News / Viking still viable with high charges
HIGH transmission charges for Shetland will not damage plans for the 370MW Viking Energy wind farm, the developers said on Thursday.
Last week energy regulator Ofgem announced they would not bring down the cost of transmitting electricity from the Scottish islands to the same level that mainland generators pay, following an 18 month consultation called Project TransmiT.
As a result Viking Energy could expect to pay around £70 per kilowatt, compared to around £10 for a wind farm in Caithness. Orkney would pay around £60 per kilowatt.
Viking Energy had hoped the charges would be lower, however their business projections show the wind farm could still proceed with a far higher charge of between £80 and £127.
The joint partnership behind the wind farm is in an awkward position in that it wants to encourage Ofgem to reduce the charge as much as possible, while ensuring investors continue to have confidence in the venture.
Shetland Charitable Trust has been struggling to persuade its trustees to agree to a further investment of £6.3 million to take Viking Energy to the construction stage, after the Scottish government approved the development one month ago.
Chairman Bill Manson said: “The figure that has been portrayed as coming from Ofgem is well within the range of costs with which we have done our modeling and therefore it does not make us fear for the future of the project.”
Supporters of Viking Energy have been alarmed at rumours spreading through Shetland that Ofgem’s decision has dealt “a death blow” to the plan for 103 huge turbines across central Shetland.
Shetland Charitable Trust hopes to earn around £20 million a year from the wind farm in which they hold a 45 per cent stake, with a further £10 million being pumped into the economy through jobs, support services and land rent.
Chris Bunyan, of the Windfarm Supporters Group, said: “Despite the negative publicity about the electricity regulator’s report on the charges for connecting renewable energy projects in Scottish islands to the National Grid, it is in fact good news.
“The proposed charges are still too high and discriminate against Shetland, Orkney and the western isles, but they make the Viking Energy investment look more attractive, not less.
“The proposed charges are nearly half what Viking Energy has been using when drawing up its investment plans. This could mean more money for the charitable trust.
“Ofgem’s proposals would mean a charge for renewable energy in Shetland of £70 per kilowatt, although this is up for discussion and the Scottish government and all political parties believe it is too high and discriminatory.
“When looking at the costs of the wind farm, Viking Energy has been using estimates of up to £127 per kilowatt. So even if the proposed unfair charges do not change, it does not have an effect on investment plans – except to probably make them even more attractive.”
Earlier this week Orkney Islands Council’s grid consultant Jeremy Baster joined Scottish energy minister Fergus Ewing and Western Isles Council in describing the Ofgem decision as a disappointment and a serious setback to plans to develop renewables in the isles.
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