Vital subsea energy cable put in doubt

A Multi-million pound high-voltage subsea cable linking Orkney to the mainland could be in jeopardy after regulators told a power giant to increase its capacity to keep energy bills down.

Ofgem demanded Scottish and Southern Energy Networks almost double the power that will supply the 220MW link to provide better value to customers by cutting bills.

The power link, which has been proposed for more than a decade, is estimated to cost about £260 million and be completed in 2022.

It would help new wind farms and tidal power projects on Orkney to send electricity to the rest of the UK.

But Ofgem said the proposed 70MW of electricity generated on the island archipelago by SSEN was not enough and asked it to increase its capacity to 135 MW.

It also said there was a risk consumers would pay for a link that is larger than required.

A spokesman for Ofgem, which will make a decision on the business case for the link next spring, said: “The regulator believes SSEN’S proposals do not do enough to protect consumers from the risks of paying for a link that is bigger than needed.

“We have said to them there has to be more generators used in the link.

“They wanted to create 70 MWS of electricity, but we are saying it should carry 135MW, which is almost double.”

The regulator says it will reject the proposed new electricity link unless SSEN, the network arm of Scottish Southern Electricity (SSE), can increase power generation on the islands.

SSEN has spoken to customers, industry stakeholders and the Orkney community during the consultation which has also involved discussing the location of substations and overhead power lines. However the energy firm had concerns about some of the UK regulator’s conditions, which it said put the viability of the power scheme in jeopardy.

A spokesman said: “As the combination of the conditions proposed by Ofgem look extremely challenging to achieve, they risk threatening the viability of the project unless changed.

“SSEN will now undertake a round of engagement with its generation customers and other stakeholders with an interest in the Orkney transmission reinforcement to help shape its response to Ofgem’s consultation.”

The electricity network firm said it “strongly disagrees” with regulator’s view that 135MW of new generation is required before it will allow the project to continue.

It said this contrasted with its own assessment, which suggested no more than 70MW of new generation is required to justify investment in the project.

It added: “SSEN therefore remains firmly of the opinion that the volume of generation required to justify the investment is no more than 70MW and will provide a further update on its assessment of the tipping point in due course.”

SSEN said it would continue to engage constructively with Ofgem to consider all options and ensure price control is maintained and existing project continues.

David Gardner, director of transmission, said: “After more than a decade working on different proposals to provide a transmission connection to Orkney, the publication of the Needs Case consultation, and Ofgem’s recognition there is a clear need to provide a transmission connection, is a crucial step forward for the project and Orkney’s renewables industry.

“While there are still several obstacles to overcome, having got this far it is important we don’t miss this opportunity to unlock Orkney’s vast renewables potential. We will therefore continue to work in close consultation with our generation customers and wider stakeholders to address the key points raised by Ofgem in its consultation.”