Five year reprieve for oil-fired Lerwick power station after OFGEM declares mainland subsea cable too costly

Lerwick Power Station
Lerwick Power Station.. generating since 1953

Oil-fired Lerwick power station is to continue generating for five years after its planned 2020 closure because tough new EU emissions limits will not apply to it until 2030.

Consequently, OFGEM has rejected a proposal by National Grid Shetland Link Ltd and Aggreko to build a subsea electricity distribution link from Shetland to mainland Scotland.

And between now and then, OFGEM is hoping that – subject to receiving State Aid approval – wind farms on the main islands such as Shetland will be eligible to compete for a Contract for Difference (CfD) in the 2019 auction for less established technologies.

Perth-based Scottish and Southern Energy Networks, the system operator for Shetland, has provided assurances to OFGEM that it can provide security of supply to the islands until at least 2025 ‘through a combination of Lerwick Power Station and additional supporting measures’.

An SSEN spokesman said: “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.”

Alastair Cooper, convenor of Shetland Islands Council development committee, commented: “I think this is a very sensible decision – the solution they <SSE> were proposing was not the best one for us.”

24 Nov 2017

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed