Ofgem has given the green light for SSE to contribute to fund the construction of the first electricity transmission link between the Scottish mainland and the Shetland Isles.
The new 600MW link is required as the power station at Lerwick, which is currently the islands’ main source of power, is due to close in 2025 due to concerns over emissions.
In order to make up the shortfall, it will be necessary to build a new power station or create a new sub-sea link with the north Scotland grid, which is run by SSE.
Ofgem has now announced its approval for SSE’s application to contribute towards the cost of the new cable, which would enable the Shetlands’ burgeoning wind power industry to export electricity as well as ensure the islands’ energy security.
SSE has estimated that the islands will be reliant on imports of electricity via the transmission link for around one-sixth of the time.
The north Scotland network operator has calculated that it will provide £250 million towards the £709 million cost of the project with its contribution capped at £394 million.
But SSE said the new link will save around £140 million compared to the cheapest alternative market-based solution, such as building a new power station on the islands.
Following Ofgem’s decision, SSEN Distribution will also now progress preparation of the Shetland standby arrangements to complement the transmission link.
Ofgem has also stated that it will consult early next year on similar contributions to the Western Isles and Orkney transmission links, which SSE has also proposed.
Colin Nicol, managing director for networks at SSE, welcomed Ofgem’s decision to approve his company’s ‘whole system solution’ for Shetland. .
He said: “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.”
SSE will shortly submit proposals to the system operator and relevant industry bodies on t changes to industry codes and license conditions that will be required to implement the new link.
The company’s generation arm is also planning to build up to 457 MW of wind power at its Viking project on the Shetlands, which received a setback in September after failing to secure support in the government’s latest Contract for Difference auction.