OFGEM New approach to secure Shetland electricity supply (2664X)
23 November 2017 - 6:00PM
UK Regulatory
TIDMBD56 TIDMSSE
RNS Number : 2664X
OFGEM
23 November 2017
23 November 2017
New developments result in a fresh approach to securing Shetland
electricity supply
Ofgem has decided to reject a proposal by National Grid Shetland
Link Ltd and Aggreko to build a subsea electricity distribution
link from Shetland to mainland Great Britain.
Scottish and Southern Energy Networks (SSEN), the system
operator for Shetland, recommended the proposal in May following a
competitive process and in July Ofgem launched a consultation on
the costs of it. Ofgem agrees that the companies made an efficient
business case to develop the link.
However, since then two major developments have changed the case
for the proposed link.
-- A change made in July 2017 at EU level to a document that
sits under the Industrial Emissions Directive (IED) means that
tougher emissions targets which were due to apply to Lerwick Power
Station from 2020 will now only apply from 2030. This view is
supported by the Scottish Environment Protection Agency (SEPA).
-- In October 2017 the Government announced that, subject to
receiving State Aid approval, wind farms on remote islands such as
Shetland will be eligible to compete for a Contract for Difference
(CfD) in the next auction for less established technologies,
planned for 2019.
In light of the changes under the IED, Ofgem sought assurance
from SSEN that security of supply on Shetland could be maintained
until at least 2025. SSEN confirmed that with targeted investment,
security of supply could be provided until 2025 through a
combination of Lerwick Power Station and additional supporting
measures. This can be done at a cost that is significantly below
that of the National Grid Shetland Link Ltd and Aggreko solution.
This also allows for the possibility of further savings being
realised if a more integrated solution comes forward, notably if a
transmission link is needed following the next CfD round.
-ends-
1. Ofgem will publish a document setting out its decision in
more detail next week.
2. Lerwick Power Station on Shetland was built in 1953. It was
expected that it would need to have closed by 2020 as it would not
be compliant with the IED.
As a result, Ofgem decided in 2014 to require SSEN to run a
tender for ensuring security of supply on Shetland. SSEN completed
this in May 2017 and recommended the proposal by National Grid
Shetland Link Ltd and Aggreko for an electricity distribution link
between Shetland and the mainland with a backup diesel generator on
Shetland.
Changes introduced on 31(st) July to a document that sits under
the IED mean that tougher emissions targets will only apply to
'small isolated systems' such as Shetland from 2030. In Scotland,
SEPA is responsible for ensuring compliance with the IED. SEPA has
confirmed that the change means the previous deadline of 1 January
2020 for Lerwick Power Station to comply with those targets has now
been put back to January 2030. However, SEPA noted that it will
also undertake a review of its emissions performance and decide
whether additional conditions are required.
3. For more information on the Government's CfD allocation
rounds, see this. Government has confirmed that remote island wind
projects, including in Shetland, will be eligible to compete in the
next round for less established technologies, subject to receiving
State Aid approval."
Further information
For media, contact:
Chris Lock: 0207 901 7225
Media out of hours mobile: 07766 511470 (media calls only)
For investors, contact:
Martin Young: 0207 901 7114
About Ofgem
Ofgem is the independent energy regulator for Great Britain. Its
priority is to make a positive difference for consumers by
promoting competition in the energy markets and regulating
networks.
For facts, figures and information about Ofgem's work, see
Energy facts and figures or visit the Ofgem Data Portal.
Follow us on Twitter @ofgem and LinkedIn
This information is provided by RNS
The company news service from the London Stock Exchange
END
IRSZLLFLDFFZFBD
(END) Dow Jones Newswires
November 23, 2017 02:00 ET (07:00 GMT)
Sse (LSE:SSE)
Historical Stock Chart
From Apr 2024 to May 2024
Sse (LSE:SSE)
Historical Stock Chart
From May 2023 to May 2024