10/24/2019

Ofgem encourages revised proposals for Scottish Isles transmission links

Planned wind farms on the islands fail to win subsidies in recent government auction / Ofgem would welcome revised proposals from SSEN including providing greater certainty on the future of the windfarms that underpin the need for links / Ofgem’s priority is to help deliver the most effective and fastest route to a net zero emissions economy at the lowest cost to consumers

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Ofgem is unable to approve a proposal by Scottish and Southern Energy Networks (SSEN) to build a 600MW subsea electricity transmission link from Shetland to mainland Scotland. For Shetland, the cable would connect planned windfarm projects on Shetland with mainland Scotland allowing them to export electricity to the rest of Great Britain.

In March 2019 Ofgem said it was minded to approve the estimated £709 million link. The proposal from SSEN for a 600MW transmission link 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. For the Western Isles , Ofgem is unable to approve SSEN’s proposal to build a 600MW transmission link to connect the Western Isles to mainland Scotland.

In March 2019 Ofgem said it was minded not to approve the estimated £623 million 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 from SSEN 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’s committed to helping deliver most effective and fastest route to a net zero emissions economy at the lowest cost to consumers.

It encourages SSEN to submit revised proposals for both transmission links, including establishing more certainty for consumers that the windfarm projects will go ahead. Ofgem is engaging with SSEN to secure evidenced and realistic proposals from them and will endeavour to consider them as soon as possible.

Ofgem regulates network companies including Scottish and Southern Energy Networks (SSEN), a subsidiary of Scottish and Southern Energy (SSE). All energy consumers pay for the cost of investment in new capacity through their energy bills and the regulator ensures that it obtains the best deal possible for them.