Xlinks First updates guidance on construction costs and strike price for the Morocco-UK Power Project

Xlinks First, the investment company for Morocco – UK Power Project (‘the Project’), is today updating guidance on the construction costs and strike price for the Project.

The Project guidance, as at April 2024, is as follows:

• estimated construction cost of £22-24 billion
• estimated strike price range of £70-80/MWh (2012 pricing).

There has been significant upward pressure on the cost of all energy projects, as reflected in this DESNZ press release. The increase in the Xlinks’ guidance on the Morocco – UK Power Project strike price is broadly in line with what we are seeing in CfD estimations. This is driven by macroeconomic effects: the impact of global events on the supply chain account for c.60% of the change, driven by a myriad of factors, including market-wide increases in raw material and energy costs, as well as a global increase in demand for renewables; while c40% of the change relates to direct macroeconomic effects, with interest rates responsible for the vast majority of this change. We continue to optimise the Project as we progress, but the impact of this has been de minimis compared to the effect of macroeconomic changes.

To note, this is Xlinks First’s guidance based on internal cost projections as they stand today. The final strike price will be determined by the UK’s Department for Energy Security and Net Zero.

James Humfrey, CEO of Xlinks First, commented:

“Our new guidance on the Morocco – UK Power Project strike price is broadly in line with what we are seeing in the wider market, and is caused by the impact of macroeconomic factors.

“Xlinks remains 100% committed to delivering the Morocco – UK Power Project in the next decade, to supply 8% of the UK’s electricity demand, with affordable, reliable, clean power. We continue to make good progress in raising the private capital needed to deliver the project, as well as constructive dialogue with key stakeholders, including the UK’s Department for Energy Security and Net Zero.”