Xlinks pauses ambitious UK-Morocco undersea power cable project amid regulatory hurdles

British firm Xlinks has temporarily paused its ambitious 3,900-kilometer undersea electricity cable project connecting Morocco to the United Kingdom. The company has halted its Development Consent Order (DCO) examination process while awaiting a crucial decision on its Contract for Difference (CfD) from the UK Department of Energy Security and Net Zero.

In a May 14 letter to the UK Planning Inspectorate, Xlinks requested this pause to ensure financial certainty through a CfD that would guarantee fixed electricity prices for 25 years. Company sources emphasized that this represents “a pause in the DCO process, not a suspension,” aimed at preventing “misalignment of different project development stages.”

The primary obstacle delaying the project is the need for price certainty. Xlinks is pursuing a guaranteed price of £77 per megawatt-hour for solar energy and £87 for wind energy produced in Morocco’s Guelmim-Oued Noun region. Without this financial commitment, potential investors are hesitant to proceed with the necessary funding.

“Without this clear commitment on a stable price, Xlinks’ financial partners are hesitant to inject the necessary investments,” the company stated.

Dave Lewis, chairman of Xlinks, has expressed frustration over the delays and frequent ministerial changes within the UK’s energy department. In a January interview with Bloomberg, Lewis noted that the undersea cable project could generate up to £24 billion (MAD 300 billion) in investments, with approximately £5 billion anticipated in Great Britain alone.

Designated as a “nationally significant infrastructure project” by the British government in 2023, this initiative underscores its strategic importance to the UK’s energy security. It aims to provide power to nine million British households while reducing CO2 emissions from the UK energy sector by 10%.

The proposed cable will traverse Portuguese, Spanish, and French coastal waters, connecting Morocco’s renewable energy facilities with the British grid. Once completed, it is expected to deliver 3.6 gigawatts of electricity generated from solar parks, wind farms, and battery storage systems.

Faced with ongoing delays, Xlinks is exploring alternatives. Lewis mentioned that if the British government’s response is further delayed, shareholders may redirect resources toward other projects, including a potential Morocco-Germany connection.

The company has opted for direct negotiations with the government instead of entering a tender process, contributing to the existing delays. Political instability in the UK has also complicated negotiations.

As competition intensifies, Australian group Fortescue is developing a similar 100-gigawatt electrical connection project between North Africa and the European Union. Fortescue’s chairman, Andrew Forrest, has confirmed discussions with Ed Miliband, the British Secretary of State for Energy Security, and various European governments regarding multiple undersea cables that could transport up to 500 terawatt-hours (TWh) of electricity annually—nearly equivalent to Germany’s total annual consumption.

Even with the most favorable outcomes, Xlinks’ complex authorization process is unlikely to conclude before 2026. While the company targets a 2030 launch date, effective service might not commence until 2031 at the earliest, raising concerns among investors. The project has already received approval from the Moroccan side but still requires approvals from France, Spain, and Portugal, which the cables would cross.