Ofgem has given the green light to SSEN’s plan for a 220MW transmission link, from Orkney to Caithness, subject to conditions which the regulator says would ensure value for money for all consumers.
Scottish and Southern Electricity Networks (SSEN) has stated their “disappointment” with the details of the decision, saying the conditions set out by Ofgem could mean the transmission link could possibly be delayed for “at least a two-year-period.”
If all goes to plan the electricity link, estimated to cost around £260m, would be completed in 2023.
The cable would enable new wind farms and potentially new tidal power projects to be set up in Orkney, with the electricity produced being sent to the rest of Great Britain.
Ofgem regulates network companies including SSEN, which is a subsidiary of SSE. All energy consumers pay for the cost of investment in new network capacity so the regulator ensures that it obtains the best deal possible for them.
Ofgem launched a consultation in December last year on proposed changes to SSEN’s plan in an effort to ensure value for money for consumers.
Following consideration of consultation responses and further analysis, the regulator has decided to approve the plan subject to the conditions set out in its decision.
Approval is conditional on a total of at least 135MW of new wind farm projects on Orkney either being awarded a Contract for Difference (CfD) or being judged likely to be developed by December 2021.
Ofgem would expect to be satisfied that new wind farm projects are likely to be developed despite not being awarded a CfD if an independent audit states that the project is financially viable, has signed a relevant grid connection agreement and has been granted planning permission.
However, SSEN has stated disappointment that the regulator is maintaining its position that the 135MW of new renewable electricity generation needs to secure planning permission and demonstrate financial viability prior to granting approval for the construction of the link.
Ofgem has extended the date in which developers need to meet these conditions from December 2019 to December 2021. SSEN has said this means, in turn, that the construction of the transmission link may be delayed for at least a two-year period, if the full time is required to secure the 135MW target, or shorter if the need is met at an earlier stage.
SSEN’s Transmission and Distribution businesses now intend to consult with Orkney developers and other stakeholders to help establish the optimal “whole system” solution in an effort to make the most of Orkney’s renewable potential.
Talking about Ofgem’s decision, Rob McDonald, managing director for transmission with SSEN, said: “Whilst we are clearly disappointed with today’s decision, our commitment to work with Orkney developers and other stakeholders to unlock Orkney’s vast renewable potential has not changed.
“With both the UK and Scottish Government committed to net zero emissions, we firmly believe Orkney and Scotland’s other two major island groups will have a key role to play in the fight to prevent the worst effects of climate change.
“We now look forward to working with developers and other stakeholders on Orkney to collectively explore the best way forward to unlock Orkney’s renewable potential.”