In December, 2020, the eminent Edinburgh University economist Professor Gordon Hughes comprehensively demolished the case for the Viking Energy (VE) wind farm and its associated subsea cable and condemned the actions of SSE, regulator Ofgem, the Scottish government and Shetland Islands Council: The Shetland Islands: Renewables and Corporate Interests (Renewable Energy Foundation, 9 December 2020.)
Appearing in the Shetland media at Christmas, his damning conclusions were buried beneath the Brexit climax and the new coronavirus panic. However, it’s well worth revisiting and I quote from it here:
Noting that, with the “willing involvement of the Shetland Islands Council, the Scottish Government and the Ofgem…., the Shetland Islands are being converted into….. a private colony operated by the power company SSE,” Hughes explains why VE provides very poor value, indeed, for UK consumers.
Scotland already has more renewable energy than it can use meaning VE output must be transmitted several hundred miles to England. The inadequacy of border inter-connectors results in Scottish wind farms being told to switch off while being paid for full capacity output and the arrival of VE will simply add to the problem. Other parts of the country are similarly affected.
As progressively more renewable energy has been installed, the annual cost of this so-called ‘constraint payment’ arrangement – charged directly to consumers’ bills – has soared to a staggering £274 million/year and will continue to grow for the foreseeable future.
Given that, “as the regulator it has a statutory duty to protect the interests of electricity and gas customers in the whole of the United Kingdom,” Hughes finds Ofgem’s role “particularly controversial,” adding:
“Ofgem also has a duty to promote renewable energy, but in a manner that is efficient and consistent with the long run interests of customers, so there can be no excuse for supporting a scheme that is unjustified in geographical and economic terms.”
However, analysing the cost of VE’s energy, he finds the “net value of power (to UK consumers) at Caithness is £15/MWh while the cost of producing and delivering power to Caithness is £82/MWh.”
His result for the cost of ‘carbon savings’ is even worse: “the actual cost of reducing emissions using the Viking project is likely to be more than £550/tCO2. That is extremely high, much greater than even extreme estimates of the Social Cost of Carbon, and wildly in excess of mainstream values such as the $29/tCO2 assumed in the Stern Review.”
Hardly a basis for a “green recovery”, one might think; more a vast bonfire of consumers’ hard-earned cash.
Referring to SSE’s monopolistic position, Hughes concludes: “It is extremely surprising, to say the least, that Ofgem, the Scottish Government and the UK Government have tolerated a situation in which the various parts of SSE – as wind farm developer, transmission operator, power distributor and plant operator – have been allowed to determine the design and assessment of projects whose costs will ultimately be borne by British electricity customers via a variety of what are, in effect, taxes.”
Objectors who, like Sustainable Shetland and myself, had the temerity to challenge the wisdom of Viking Energy and were mocked and vilified by the likes of Jonathan Wills and Gary Robinson, and whose painstaking submissions were ignored and shielded from public view by Ofgem, are now completely vindicated.
Hughes’ incineration of the case for VE, and by extension, industrial island renewables, in general, has exposed it as the vast political con that it is.