SIC - Orkney & Shetland valuation joint board

Lerwick power station to stay open until 2025

Lerwick power station is set to produce electricity well into the next decade.Lerwick power station is due to cease full operations by 2025.

PLANS to serve Shetland’s energy needs with a 60MW subsea cable from the Scottish mainland have been rejected by Ofgem following a relaxation of emissions targets and a government pledge of support for island wind farms.

Scottish and Southern Energy Networks has confirmed that security of supply in the isles could be guaranteed until at least 2025 through a combination of its Lerwick power station and “additional supporting measures”.

This could be done at a cost which is “significantly below” the estimated price of the 260km cable between Dounreay and Scalloway, which would have seen renewable energy being sent north.

A change made in July at EU level to a document that sits under the Industrial Emissions Directive means that more stringent emissions targets due to affect Lerwick Power Station from 2020 have now been pushed back to 2030.

The UK Government, meanwhile, confirmed in October that wind farms on remote islands would be able to compete in the next Contract for Difference (CfD) auction, thought to be in early 2019.

This would, potentially, give rise to the long-mooted 600MW interconnector cable, which – unlike the proposed 60MW link – would allow the export of energy from large scale renewable projects like the Viking wind development.

It follows stern criticism from Shetland Islands Council on the 60MW plans for putting the “very future of islands’ community and economy at stake” by failing to focus in a larger interconnector.

Energy regulator said it would give more details on its decision to reject National Grid Shetland Link Ltd and Aggreko’s plans for the 60MW cable next week.

Referring to the plans to keep the power station open until 2025, an Ofgem statement issued on Thursday morning said it “can be done at a cost that is significantly below that of the National Grid Shetland Link Ltd and Aggreko solution.

“This also allows for the possibility of further savings being realised if a more integrated solution comes forward, notably if a transmission link is needed following the next CfD round.”

The estimated total cost of work which would have been undertaken over the 20-year lifetime of the 60MW project was £581.7 million, with capital costs thought to be around £303 million.

The diesel fuelled Lerwick Power Station was built in 1953 and it was expected that it would need to be closed by 2020.

But the change in emission targets for “small isolated systems” like the Shetland scheme means that it could in theory now stay open until 2030.

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