Ofgem rejects £700m Shetland subsea electricity transmission link

Energy regulator Ofgem said today it is “unable to approve” a plan by Scottish and Southern Energy Networks (SSEN) to build a 600MW subsea electricity transmission link from Shetland to mainland Scotland, though it would welcome revised proposals.

Ofgem rejects £700m Shetland subsea electricity transmission link

The planned cable would connect planned windfarm projects on Shetland with mainland Scotland allowing them to export electricity to the rest of Great Britain.

Ofgem had said it was minded to approve the estimated £709 million link in March this year. 

The proposal was based on the largest planned project, Viking Energy Wind Farm, securing subsidies through the UK Government’s Autumn Contracts for Difference (CfD) auction. 

The award of these subsidies would have provided confidence that the wind farm is likely to progress, and protection for consumers from the risk of paying for an underutilised transmission link to the Shetland Isles.

However, the wind farm was not successful in securing these subsidies in last month’s auction.

SSEN’s proposal to build a 600MW transmission link to connect the Western Isles to mainland Scotland has also failed to win support from Ofgem.

The watchdog said in March it was minded not to approve the estimated £623m link, but would approve a revised submission for a 450MW link or consider the case for a 600MW link if consumers were more appropriately protected from the risk of paying for an oversized link. 

The proposal for a 600MW transmission link was based on the two largest planned projects, Stornoway and Uisenis Wind Farms (formerly both Lewis Wind Power projects), securing subsidies in the recent auction. 

Only one of the projects was successful, increasing the risk that consumers would be paying for a significantly underutilised transmission link. 

Ofgem said it encourages SSEN to submit revised proposals for both transmission links, including establishing more certainty for consumers that the windfarm projects will go ahead.

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.”

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