Ofgem's nod for Shetland link confirmed

Strathy North wind farm. Source: SSE (www.sse.com).

UK energy market regulator Ofgem on Thursday announced a decision to approve the 600-MW Shetland electricity transmission link project subject to obtaining sufficient evidence by year end that the 443-MW Viking onshore wind farm is likely to get built.

The watchdog thus confirmed its “minded to” position from April.

The subsea transmission link that will connect Shetland to mainland Scotland, proposed by Scottish Hydro Electric Transmission (SHE-T), will ensure security of supply on the Shetland Isles and allow hundreds of megawatts of low carbon generation to connect to the grid. The Viking Energy Wind Farm (VEWF) is considered the anchor project which commercially underpins the transmission link.

Ofgem said the type of evidence it seeks to be sure the wind project is likely to proceed includes evidence of a final investment decision (FID) being reached, evidence of project information on the basis of which that FID has been taken, and evidence of the FID leading to a major development milestone, such as the entry into a major supply contract or commitment of significant development spend.

UK utility SSE plc (LON:SSE) a month ago announced the FID for the wind project, wholly owned by its unit SSE Renewables and developed together with Viking Energy Shetland. At the time it said the excellent wind conditions in Shetland would help it reach a load factor of some 48% and an annual output of 1.9 TWh.

The Consultation on the Final Needs Case for the Shetland transmission link project has received mainly responses opposing the minded-to position, Ofgem noted. It highlighted two key issues brought up by the respondents: a view that it would be cheaper to bet on on-island gas-fired generation to ensure long term security of supply, and the perceived negative environmental impact of the wind farm and link on the local area.

The regulator will publish the full and detailed reasons for its decision by the end of this month.

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