Speculative profits (Angela Hunt)

In the editorial on Friday 20th April The Shetland Times made reference to the “community windfall” from the proposed windfarm development and stated if the trustees did not vote to go ahead it would be a “logical conclusion” that Shetland would miss out on this cash bonus, and countless correspondents continue refer to future payouts of £20 million per year beyond 2017.

How can you be so cruel to speak of speculative profits to a community which is experiencing the pain of cuts to its culture right now, along with employment rationalisation as though this windfall was guaranteed, before in fact, a single ground test has been completed by a qualified energy engineer on this peat-based terrain?

There are several other possible scenarios to consider before the new trustees of the charitable trust agree to spend £6,300,000 on ground testing to progress the development.

1. Not every windfarm granted consent gets built.

In October 2011, the proposed developers of the Viking site, which is SSE, asked for consent to be withdrawn from the Waterhead Moor site after two years of testing because of perceived construction difficulties. The site has very similar peat ground conditions to the proposed area in Shetland – and at first it too appeared to have perfect wind conditions. However, the construction on low lying hills covered in 1m to 4m of deep peat was proved to be too challenging and despite having made a considerable investment SSE took the responsible decision not to proceed.

It took seven years from consent to reach a decision to abandon the Waterhead Moor development; the cost of any such delay in Shetland with executives and energy employees flying back and forth will be very high. Is there contingency planning for an extended period of testing which may be necessary in a landscape beset by volatile weather conditions?

2. Much of the proposed Shetland site is a rain sodden peat bog. Construction is complicated on peat and the site will require drainage even before infrastructure begins. To gain insight into the construction of a windfarm on peat land could the trustees be requested to read the paper published by the University of East London, <i>Wind Farms and Blanket Peat</i>. It details the disaster after a considerable landslide during the attempted construction of a 71 turbine development on peat in 2003, the photographs are dramatic but the paper has many valuable points and a considered summary in advice for other developers explaining how “On ground predisposed to instability, small actions can have large consequences” (the report is free on the internet and well written).

SSE will be fully aware of this report and, from its recent experience at Waterhead Moor, the complexities of construction and potential for financial loss on such ground conditions. The statement on Friday speaks only of its intention to “continue with developments” i.e. to move to testing.

This measured response is in marked contrast to the talk of a sure-fire build with guaranteed profits to flow to the community by the windfarm proposal’s optimistic supporters.

3. In view of this imbalance it would be helpful to publish pages from the financial projections in <i>The Shetland Times</i>. The projections were compiled by financial consultants in an Edinburgh office, 360 miles from the site, and the content of these documents would hopefully demonstrate to sceptics that the accountants were mindful of the additional costs of site drainage with contingency planning for construction on peat in the profit and loss calculations.

While a commercial developer would not want to publish the whole report on its financial dealings, surely it is a simple thing to make some of the calculations public to explain how the projected profits bandied about in discussion of this proposal really are achievable?

Angela Hunt

P.S. The figures for windfarm consent, development and those actually taken forward to build are on www.renewable-uk.com, the database UKWED. It now includes the Viking site though only cites SSE as the developer with no mention of its partners.


Add Your Comment
  • John Robertson - reporter

    • April 23rd, 2012 11:39

    For the sake of accuracy, Angela Hunt is wrong to state that SSE got consent for Waterhead Moor windfarm and then decided not to go ahead. The windfarm had not been consented. It was still only at the planning stage with the application being considered by the Scottish government when SSE scrapped it.


  • Alan Skinner

    • April 23rd, 2012 13:22

    My concern is whether there is going to be any profit at all. I keep hearing people saying “the revenue is guaranteed”. Well, it may be guaranteed, but only in theory. The UK government announced in late 2011 that it is cutting its subsidies to the solar power industry by 50%. The German government announced a 30% cut in subsidies. Substitute the word “wind” for “solar” and you will understand my concern on revenue.
    My second concern relates to possible cost overrun. In his briefing note of 4th October 2010, the Financial Controller of Shetland Charitable Trust states the estimated build cost for the project to be £685m, with SCT’s contribution being £62m. (It is unclear whether the £62m includes the £3.4m already invested, and the £6.3m recently requested, or not). SCT’s £62m investment is approx 30% of its total portfolio. Just think of Scotland’s two most recent large projects, the building of the Scottish parliament ( which overran costs by a factor of ten), and the Edinburgh tram project ( which overran costs by a factor of three), and you will understand my concern. On recent evidence, the trustees would still run around saying “we have to keep investing, or our stake will be diluted”.
    I think we are massively financially exposed on this project and that the financial risks have not been properly analysed and assessed.
    I sincerely hope that the fairytale numbers come to pass, and we all become rich. This will enable us to stop discussing obscene cuts in education and care for the less fortunate in our community. However, I have grave doubts.

    Alan Skinner – Candidate for the North Isles

  • Douglas Young

    • April 25th, 2012 22:15

    The level of earnings is neither guaranteed nor known; it will be decided by Ofgem and their rather fluid charging regimes for transmitting energy. Whilst EU Human Rights Law is frequently misused, I feel it may come to the aid of those living within 2km of a turbine as this breaks the Scottish Govt’s own rules, along with the lack of a health assessment impact study.


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