Energy / Anxious wait for Ofgem decision following CfD setback

Lerwick power station is due to close in 2025.

SHETLAND Islands Council is seeking assurances from Ofgem that the isles’ future energy needs are being properly considered when the energy regulator finally makes a decision on Shetland’s ‘Needs Case’, which is expected to be published later this month.

Replacing the ageing Lerwick power station with a subsea cable to Caithness, including a back-up facility on the islands, is dependent on whether Ofgem approves the construction of a 250 kilometre interconnector, estimated to cost in the region of £710 million.

Scottish Hydro Electric Power Distribution (SHEPD), the company responsible for keeping the lights on in Shetland, would contribute to the cost of the transmission link.

However, at the moment the construction of that 600MW subsea cable depends entirely on whether the 457MW Viking Energy wind farm goes ahead.

With all three consented Shetland wind farm projects (Viking, Beaw Field and Mossy Hill) having failed to secure government subsidy under the Contracts for Difference (CfD) mechanism, there are now questions as to how – and at what timescale – any of the projects can become a reality.


SSE Renewables, the company that runs the Viking Energy project, has said that it is still committed to building the wind farm, but the overall timescale is somewhat uncertain.

Peel Energy, which owns the Beaw Field and Mossy Hill projects, said it is looking at “alternative ways of delivering these wind farms”.

If Ofgem approves SHEPD’s contribution to the needs case, and Viking commits to take its project forward, the transmission link will proceed.

If not, an alternative solution would need to be identified, Scottish and Southern Energy said on Friday.

“Following the outcome of the 2019 CfD auction, in which the main Shetland developer, Viking Energy, confirmed its continued commitment to delivering their project, SSEN now awaits the final decisions from Ofgem on both the transmission link Needs Case and SHEPD’s proposed contribution to the transmission link,” a SSE spokeswoman said.

Become a supporter of Shetland News


Shetland Islands Council chief executive Maggie Sandison said: “A new solution for a secure energy supply to Shetland must be identified and implemented by 2025.

“Shetland Islands Council is seeking assurance from Ofgem that their decision on the final needs case for the Shetland transmission project considers the wider impacts and addresses the uncertainty our community faces on its long term energy solution.”

Ofgem said it would not comment until it has published their decision, expected later this month.

Become a supporter of Shetland News

Shetland News is asking its many readers to consider start paying for their dose of the latest local news delivered straight to their PC, tablet or mobile phone.

Journalism comes at a price and because that price is not being paid in today’s rapidly changing media world, most publishers - national and local - struggle financially despite very healthy audience figures.

Most online publishers have started charging for access to their websites, others have chosen a different route. Shetland News currently has  over 600 supporters  who are all making small voluntary financial contributions. All funds go towards covering our cost and improving the service further.

Your contribution will ensure Shetland News can: -

  • Bring you the headlines as they happen;
  • Stay editorially independent;
  • Give a voice to the community;
  • Grow site traffic further;
  • Research and publish more in-depth news, including more Shetland Lives features.

If you appreciate what we do and feel strongly about impartial local journalism, then please become a supporter of Shetland News by either making a single payment or monthly subscription.

Support us from as little as £3 per month – it only takes a minute to sign up. Thank you.



Subscribe to a selection of different newsletters from Shetland News, varying from breaking news delivered on the minute, to a weekly round-up of the opinion posts. All delivered straight to your inbox.

Daily Briefing Newsletter Weekly Highlights Newsletter Opinion Newsletter Life in Shetland Newsletter

JavaScript Required

We're sorry, but Shetland News isn't fully functional without JavaScript enabled.
Head over to the help page for instructions on how to enable JavaScript on your browser.

Your Privacy

We use cookies on our site to improve your experience.
By using our service, you agree to our Privacy Policy and Cookie Policy.

Browser is out-of-date

Shetland News isn't fully functional with this version of .
Head over to the help page for instructions on updating your browser for more security, improved speed and the best overall experience on this site.

Interested in Notifications?

Get notifications from Shetland News for important and breaking news.
You can unsubscribe at any time.

Become a supporter of Shetland News

We're committed to ensuring everyone has equitable access to impartial, open and quality local journalism that benefits all residents.

By supporting Shetland News, you play a vital role in ensuring we remain a pivotal resource in supporting the community.

Support us from as little as £3 per month – it only takes a minute to sign up. Thank you.