SSE seeks bidders for new £multi-million Shetland power station – but Holyrood MP fears higher power bills for consumers


Oil-fired Lerwick power station is due to close in 2019
Oil-fired Lerwick power station is due to close in 2019

Scottish Hydro Electric Power Distribution –  part of Perth-based SSE plc – is presently seeking commercial partners to help to keep the lights on in Shetland after its power station on the islands closes in 2019.

SHEPD has been collaborating with the UK energy regulator Ofgem to deliver an ‘open, competitive process’ to ensure the most economic and efficient option is procured now  – before its ageing Lerwick power station comes to the end of its operational life in four years’ time.

But the local Holyrood MP is concerned that consumers will end up paying above the odds.

The Shetland Islands – located about 130 miles north east of mainland Scotland – and are not currently connected to the Great British electricity system.  This means that the Shetlands have to be capable of meeting all of their own electricity needs 24 hours a day, 365 days a year.  Generation and demand in Shetland have to be in balance at all times to keep the lights on.

SSE – one of Britain’s ‘Big Six’ power suppliers – provides electricity to 750,000 customers in northern Scotland – including Shetland, which runs its own separate micro-grid system which has no connection to the Scottish/ British mainland

The two main sources of electricity generation are Lerwick power station and Sullom Voe Terminal Power Station. The power station is nearing the end of its operational life while electricity supply from the Sullom Voe Terminal Power Station is ‘uncertain’ from 2017 onwards.

Shetland offers high potential for the development of renewable energy resources – wind, wave and tidal – with innovative smart grid solutions to manage their contribution to the network.  A trial project called Northern Isles New Energy Solutions (NINES) is already delivering some energy storage and domestic demand side management measures.

Tavish Scott, MSP
Tavish Scott, MSP

However, Tavish Scott (Lib Dem) the local Holyrood MP for the Shetland Isles, is concerned that his constituents may end up paying more than they currently do under these proposal.

Last night, he warned SSE: “On your New Energy Solution for Shetland consultation, I want to make a couple of observations with regard to the importance of there being a clear outcome to meeting the energy needs of my Shetland constituency.

“I was dismayed by OFGEM’s earlier decision to market test the initial submission by SSE to build a new power station in Lerwick to meet the needs of consumers across the islands. I am not clear what will have been achieved by that delay, the extra cost for all parties and the consequences for project management and build.

 “Nor am I clear about who will bear these costs although I can presume that the customer will ultimately see any additional costs of delay reflected in household and business bills.”

SSE held four ‘consultation meetings’ with customers, communities and market participants over this winter to help shape the process. The Big Six generator received more than 300 responses to these consultations.

Subject to agreement with OFGEM and the independent auditor overseeing the bidding process, contractors that show they have the capabilities required will be formally invited to tender for the £multi-million contracts in June 2015.  The main contract areas are:

  • Reliable provision of capacity and energy generation
  • Reduction in capacity and energy
  • Ancillary and back-up generation services for intermittency

Potential bidders to build a new power station on Shetland – in part and/or whole –  should submit expressions of interest by 8 May 2015. 

For more information; tel 01463 728109

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