SIC - Orkney & Shetland valuation joint board

Council / Viking decommissioning bond worth £40 million

SIC and SSE Renewables confident that negotiations will be finalised soon

Construction of the large wind farm started in summer of 2020. Photo: Shetland News

SHETLAND Islands Council and SSE Renewables are close to agreeing a decommissioning bond for the Viking Energy wind farm, confirmed to be in the region of £40 million.

Both sides have confirmed that negotiations are at an advanced stage.

Eyebrows were raised last year after construction work on the 103-turbine wind farm in the central mainland of Shetland got underway without a guarantee that sufficient funds will be in place to decommission the wind farm and restore the site at the end of its life in 2049.

Viking Energy decommissioning bond agreement ‘should have been in place’ – but isn’t

At the time, wind farm opponents Sustainable Shetland said this was yet another example of poor governance on behalf of the planning authority, while discussions were ongoing to determine the right size of the decommissioning bond.

Save Shetland, another group opposing the wind farm, reported the council to the local government ombudsman over whether is was reasonable for the council to allow construction to commence without the guarantee in place. This complaint is still pending.

Typical values for Scottish mainland wind farm guarantees are in the region of between £30,000 and £60,000 of installed megawatt, which would have translated to a decommissioning bond of between £13. 5million and £27 million.

SSE Renewable’s initial proposal, rejected by the council, was about £11 million.

SIC chief executive Maggie Sandison

The council’s chief executive Maggie Sandison has now confirmed to Shetland News that a “much higher” offer from SSE Renewables has been received and that discussions have moved on to more technical details as to where the bond should be held.

“It is being sorted,” she said. “We have had a second offer from Viking, which is much higher than their last one; and also – following a re-evaluation – higher than the council’s original proposal.

“The discussion has moved on to what type of bond, and we have got some legal input going in to determine that.”

Viking Wind Farm (VEWF) spokesperson Aaron Priest said: “Initial proposals for the decommissioning guarantee were provided to the SIC towards the end of 2019 and discussions have continued since.

“VEWF is aware that the SIC has taken independent expert advice, as has VEWF, resulting in discussions moving closer to an agreed final value and mechanism.

“Guarantees are required as standard on all SSE wind projects. Viking is expected to go into production in 2024 with a 25-year consent.”

Frank Hay of Sustainable Shetland said it was a matter of concern that the decommissioning bond is only going to be signed off nine months after work commenced.

“There was a clear statement in the windfarm planning consent documents that no work should start until the decommissioning bond had been signed off,” he said.

“As with a number of other planning conditions, the SIC have chosen not to apply conditions strictly and have appeared all too keen to facilitate the wind farm development for SSE, their former partners.”

The decommissioning and restoration process is governed by a detailed plan, approved by environment agency SEPA and Scottish Natural Heritage, which is now known as NatureScot.

Once agreed, the decommissioning guarantee will be reviewed every five years to keep it current.