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Marine energy research projects near the Orkney islands may need public funding to get a grid connection, according to a government report published on Monday.
There is a “looming underwriting funding gap” for a proposed 180MW cable to Orkney, the report warned. The link is needed to support a growing number of wave and tidal projects in the area. However, the technology is not yet advanced enough commercially to generate enough money to cover the costs of the related infrastructure.
It “may be justified” to fund some research and development grid capacity, the report suggested. This would most likely come through a body such as the European Marine Energy Centre, which hosts 10 developers in the area.
Orkney is one of three planned Scottish island transmission connections that are caught in a deadlock. The others are a 450MW cable to the Western Isles and a 600MW link to the Shetland Isles.
Ofgem will only approve investment in the cables if there is firm commitment from island renewables developers to use them. Meanwhile, renewables developers are reluctant to make investment decisions amid uncertainty over when the grid connection will be available. It can take upwards of four years to get an undersea cable approved and built.
There is also the issue of cost: windfarms on these islands will face higher grid access charges than their mainland counterparts. In recognition of this extra cost, the Department of Energy and Climate Change (Decc) has proposed a higher “strike price” of £115/MWh for power generated by island windfarms.
The report, commissioned from consultancy Xero by the UK and Scottish governments, said this higher strike price was not enough on its own. It said: “To be effective, the Scottish islands strike price needs to factor in lengthy grid connection lead-times and provide longer-term visibility on levels of support.”
Other recommendations included a review of transmission charges and Treasury loan guarantees.
UK energy secretary Ed Davey said: “We have already made more progress in the last year than for many years, after the UK government announced last December additional support for onshore wind projects, with a special higher Scottish Islands strike price. While that initiative itself should unlock much potential green energy, I’m determined to tackle remaining issues despite the complexity involved.”
Scottish energy minister Fergus Ewing highlighted the “significant challenges” in getting grid connections completed in time. Monday’s report will “help us to address the critical remaining barriers”, he said.
“There is wide acknowledgement across both the Scottish and UK Governments that the Scottish islands hold huge renewable energy potential, which could make a substantial contribution to both governments’ 2020 renewable energy targets and longer-term climate change ambitions.”
Decc is expected to publish an update on the renewables subsidy budget, including support for Scottish island projects, in the next few weeks.
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