600 new Scottish energy jobs to be created after OFGEM approves £1.2b subsea electricity link and cuts transmission charges


SSE subsea cable-laying
SSE subsea cable-laying

By Our Renewables Correspondent

UK energy regulator Ofgem has given the green light for a new subsea electricity interconnector between Moray and Caithness which will bring 1.2 gigawatts of Scots renewable energy onshore to the UK grid.

The new subsea link will connect the electricity grid on either side of the Moray Firth. SHET has already submitted more details on the project, and Ofgem is currently analysing them to check that the spending, technical and delivery plans for the upgrade are appropriate and offer value for money for consumers.

If Ofgem finds that the project could be delivered for less, then it will lower the amount of funding allowed to complete it.

Scottish Hydro Electricity Transmission division (SHET) will carry out £1.2 billion upgrade of the electricity network, which is due to go live in 2018.

SHETransmission, the electricity transmission subsidiary of SSE plc, welcomed Ofgem’s decision to approve the need for the new transmission link between Caithness and Moray. The new link, which will feature over 100 miles of underground and subsea cable, is needed to transmit a large volume of electricity from renewable sources in the north of Scotland.

Construction work should begin in the next few months and is expected to be completed in 2018. The project will support over 600 jobs during construction and is part of a transformational programme of investment in electricity transmission infrastructure to support the transition to lower carbon electricity generation, increasing security of supply and promoting economic growth.

Mark Mathieson, Managing Director, SSE Networks, said: “As a responsible developer, we have worked with communities and other stakeholders to make sure that we have the best solution for connecting renewable energy to the transmission system. Ofgem has undertaken detailed and extensive consultations on this project in order to ensure the right project is delivered at the right time to minimise electricity grid constraints without incurring unnecessary costs for electricity consumers.

“I am very pleased that it has been given the green light and we will now work with Ofgem on the remaining details and focus on ensuring that the new link is constructed in a safe and responsible way so that the benefits it will bring in unlocking renewable sources of energy for decades to come are realised.”

Ofgem has also announced changes to the methodology for calculating what generators pay to use the electricity transmission network.

This change is officially being made to ‘better reflect the costs that different generators have on the system’ – which has long been a policy supported by the SNP Government and Scottish energy’s renewables industry.

It will come into effect on 1 April 2016. Ofgem analysis indicates the changes will lead to a more efficient system which will benefit consumers.

The methodology will retain the locational signal to encourage generators to build as close as possible to where energy demand is. This reduces the need to build costly infrastructure such as electricity pylons. The main update will recognise that renewable generation uses the system less than traditional forms of generation and so imposes lower costs. The change will therefore more accurately reflect the costs that different generators put on the electricity network.

Martin Crouch, Senior Partner at Ofgem (Transmission) said: “This is a major step forward for an essential upgrade to the high voltage grid so that more renewable energy can connect to the networks.”

And, commenting on the plans to change transmission charges, he added: “The changes to transmission charging are the result of an extensive consultation process and detailed analysis. The new arrangements more accurately reflect the costs of Britain’s diverse energy generation and will lead to lower costs overall for consumers.”

Ofgem’s full reasoning for the two decisions will be published within the next four weeks.

Colin Nicol, Lead Director of Wholesale Generation Development at SSE, said: “Following Ofgem’s recognition back in 2010 that the transmission charging regime needed to be reformed to meet the needs of future generation and the transition to a low carbon economy, we welcome this announcement as going some way to address the inequality faced by generators in the north of Scotland – particularly renewables.

“Ofgem’s decision follows one of the most extensive consultation periods undertaken in the energy industry and whilst we remain disappointed that Ofgem has not brought forward the implementation from April 2016, we now look forward to the introduction of the new charging regime which will help encourage the necessary investment to meet our renewable and climate change targets.”

For Scottish Renewables Ltd, a spokesman said: “Transmission charging for renewable energy projects in the north of Scotland is unfair and in need of reform. So Ofgem’s announcement is a long-awaited, and much welcomed, recognition of the value of Scotland’s renewable energy.

“These changes will help create a more level playing field between generators on the Scottish mainland and those further south, which is crucial if we are to make the transition to a low carbon energy system while also providing value for consumers.

“Despite our disappointment that the new charging regime won’t be implemented until 2016, four years later than originally estimated, this announcement from Ofgem is undoubtedly good news for the sector.

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