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Trust asked to triple Viking investment

SHETLAND Charitable Trust will decide on Thursday whether to increase its investment to £10 million into the proposed Viking Energy wind farm in order to prepare the ground for the turbines to be erected.

The Scottish government is expected to make a decision shortly on whether to grant consent for the 127 turbine wind farm.

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Issues around impact on birds and the airport at Scatsta have yet to be fully resolved, leaving the possibility for some or all of the turbines to be refused permission or for a public local inquiry.

If consent is granted the trust’s financial controller Jeff Goddard says it will take at least 18 months and cost £14 million to prepare the groundwork to make a final decision on investing in the £680 million wind farm.

The wind farm is a joint venture with Scottish and Southern Energy who must cover half of the cost, while the owners of the Burradale wind farm own 10 per cent of the Shetland half share in the development.

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Mr Goddard said according to valuation consultants Quayle Munro, simply granting the wind farm consent will multiply the value of the trust’s current investment from £3.42 million to more than £72 million, making every £1 worth £21.

To move ahead the trust is being asked to invest a further £6.3 million for its share to take the project to the final stage before the money is raised to build the wind farm, known as “financial close”.

Mr Goddard said the process “is expected to take up to 18 months – 2 years”, involving:
* finalising connection and transmission charging arrangements;
* procurement and construction contracts;
* turbine warranty and maintenance arrangements;
* long term trading arrangements for the electricity generated;
* arrangements of debt and land;
* detailed ground investigation;
* and due diligence to underpin the entire process.

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By the time this stage has been reached the value of the entire investment will have risen to £388 million, according to Quayle Munro, Shetland’s half being worth £194 million.

However, Mr Goddard says, these figures will be “dwarfed” by the revenue streams from the working wind farm. “It is clear that long term financial value on investment is best achieved by seeing the project through to full production.”

He adds that if consent is delayed by a public inquiry, the trust should spend £360,000 to protect the investment made so far by allowing the business to continue to operate efficiently.

Her Majesty’s Revenue and Customs have granted permission for the trust to take the risk of investing in the wind farm even though it is a charity, because of the size of the potential benefit. Mr Goddard believes they will take a similar view of any further injection of cash.

He also pointed out that the trust had already made substantial investments the council offices at North Ness (£7 million), Scatsta airport (£8 million), commercial property (£20 million) and land at Sullom Voe oil terminal (£23 million).

If the government refuses to grant consent, he adds, a further report will be prepared for trustees.

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