Ofgem to review 600 MW Shetland HVDC link plan

Both bids for Ofgem approval were linked to the go-ahead of the 475 MW Viking Wind Farm, a joint venture between SSE Renewables and Shetland Council, which SSE Renewables says is “the anchor project that commercially underpins the link”.

However, Ofgem advised that the case for approval would need to be re-submitted after the Viking Wind Farm failed in October’s Contracts for Difference auction.

According to SSEN Transmission, the proposed 600 MW High Voltage Direct Current (HVDC) interconnector, linking Kergord on the Shetland Isles to Noss Head on the Scottish mainland, would allow new renewable electricity generators on Shetland to export low carbon electricity to the GB market. 

The link would also ensure Shetland’s future security of supply, as the largely diesel-powered Lerwick Power Station, the islands’ main current power source, is expected to begin its shutdown in 2025. 

The 600 MW link is scheduled to be energised and operational by April 2024.

We have submitted a robust investment case to Ofgem which makes it clear that a 600MW link remains the most economic, efficient and timely option to secure Shetland’s future energy needs

Rob MacDonald, managing director, SSEN Transmission

SSEN first submitted its request for funding in September 2018, on the basis that the Viking Wind Farm would secure a subsidy via Ofgem’s Contract for Difference auction the following year.

Ofgem issued a “minded-to” letter supporting the project in March 2019, making success in the the Contracts for Difference auction a condition of its approval.

But when the wind farm failed to win a Contracts for Difference, Ofgem advised SSEN Transmission to resubmit its bid, saying that it should demonstrate the continued need for the proposed link, and consider an alternative size of link or alternative conditions for approval.

Ofgem’s letter also said: “If we receive a revised submission we will endeavour to consider it as soon as possible and will consult on our views on the revised Final Needs Case submission ahead of reaching a decision”. 

SSEN has now opted to resubmit a proposal based on the same capacity, arguing that analysis by the National Grid Electricity System Operator supports its case that a 600MW link as the most economic, efficient and timely option. 

Commenting on the new submission, Rob McDonald, managing director for transmission, said: “We have submitted a robust investment case to Ofgem which makes it clear that a 600MW link remains the most economic, efficient and timely option to secure Shetland’s future energy needs.

“As well as providing a connection for Shetland’s renewables, the link will also help address Shetland’s security of supply needs as well as offering Shetland’s oil and gas sector a unique opportunity to decarbonise its operational electricity requirements, delivering a whole system approach to support the transition to net zero emissions.

“Whilst we have listened to calls to consider delaying investment to develop a bigger link, our analysis shows that a bigger link would not be economic or efficient and would create a delay of at least two years, jeopardising the potential of any transmission link to Shetland proceeding.   

“We now look forward to working constructively with Ofgem, our contracted developers and other stakeholders to progress the transmission link in a timely manner.”

According to an update on SSE Group’s website, Scottish renewables “is fully committed to building Viking Wind Farm and intends to take a final investment decision as soon as possible.

“Enabling work on the project has already begun to ensure that it can proceed without delay when a final investment decision is reached.”

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