Ocean Kinetics - The Engineering Experts

Energy / SSE takes control of Viking Energy wind farm project

The view of the original Viking Energy wind farm proposal looking east towards Aith. Some of these turbines have now been removed. Image Viking Energy
A view of the planned Viking Energy wind farm from Aith.

A DEAL has been struck which will see energy giant SSE providing all of the future finance required to build the Viking Energy wind farm should the project be successful in attracting government subsidy.

It means that SSE’s long standing partner Viking Energy Shetland, which is 90 per cent owned by Shetland Charitable Trust (SCT), will lose influence on the project as SSE invests more into the 450 megawatt wind farm.

Vice chairman of anti-Viking campaign group Sustainable Shetland James Mackenzie said the latest development meant the “end of the much trumpeted ‘community’ wind farm”.

SCT chairman Bobby Hunter said SSE would become the controlling shareholder of the project, but SCT, through its £10 million investment, would retain some influence.

“At the same time, the trust is not required to commit further capital sums to the project,” he said.

He insisted the community would continue to own a stake in the planned wind farm, which, he said, would earn a substantial return for the trust in addition to other spin-offs such as community benefit payments, estimated to be in the region of £2.2 million per annum, rental income to Shetland Islands Council as the main landowner, as well as job creation.

The charitable trust would earn a ‘preferred annual return’ on its investment but Hunter said it was not possible at the moment to give an accurate percentage rate as this depends – among other things – on the outcome of the Contracts for Difference (CfD) process.

Thursday’s announcement comes after Scottish ministers approved plans for the size of the Viking turbines to be increased from 145 metres to 155 metres.

The 103-turbine wind farm is dependent on winning government subsidy in the looming CfD auction, and on a £710m subsea interconnected cable being laid to the mainland to allow energy to be exported.

Hunter said: “There is a whole raft of areas that will bring economic benefit to the community, plus if the interconnector comes then more wind and tidal can be developed.”

To date, the project has been funded 50/50 by SSE and Viking Energy Shetland.

The other 10 per cent of Viking Energy Shetland is owned by Viking Wind Ltd, which was formed by people involved with the Burradale wind farm on the outskirts of Lerwick.

SSE said on Thursday that the Viking Energy wind farm would make a “significant contribution to Scotland’s decarbonisation targets and provide security of supply for Shetland through underpinning a new transmission link”.

“The project will also bring vital socio-economic benefits to the islands,” it added.

Sustainable Shetland chairman Frank Hay said the move didn’t surprise him at all as this was exactly what had anticipated.

Hay said that in a recent Ofgem consultation he had stated: “However, Shetland Charitable Trust which part owns Viking Energy may well decide to discontinue their involvement due to the financial risks associated with the huge investment that would be required.

“The likely outcome could be that partners SSE would buy out the SCT share and any community control would be lost.”