ENERGY regulator Ofgem confirmed this morning (Wednesday) that it is “unable” to approve proposals by Scottish and Southern Energy Networks (SSEN) to build a 600 megawatt subsea cable which would connect Shetland to the national grid.
The decision follows on from the unsuccessful application by Viking Energy for UK Government subsidy under the Contracts for Difference (CfD) mechanism.
Ofgem, however, said it welcomed revised proposals from SSEN.
SSEN Transmission said it “remains very confident that the proposed 600MW link remains the most economic and efficient” solution for Shetland.
The cable has also been mooted as a way of importing energy to Shetland to replace the ageing Lerwick Power Station, which is set to close by 2025.
In March, Ofgem said it was minded to approve the estimated £709 million link on the condition that the 103-turbine, 457MW Viking Energy wind farm was successful in winning subsidy through the CfD.
Two smaller proposed Peel Energy wind farms in Yell and the outskirts of Lerwick, which like Viking Energy require a subsea cable to export energy, also failed to win support.
On Wednesday Ofgem encouraged SSEN to submit revised plans for a Shetland interconnector in view of Viking’s failure in the CfD auction, with the energy giant asked to deliver “more certainty for consumers” that wind projects will go ahead.
“Ofgem is engaging with SSEN to secure evidenced and realistic proposals from them and will endeavour to consider them as soon as possible,” the regulator added.
Ofgem also said it is unable to approve SSEN’s proposal to build a 600MW transmission link to connect the Western Isles to mainland Scotland after only one of two projects achieved CfD success.
The regulator added that it expects to publish an ‘in principle’ decision on Scottish Hydro Electric Power Distribution’s (SHEPD) proposals to contribute financially towards a proposed electricity transmission link to Shetland in November.
In response to Wednesday’s news, SSEN said Ofgem’s ruling “gives developers and SSEN Transmission the opportunity to demonstrate the continued need for the proposed links”.
“This includes provision of alternative evidence to demonstrate generator commitment in the absence of sufficient generation securing a CfD,” the energy company said.
SSEN managing director for transmission Rob McDonald said: “It is now critical that all parties work together to provide the information Ofgem require at the earliest possible opportunity.
“Ultimately, a successful outcome will depend on renewable developers on both island groups demonstrating that sufficient generation will progress to underpin the transmission investment cases.
“We will now work with all parties to provide all necessary information with the upmost urgency to ensure any delays to the process are kept to an absolute minimum and to help provide the island links the best chance of success.”
A spokesperson for Viking Energy said that despite its wind farm “not being awarded a Contract for Difference in the UK Government’s latest auction for low carbon power, Viking Energy remains committed to progressing the project”.
“Conditional approval of the Shetland needs case, akin to the approval for the Orkney transmission needs case, would provide the necessary signal for Viking Wind Farm to progress towards a final investment decision,” they added.
“A timely final decision from Ofgem on Scottish Hydro Electric Power Distribution’s proposed contribution towards the new transmission link for Shetland is also critical to allowing Viking Energy to determine how best to deliver the wind farm.
“Viking Wind Farm can harness the excellent wind conditions in Shetland and play a vital role in contributing towards the UK and Scotland’s net zero targets. It would bring vital socio-economic benefits to the islands, opening up much needed and sustainable diversification of the Shetland economy.”
The proposed 29-turbine, up to 200MW Energy Isles wind farm in Yell, which has not bid for CfD support as it is not yet consented, would also require a interconnector to export energy.
However, the team behind the plans wrote to Ofgem in a recent consultation that the regulator should consider a cable larger than 600MW to cater for Shetland’s future energy needs.
Campaign group Sustainable Shetland, which opposes the Viking Energy wind farm, said it “cautiously welcomed” the Ofgem news.
“Following on from the failure of Viking Energy to make a winning bid in the recent CfD auction, this is not really a surprise,” chairman Frank Hay said.
“Ofgem is obliged to assess projects for value for money to consumers. It should be clear that building wind farms hundreds of miles from where there is demand and requiring very expensive inter-connectors is very doubtful from a value for money point of view.”
“No doubt there will still be those who will be seeking an even larger cable and continue with their determination to turn Shetland into a very large wind farm for purely profit motives.”
Hay said it is time to “belatedly think about how we might use renewable energy constructively on these islands for a sustainable future”.
“For too long now the focus has been on proposals for large industrial scale wind farms with little consideration for the people who would be forced to live in close proximity to them or the environmental damage their construction would cause,” he added.
“As we said after the result of the CfD auction was announced, it is now time to draw a line under the Viking Energy project and move on to thinking about better energy solutions for these islands.”
In terms of the isles’ energy network post-power station, Ofgem added that it will “work with Scottish Hydro Electric Transmission and SHEPD on the interactions between a potential transmission link and future security of supply on the Shetland Isles to seek to ensure an economic and efficient outcome for existing and future consumers”.