Ofgem has said it expects to approve a £600 million project to boost the capacity of the electricity transmission network in Argyll and Bute.
In response to a recent surge in connection applications from renewable generators, Scottish and Southern Electricity Networks (SSEN) is planning to raise the voltage level of several sections of overhead power lines, while also building an entirely new connection to an existing line.
The company is seeking funding for the Argyll and Kintyre project through the Large Onshore Transmission Investment (LOTI) re-opener mechanism.
Ofgem gave preliminary approval for the project in December after conducting an initial needs case assessment. It has now issued its minded-to decision for the final needs case assessment.
SSEN is already replacing a long stretch of the overhead power line on the Kintyre peninsula, which is coming to the end of its operational life. To ensure it is future proof, the existing 132kV line between Crossaig and Invernay is being replaced with a new 250kV line, although it will initially only be operated at 132kV.
As part of the Argyll and Kintyre project, the company is planning to upgrade the substations along the route to enable the line to be operated at the higher voltage level. It will replace two substations at An Suidhe and Crarae, build a new substation at Craig Murrail and relocate the Port Ann grid supply point to the site, and replace the Crossaig substation with a new 275kV/132kV substation to connect to the 132kV line down to Carradale.
The company also intends to build around 10km of new 275kV overhead line between Invernay and a new 275/132kV substation at Creag Dhubh to replace the old 132kV line. This circuit will initially be operated at 132kV until the other substation upgrades have been completed.
SSEN is additionally planning to build around 14km of entirely new 275kV overhead line to connect the new Creag Dhubh substation to SP Energy Networks’ 275kV line between Dalmally and Windyhill.
For the initial needs case assessment, SSEN estimated the price tag for the upgrades at around £352 million but it has since raised this figure to £600 million due to refinements to the project’s scope and above-inflation cost increases caused by global supply constraints.
Ofgem said it acknowledges the reasons for the increase which will be scrutinised further at the third and final project assessment stage.
The pipeline of prospective projects that may need to connect to the network has also increased significantly since the initial needs case assessment.
Almost 600MW of generation is already connected to the electricity transmission network in the area. SSEN previously identified projects that could increase this to 3.3GW but there are now enough projects in the pipeline to increase the total to nearly 4.1GW. The amount of contracted generation in the pipeline has increased by around 1.6GW to almost 2.3GW.
As a new, separable and high value (more than £100 million) project, Ofgem said the Argyll and Kintyre scheme does meet the criteria for late stage competition. However, the regulator said implementing the Competitively Appointed Transmission Owner and Special Purpose Vehicle models could cause significant delays and it is not confident that the Competition Proxy model would benefit consumers.
Rob McDonald, managing director of SSEN Transmission, said: “Ofgem’s minded-to decision is a hugely important milestone in taking forward this much needed project, which will play a major role in securing future electricity supplies across the north of Scotland and enabling the connection of new renewable energy generation in the region.
“By enabling the growth in low carbon and affordable renewable electricity generation, this investment will also help support the country’s future energy security, reducing our dependence and price exposure to volatile global wholesale gas markets. The need for this project is beyond doubt and we welcome Ofgem’s clear acceptance of the need for this project following its assessment of our robust final needs case.”
The deadline for responses to the minded-to decision is 15 September.