Shetland link project makes progress with positive Ofgem decision

UK energy market regulator Ofgem has given the green light to proposals by Scottish Hydro Electric Power Distribution (SHEPD) and Scottish and Southern Electricity Networks (SSEN) to contribute towards the cost of building the Shetland transmission link.

“This decision provides Shetland’s renewable developers the clarity they require about their future network charges, helping them make necessary financial investment decisions and provide the evidence required by Ofgem for the regulator to approve the proposed transmission link to the Shetland Isles,” SSEN said in a statement last week. The company’s contribution is estimated at GBP 251 million (USD 327m/EUR 294m), based on the value of services that a Shetland link would provide to SSEN’s distribution customers.

The link is needed to ensure the future security of supply for Shetland as the Lerwick Power station is planned to cease full duty operations by 2025. The 457-MW Viking Wind Farm by SSE Renewables is considered the anchor project which commercially underpins the Shetland transmission link. It failed to secure a contract for difference (CfD) in the autumn of 2019, but SSE Renewables is committed to building the wind farm.

The SSE plc (LON:SSE) subsidiary said it is awaiting Ofgem’s decision on the revised Needs Case for the Shetland link in the next few months in order to progress the shovel-ready Viking onshore wind project. It has already initiated enabling works so as to be able to proceed without delay when it reaches a final investment decision.

Ofgem plans to consult in early 2020 on the proposed methodology for similar contributions to the Western Isles and Orkney transmission links.

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