A 505km electricity link between Scotland and England is giving some scale to the specialist insurance challenge sitting behind the UK's expansion of its power network.
Eastern Green Link 2 (EGL2), a £4.3 billion joint venture between SSEN Transmission and National Grid Electricity Transmission, will connect Peterhead, in Aberdeenshire, with Drax, in North Yorkshire, through a 2GW high-voltage direct current link. Most of the route will run beneath the North Sea, and once operational it will be capable of carrying enough electricity to power around two million homes.
Aviva has confirmed to Insurance Business that it is involved in insuring the project.
That makes EGL2 a particularly tangible example of an issue highlighted in the Association of British Insurers' The Value of Commercial Insurance: Enabling growth, innovation, and resilience report: the specialist insurance sitting behind major infrastructure can be integral to how risks of this scale are financed and delivered.
For brokers, the challenge is not simply finding enough cover for a £4.3 billion asset. Projects such as EGL2 bring together risks spanning manufacturing, construction, marine installation and eventually the operation of infrastructure expected to remain in place for decades.
Subsea transmission cables have a risk profile that can make placement particularly complex.
Manufacturing lead times can stretch over years, while installation is dependent on weather, seabed conditions and highly specialised equipment. If a fault develops after installation, inspecting and repairing a cable beneath the sea can require specialist vessels and substantial expenditure.
EGL2 itself demonstrates the scale of the supply chain involved. Around 1,000km of cable is being supplied for the project, while converter stations are required at either end to connect the high-voltage direct current link to the existing transmission network.
For brokers, that means understanding where responsibility and exposure sit across different stages of the project rather than treating it as a single construction risk.
Construction insurance protects capital while infrastructure is being built, before the risk changes again once an asset becomes operational. The ABI argues that without appropriate construction and operational cover, financiers have to retain or price more of that uncertainty themselves, potentially increasing costs or making financial close more difficult.
That puts the insurance placement much closer to the financing of infrastructure than the traditional idea of insurance as a cost added once a project has already been designed.
The scale of EGL2 also illustrates why continuity between developers, brokers and underwriters matters on technically complex infrastructure.
A broker approaching the market has to translate a project involving long manufacturing timelines, multiple contractors and specialist installation into a risk insurers can understand and price. The information required to do that can change as the project moves from design through construction and eventually into operation.
That makes early visibility important. The more insurers understand about how equipment is being manufactured, installed and protected, the more informed the discussion around the risk can be before large amounts of capital have already been committed.
It also means the broker's role does not necessarily end once construction cover has been placed. The exposure changes as the asset moves towards operation, creating a need to consider how protection follows the project rather than treating construction and operation as entirely separate conversations.
EGL2 should not be taken as evidence that insurance capacity is constraining the UK's grid expansion. Aviva's involvement demonstrates that specialist capacity is being deployed on projects of this scale, rather than proving that the wider market will struggle to support those coming behind it.
What the project does demonstrate is the complexity sitting underneath the headline investment figure.
As the UK builds increasingly large electricity infrastructure, brokers will be tasked with turning projects stretching hundreds of kilometres, crossing different environments and carrying multiple phases of risk into placements the insurance market can support. On a £4.3 billion project largely hidden beneath the North Sea, insurance is far from the most visible piece of the infrastructure, but it is one brokers have to get right.
