SCOTLAND OFFICE minister Lord Duncan has added his weight to calls for Shetland's energy needs to be served by a high-capacity interconnector which would allow large renewable projects to export electricity to the mainland.
Speaking during a two day visit to the isles this week, the Conservative politician said any subsea cable needs to cater for "whatever we think Shetland needs it to work for over the next 50 years".
He said Scottish islands will likely become a "world leader" in renewables and added that Shetland's future electricity system should be explored as an "asset to the whole country".
Shetland Islands Council recently said in response to an Ofgem consultation that the islands' "community and economy is at stake" if plans to import electricity via a 60MW subsea cable once Lerwick Power Station closes come to fruition.
Station operator Scottish and Southern Electricity Networks confirmed in June that a 260km subsea cable is set to be laid between Dounreay and Scalloway to replace the ageing station by 2021 and connect the isles to the National Grid for the first time.
But the council is keen to see a more "joined up" approach to electricity and cited the benefits of instead installing a long-mooted 600MW interconnector between Shetland and the mainland which would allow large-scale renewable projects - like the Viking Energy wind farm - to export energy.
The estimated total cost of work to be undertaken by partners National Grid Shetland Link Ltd and Aggreko UK Ltd over the 20-year lifetime of the new project is £581.7 million, with capital costs coming in at around £303 million.
Government regulator Ofgem, which has given the project the initial green light, said the new proposal is expected to cost £188 million less over its lifetime than the back-up option, which was a new full duty diesel power station.
In a continuation of UK government cross-subsidy arrangement ensuring Shetland residents don't pay significantly higher energy prices, the cost of the cable will be spread across the country.
The Conservatives' manifesto for June's general election contained a pledge to support renewables in Scotland's remote islands "where they will directly benefit local communities".
The stumbling block for large scale renewable developments on the islands - like Shetland's 103-turbine Viking Energy project - is setting a viable strike price for energy transmission, which could in turn trigger subsea interconnector cables linking the islands to the National Grid.
Lord Duncan said the government is trying to have the islands defined as "islands offshore" - meaning that they have a "separate definition which would allow us to make a little bit of progress on that, in terms of the funding arrangements that can come along."
It is believed that islands renewables projects will be able to bid in a second contracts for difference round, probably in early 2019.
The former MEP also said the Conservatives hope to bring city deals - which give local areas specific powers and freedoms to support economic growth and are already in place for the likes of Glasgow, Edinburgh and Aberdeen - to the islands.
Lord Duncan - who was speaking to local media on Thursday before meeting Shetland Islands Council convener Malcolm Bell and development committee chairman Alastair Cooper - suggested that the government's own preference would be for an large-scale interconnector be installed rather than a 60MW import-focused link.
"We need to make sure the cable works for whatever we think Shetland needs it to work for over the next 50 years," he said.
"We're not putting in a small cable then a bigger cable. If we're going to be funding, we're going to be funding the whole shebang here. That's what we need to be looking at.
"We want to understand what that looks like, so that it works in both directions, so we can actually see it as an asset to the whole country. Because at some point in the future, the evolution of renewable energy on these islands will be I think a world leader.
"It is already making huge moves on wind, but I think it's going to be tidal, it's going to be offshore wind, it's going to be wave - we need to much more innovative than we've been in the last short period.
"What we don't want to do at any point is to fund something which is entering into a period of obsolescence pretty much the minute you put it in. We want to make sure we're funding for the future."
Lord Duncan's intervention come in the same week Drew Ratter, chairman of the investment committee of Shetland Charitable Trust - which has a 45 per cent stake in the Viking wind farm - wrote in the Scotsman to support a large-scale interconnector.
He said the "government should be breaking down barriers, not creating them", adding that "ministers should call in the small cable proposal as a matter of urgency".
Northern Isles MP Alistair Carmichael said that Lord Duncan's thoughts on the interconnector situation was "a statement of the blindingly obvious".
But he said the "lack of joined up thinking" was partly due to the Conservatives' energy policy after the 2015 general election which stopped subsidies for new onshore wind farms and put the notion of an islands strike price on the backburner.
The Liberal Democrat told BBC Radio Shetland that the Tories deserved credit for changing their tune and said he hoped they are able to use the "force of government to get in with the regulator and to get that joined up future, because otherwise they will have done more damage than they realised two years ago."