had been significantly oversubscribed.
Xlinks’ investors…
