Ofgem approves cable funding proposal from SSEN
The proposed inter-connector cable linking Shetland to the mainland has edged closer to reality, with energy regulator Ofgem approving a proposal from Scottish and Southern Electricity Networks (SSEN) to make a major £251 million contribution towards the link.
SSEN – the distribution system operator for the isles – has been working to identify the future security of supply for Shetland, as preparations are made to replace the antiquated diesel-powered Lerwick power station, which is expected to cease full duty operations in 2025.
The proposal will see SSEN provide a financial contribution towards the proposed transmission cable, which promises to secure Shetland’s future security of supply “at the lowest cost” to consumers.
SSEN says a saving around £140 million can be achieved when compared to the cheapest alternative market-based solution.
In response to Ofgem’s decision, SSEN is also promising to progress preparation of the Shetland “standby arrangements” which will complement the transmission link.
It is hoped the decision will provide Shetland’s renewable developers clarity about future network charges, helping them make investment decisions and provide the evidence required by Ofgem for the regulator to approve the proposed transmission link to the Shetland Isles.
Commenting on today’s decision, Colin Nicol, Managing Director for Networks, said: “We welcome today’s decision by Ofgem to approve our whole system solution for Shetland, which is a positive step toward meeting Shetland’s electricity needs at a much lower cost to energy consumers than alternative options.
“The proposal will support future security of supply as well as unlocking Shetland’s renewable potential. Once built, the transmission link and the low carbon output from renewable generators on Shetland will also help support the electricity needs of Shetland’s oil and gas industry and its wider economy.
“Our transmission business will shortly re-submit to Ofgem an updated Needs Case for the Shetland link and we look forward to working with Ofgem and Shetland developers to progress this proposal in a timely manner.”