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Cable contribution welcome news for renewables in Shetland

April 10th 2019

Renewables projects planned for Shetland, including the Viking Energy Wind Farm, may get a boost if Scottish Hydro Electric Power Distribution (SHEPD) succeeds in its proposal to pay part of the cost of Shetland’s 600 megawatt (MW) electricity cable link.

SHEPD’s proposed contribution of £251 million towards the estimated £709m Shetland transmission project could result in lower charges on cable users, which would significantly reduce operating costs for renewables projects.

This would also help improve the competitiveness of the projects planning to bid in the forthcoming Contracts for Difference (CfDs) auction, boosting their chances of securing government-backed support contracts to allow construction to proceed.

SHEPD’s interest in sharing the cost of the cable is to help it provide security of supply for Shetland electricity customers beyond the lifetime of Lerwick Power Station. Its proposed whole system solution would include a new power station kept on standby for use during periods of low wind power generation and cable downtime. SHEPD estimates a saving of £140m to GB electricity bill payers by adopting this approach in favour of other options.

Responding to SHEPD’s proposal, a Viking Energy spokesperson said: “This is obviously a very welcome contribution to the long-running debate about funding island connections. Charges for transmitting electricity are easily the biggest operating cost facing Viking Energy and other island wind farm developers so any reduction will help the projects deliver energy at a lower cost.

“However, it’s crucial that industry regulator Ofgem provides a speedy response to SHEPD’s proposal to allow time for wind developers in Shetland to quantify the potential impact on their CfD bids, given the CfD round is due to open at the end of May. We also welcome the intention for the proposal to be extended to the Orkney and the Western Isles to give all the Scottish islands the opportunity to realise their renewables potential.”

Viking Energy has long advocated the benefits to Shetland of establishing a cable link with the Scottish mainland, enabling a renewable energy industry to become established, diversifying the islands’ economy and greatly reducing carbon emissions locally and nationally.

SHEPD’s contribution proposal comes just weeks after Ofgem provisionally approved development of the 260 kilometre high-voltage direct current (HVDC) cable between Weisdale and Caithness along with construction of a HVDC convertor station at Upper Kergord and a switching station at Noss Head, near Wick. Ofgem’s approval is conditional on Viking Energy Wind Farm being awarded a CfD.