The electricity link, estimated to cost around £260m, would enable new wind farms and potentially new tidal power projects on Orkney to send electricity to the rest of Great Britain.
SSEN said that it disappointed in today’s decision, in which the energy regulator has maintained several challenging conditions that need to be met before funding approval for the proposed transmission link from Orkney to Caithness is granted. In its final decision, Ofgem has maintained its position that 135MW of new renewable electricity generation needs to secure planning permission and demonstrate financial viability prior to granting approval for the construction of the link to proceed.
Ofgem, which regulates network companies including SSEN, launched a consultation in December last year on proposed changes the Orkney transmission plan to ensure value for money for all consumers. All energy consumers pay for the cost of investment in new network capacity so the regulator is tasked with ensuring that it obtains the best deal possible for them.
Following consideration of consultation responses and further analysis, Ofgem has decided to approve the plan subject to the conditions set out in its decision. Approval is conditional on a total of at least 135MW of new wind farm projects on Orkney either being awarded a Contract for Difference (CfD) or being judged likely to be developed by December 2021.
Ofgem would expect to be satisfied that new wind farm projects are likely to be developed despite not being awarded a CfD if an independent audit states that the project is financially viable, has signed a relevant grid connection agreement and has been granted planning permission.
SSEN said that, Ofgem’s extension of date in which developers need to meet these conditions from December 2019 to December 2021 means, in turn, that the construction of the transmission link may be delayed for at least a two year period.
SSEN’s Transmission and Distribution businesses now intend to consult with Orkney developers and other stakeholders to help establish the optimal ‘whole system’ solution to unlock Orkney’s renewable potential.
Rob McDonald, managing director for transmission, said: “Whilst we are clearly disappointed with today’s decision, our commitment to work with Orkney developers and other stakeholders to unlock Orkney’s vast renewable potential has not changed.
“With both the UK and Scottish Government committed to net zero emissions, we firmly believe Orkney and Scotland’s other two major island groups will have a key role to play in the fight to prevent the worst effects of climate change.
“We now look forward to working with developers and other stakeholders on Orkney to collectively explore the best way forward to unlock Orkney’s renewable potential.”