Sounding Off – Drew Ratter on the future of Viking Energy
The future of Viking Energy and, indeed renewable energy in Shetland, deserves serious debate and consideration. I am concerned that nobody but a few partisans is actually reading any of the stuff about Viking Energy any more. Which is regrettable, if understandable. Just the same, I feel I have to have one more public try at being as forensic and factual as I can be.
For the future of the Shetland community, Viking Energy is very important. From my own position as investments chairman at Shetland Charitable Trust, it is likewise. I need to understand the business model for the windfarm as well as I can, so I can make recommendations to trustees in whichI have confidence. So I urge people who are tempted simply to switch off to consider some facts.
First, it cannot be described as a rash venture into which the council and the SCT have plunged, unthinking. We have taken the best advice available since day one, and I have been involved since day one, although with a gap in the middle. The project has backing, as a business venture, from Scottish & Southern Energy. SSE is probably the most successful of the generating and supply companies in Scotland, demonstrated by its strong share price and continuing independence.
Secondly, Viking has a strong management team and an excellent board of directors. The chairman, Alan Bryce's, track record includes periods as managing director of energy generation and managing director of energy networks at Scottish Power. Joe Philipsz has had a very senior career in project finance, and Elsbeth Johnson has worked at senior corporate level, and also in banking and finance. I talk with them regularly, and trust them completely.
The need for an inter-connector cable has, oddly, been described as "a pipe dream". This, of course, is not correct. It is Scottish government and UK government policy to get this essential submarine cable laid. It is also part of Shetland's Community Plan, unanimously adopted by the council. That commits the SIC and its partners to "lobby National Grid to install [a] 650MW (or larger) interconnector by 2018".
Section 4.2 of the council's Economic Development Plan, approved on 12th March this year by the Development Committee, commits the SIC to "support local efforts to establish an interconnector between Shetland and the UK mainland". The reference is online at http://bit.ly/1q7YmpO
There are very strong reasons for doing so, not least the fact that the UK consumer currently pays over £20 million per annum to subsidise Shetland’s electricity, generated using oil and gas, and contributing to a situation where our carbon footprint, per head, is comparable with that of Texas.
Further, there is a total commitment by the council and its partners to development and growth in the private economy in Shetland. One obvious area is renewables, and that is pretty well stuck unless power can go onto the grid. That can only happen with a bigger grid, as the Shetland one is full. Opposition to a cable connecting us to that grid conflicts with all our green and climate change objectives, both local, Scottish, and UK-wide.
Let us us be clear: the likelihood that a large Shetland wind farm, connected to the UK mainland, will be built is extremely high. The granting of planning consent by the Scottish government has now received a vote of confidence from the most senior of Scottish judges. That will stand.
It is worthy of note that the Scottish government’s consent for the project covered all possible impacts, including the environment, health matters and socio-economic benefits. The consent was subsequently subjected to legal challenge. At no point during that legal challenge was there any suggestion of a detrimental impact on people’s health in Shetland. In a situation where real evidence was required to back up (internet trawled) hypothesis, no argument was made, whatsoever, on a possible detrimental effect on the Shetland public’s health.
A decision has recently been taken on phase one of the necessary cabling between Shetland and the UK customer, across the Moray Firth. That will be built with the electricity regulator, Ofgem’s, blessing.
So, at a time when large scale onshore wind power is becoming one of the cheaper forms of electricity generation, the Viking windfarm has been subjected to very close financial, technical and environmental scrutiny, and has the confidence of expert opinion generally. Proof of this is that a very large company, SSE, has invested in Viking and has continued to support it throughout the provocative antics of Sustainable Shetland.
The trust will continue down the road it has chosen, but having to deal with an unanticipated judicial review, and now with an appeal which seems to have no hope of success, only of causing further delay, does not make life easy, in an environment where daily there are new demands on trust disbursements. SCT will work hard to harvest the guaranteed, government-backed profits from the project. But, if trustees were forced to dilute or abandon the investment in Viking, those profits will go elsewhere, and that elsewhere will be outwith Shetland.
Another publicly expressed nonsense is that it was the prospect of Viking Energy profits that encouraged councillors to continue overspending. I have been a member of every council since 1994, bar 2007-2012, and such a notion has never been mooted in my presence. Councillors overspent because everything they started, with community acclaim usually, went on to grow unchecked. It was bad control systems, and a genuine desire, by all involved, to do the best they could for Shetland, as well as an understandable desire to be re-elected (imagine if you went against your local leisure centre, in the face of everybody else getting one) that did the damage.
In any event, a decision at the end of 2007 meant the community shareholding in Viking Energy, which I remind everybody is the biggest community stake in a renewable project in this country and far beyond, was transferred to Shetland Charitable Trust. That body, of which I am a trustee, and for which I speak on investments, currently puts some £11million per annum into support of activities for the Shetland population. Trustees are currently aware that that is too much, and will probably have to be cut by about £2million. That will have an impact and, in an era of a declining public sector, an even greater one than it might once have had.
An unjustified notion which seems to have gained currency, and which I need to address, is about "proportionality in charitable investments" i.e. what proportion of its funds is a charity allowed to invest in any one thing. As things stand at the moment, there have been no discussions of any kind with the Office of the Scottish Charities Regulator (OSCR) about investments, and neither OSCR nor the trust has sought any such discussions. If the trust needs to discuss some matter with OSCR, we will do so. This figure of a 20 per cent limit in any one investment was even alluded to on Radio Shetland, and I can only assume it has its origins in malicious rumour.
I have to say personally that I am shocked by this latest attack in the “war” on the Shetland people's charitable trust, which Sustainable Shetland has mounted in the face of one of the clearest legal decisions ever written. I had hoped for better from them, but I consider that the right outcome for the Shetland Charitable Trust, and for the Shetland community, is something we must fight for with all means available.