Westminster report states island windfarms ‘unlikely to be economic’

High transmission charges could render the Viking Energy windfarm project uneconomic, according to a UK government report.

The document published by the UK’s Department of Energy and Climate Change considered the evidence for developing renewable projects including onshore wind, wave and tidal, in the island groups.

And while it said renewables projects could create thousands of jobs in the isles it stated: “Under current policy it is unlikely to be economic to develop further onshore wind projects on the islands as returns will not meet the required hurdle rates.”

This could have implications for Viking Energy, which is calling for “swift action” to tackle the barriers to renewables posed by high transmission charges and grid access identified in the report.

Viking Energy board member Alan Bryce said the partnership welcomed the report’s conclusion that onshore wind developments in Shetland have an important role to play in meeting Scottish and UK 2020 renewable energy and decarbonisation targets. But he said the project could not be “taken to completion” unless there was more clarity around grid access.

Mr Bryce said: “Since gaining planning consent, Viking has made good progress, but if we are to secure the best deal for Shetland and investors, it is vital that government, regulators and developers act on the conclusions of this report. Investors cannot take the project to completion until they have clarity around revenues and grid access.

“That would be in Shetland’s interest – but it would also, as the ministers indicate, diversify and broaden the country’s electricity supply.”

Viking Energy Shetland, which is 90 per cent owned by Shetland Charitable Trust, is in a 50-50 partnership with SSE to build the £700 million windfarm, which has consent for 103 turbines in the Central Main­land and a maximum rated capacity of 457 megawatts. As recently as February it said it expected to make £20 million profit annually.

The new report, which questions whether that is possible, had been initiated by Secretary of State for Energy and Climate Change Edward Davey.

He said: “The [UK] government is keen to unlock the potential for the development for renewable energy on the Scottish islands, but it’s vital that projects represent value for money for the consumer.

“The report marks a considerable step in progress towards making decisions about supporting renewables investment on the Scottish islands.”

Isles MP Alistair Carmichael described the report as a significant step towards “freeing up the transmission charging logjam.”

He said: “Local renewable developers have been vindicated in their view that the current set up will not do. I have always believed that despite enormous resistance from officials in government departments over many years.

“Having established that there is a case for island communities to be given a different charging system, the next step now is to continue in our engagement with government to set up that system and to enable the development of renewable energy.”

More on this story in Friday’s <i>Shetland Times</i>.


Add Your Comment
  • ian tinkler

    • May 15th, 2013 23:03

    What a surprise.

  • JohnTulloch, Arrochar

    • May 15th, 2013 23:25

    How are The Scottish government and the Dept of Energy and Climate Change (DECC) able to tell what will be viable on Scottish Islands when they don’t know the outcome of the independence referendum?

    Let me explain: Ed Davey recently told the Scottish Parliamentary inquiry into Scottish renewable energy targets that with independence Scots would have to foot the bill for their own renewable subsidies and Alex Salmond’s optimism that the integrated UK transmission grid will be maintained post- independence has been denied by London.

    Scottish fuel poverty levels are already through the roof so who is going to buy this energy from the islands if Scots won’t be able to afford it and there is no integrated grid system to carry it to England?

    I’m sorry, I’ll have to stop now, I need to go and regurgitate my dinner!

  • David Spence

    • May 16th, 2013 14:23

    lol John. Do what the cows do John, if you can. Chew the cud (food) twice, it may be more palletable? lol

    Mind you, just the mention of the words ‘ Viking Energy ‘ is enough to make you spasm/fit in rage given they are a prime example of ‘ money going down the drain ‘ and the ‘ me, me and me if anything is left over society ‘.

  • john Irvine

    • May 16th, 2013 17:51

    I think anyone with an ounce of sense could have foreseen this, pull the plug on VE now before another penny goes down the drain

  • David Cooper

    • May 16th, 2013 18:30

    Boys boys, Jonathon Wills says dat da government is goin ta sort it aa oot fir wis so you needna worry.. right??

  • Johan Adamson

    • May 17th, 2013 12:02

    I think its an important point that the Western Isles and Orkney got grid connections way back in the past and did not pay for them. We (the CT) are having to pay for ours, partially, and it turns out that the CT/SSE partnership that is Viking still cant afford it. That’s not fair. Also not fair is passing this cost to the consumer. Given the choice they would buy a cheaper more efficient source of fuel than wind is turning out to be.

    Orkney’s grid connection is too old now and they need a new one for all their work on tidal. They have no CT, so what will happen to them?

  • David Spence

    • May 17th, 2013 16:52

    Correct me if I am wrong, but did Her Majesty’s Treasury, want around £50,000 a year for a Fibre Optic Cable laying on the sea bed from Sumburgh, Fair Isle, Orkney and Mainland, where, quite rightly, local business here gave a resounding ‘ NO ‘ to paying this ‘ unjust fee ‘ and subsequently received the Fibre Optic Cable via the Faroe’s.

    My question is : How much will Her Majesty’s Treasury be charging per year for an Inter-Connecting Cable from Shetland to Mainland Scotland? Would it be greater or less than £50,000 a year?

    Would this cost be transferred to local businesses or the Council Tax going up for everybody on the islands and VE not paying a penny towards this cost?


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