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Ofgem has withheld funding for two new transmission connections to Shetland and the Western Isles after several proposed windfarms on the archipelagos failed to secure agreements in the latest Contracts for Difference auction.
Back in March, the regulator provisionally approved a request by Scottish and Southern Electricity Networks (SSEN) to spend £709 million connecting the Shetland Isles to the mainland power grid by 2024 via a 600MW subsea cable. The company has since lowered its cost estimate to £649 million.
However, final approval was conditional on the Viking Energy windfarm bagging a contract in the auction, which it was unable to do. The project, which is being developed by its parent company SSE, would provide up to 457MW of new generation capacity.
In light of the results, Ofgem has invited SSEN to submit a revised needs case for the connection. It said the firm may wish to consider “whether its current plans for the transmission link remain appropriate or if an alternative size of link or alternative conditions for approval should be proposed”.
SSEN is also seeking funding to install a 600MW connection between mainland Scotland and the Western Isles by 2023. In its final needs case for the project, the company estimated the cost at £663 million but has since cut the figure to £624 million.
Ofgem turned down the request in March due to concerns that the power line might be underutilised but said it would be minded to approve a smaller 450MW connection if the Stornoway and Uisenis windfarms secured CfDs.
The 189MW Uisenis project was successful in the auction, as was the 49.5MW Drium Leathann windfarm, which will also be built on the Western Isles. However, the 180MW Stornoway project was not.
As with the Shetland Isles connection, Ofgem has therefore invited SSEN to reconsider its plans and submit a revised business case.
The regulator announced over the summer it was considering a request by SSEN for its distribution arm to contribute financially towards both the Shetland and Western Isles links, as well as a third 220MW connection to Orkney.
Ofgem has now said it expects to publish an “in-principle” decision on the company’s funding proposals for the Shetland link in November.
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