Viking fails to win CfD contract
Published on September 20th 2019
Viking Energy Shetland (VES), representing the Shetland community’s ongoing partnership with SSE in the Viking Energy Wind farm (VEWF), can confirm that VEWF’s bid for a Contract for Difference (CfD) has been unsuccessful. VES is very disappointed with the outcome of the CfD auction but remains committed to the project and will continue to work with VEWF to explore all possible options to enable the wind farm to be built.
VES spokesman Aaron Priest said: “Shetland needs to reap the benefits of its world-class renewable energy resources. Shetland’s economy is over-dependent on oil and gas and has a fundamental need to diversify. Future generations in Shetland deserve the chance to utilise our abundant clean energy resources to create a new industry, jobs and prosperity in this community. We want to build a Shetland economy that is truly sustainable”.
- A CfD is a 15-year Government-backed and index-linked contract which effectively provides the wind farm with a guaranteed price for its output during that period. Alternatives to a CfD are likely to include reliance on market electricity prices (also known as a merchant approach) and a financial settlement related to the requirement to maintain long-term security of electricity supply in Shetland.
- The Viking wind farm project was consented by Scottish Ministers in 2012 following a positive recommendation by Shetland Islands Council in 2010 in its role as Shetland’s planning authority. Consent for the wind farm was renewed and restated by Scottish Ministers in May 2019 following a unanimous recommendation from Shetland Islands Council.
- Scottish Ministers’ 2012 consent for the project was challenged through the courts by a group of anti-wind farm campaigners, Sustainable Shetland. The challenge, which caused significant uncertainty and delay, went to both Houses of the Court of Session in Scotland and was finally dismissed by the UK Supreme Court in early 2015.
- VES announced in May 2019 that, whilst it would remain a partner in VEWF, and would earn a preferred annual return on its investment of around £10m up to that point, its shareholders wouldn’t be committing further investment funds.
- Construction of the wind farm would mark the dawn of a new era for Shetland by securing a connection to the national electricity grid for the first time, opening up a much needed and sustainable diversification of the Shetland economy. Viking itself would provide an average of 140 construction jobs and 35 permanent positions. Local companies and contractors stand to directly benefit and further supply chain engagement will hopefully resume soon. As well as employment and commercial opportunities for local businesses, Shetlanders stand to directly benefit by upwards of £200m over the life of the wind farm from a combination of the ongoing annual returns to the Shetland Charitable Trust, direct community benefits via Shetland Community Benefit Fund and ground rents which would be shared with around two hundred crofting families.