Both Needs Cases and Ofgem's subsequent minded-to positions were predicated on the successful award of a Contract for Difference (CfD) for sufficient volumes of new renewable electricity generation on each island group.
Following the outcome of the 2019 CfD auction, around 240MW of remote island wind on the Western Isles was successfully awarded a CfD, which is less than the 369MW required to support the transmission investment case. For Shetland, no developer was successful in the auction, with the investment case predicated on the progression of Viking wind farm, with a capacity of 457MW.
However, the potential that remote island wind developers may be able to progress without a CfD has already been publicly acknowledged. Viking wind farm has confirmed that it is still committed to developing its project on Shetland and if a way forward can be found to deliver the additional capacity required on the Western Isles, sufficient generation on both island groups will be established to demonstrate the need for both links.
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The update letter published by Ofgem gives developers and SSEN Transmission the opportunity to demonstrate the continued need for the proposed links. This includes provision of alternative evidence to demonstrate generator commitment in the absence of sufficient generation securing a CfD.
SSEN Transmission remains very confident that the proposed 600MW links remain the most economic and efficient solutions for each island group. These links accommodate all current contracted and consented generation on both island groups, with some additional capacity available for further developments.
To provide the best possible opportunity for developers on the Western Isles, SSEN Transmission has made a proposal to Ofgem to address the regulators concerns that consumers may be paying for a potentially oversized link. This would allow for the progression of a 600MW link, subject to the establishment of at least 369MW of generation.
SSEN Transmission also welcomes Ofgem's commitment to publish a decision on SHEPD's proposals to contribute financially towards the proposed transmission links and looks forward towards this timely publication, which will be a relevant consideration for developers.
Commenting on Ofgem's publication, Managing Director for Transmission, Rob McDonald, said: "We welcome Ofgem's continued commitment to provide a way forward for both the Shetland and Western Isles transmission links and allow the determination of the Needs Cases.
"It is now critical that all parties work together to provide the information Ofgem require at the earliest possible opportunity. Ultimately, a successful outcome will depend on renewable developers on both island groups demonstrating that sufficient generation will progress to underpin the transmission investment cases.
"We will now work with all parties to provide all necessary information with the upmost urgency to ensure any delays to the process are kept to an absolute minimum and to help provide the island links the best chance of success."
(MH/JG)
