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Affordability question over Lewis sub-sea cable       21/12/12

The question of “cost and affordability” of a sub-sea cable required to export renewable electricity from Lewis has been raised with the UK and Scottish governments by the national grid operator for Scotland.

Scottish and Southern Energy (SSE) which operates the electricity grid north of the border stalled the project after the initial cost of around £300 million more than doubled to £700 million.

Work is now pushed back by over a year and delays the construction of wind farms on Lewis.

It is understood a crunch make-of break time will be in the Spring when windfarm developers will be asked to pay towards the extra costs of the Minch link.

SSE discussed funding issues with regulator Ofgem which has still to approve the project.

Construction of the proposed underwater link between Lewis and Ullapool was due start soon and scheduled to be ready in 2015.

Now it seriously risks being pushed beyond the revised late 2016 date.

In common with other major grid improvements in the north of Scotland and an in-depth review of the project is underway by SSE

SSE says securing the financial backing from windfarm developers to underwrite the interconnector is “uncertain” at the present time with the industry undergoing a period of regulatory and political review - including the question of “affordability of island generation.”

David Gardner, SSE’s director of transmission, said: “Following the previous statement on 1 November 2012, further discussions have been held with UK Government and Scottish Government regarding the cost and therefore affordability of the link to generators and, ultimately, to electricity consumers in Great Britain.”

He added that SSE “continues to work closely with all parties involved in the Scottish Islands Renewables Generation group, chaired by UK Government and Scottish Government, which is considering the costs of generating power from the Scottish islands and options for addressing or mitigating the impact of transmission charges.”

He stressed there are “significant issues” for the steering group to get resolved and SSE “has emphasised the importance of timely action to meet the challenging programme for commencing work on the Western Isles link.”

He said all the grid improvements caused particular concerns due to demand for key plant items (for example high voltage cable technology, cable manufacturing capacity and subsea installation equipment) “exacerbated by a restricted market place and the number of competing projects within the UK as well as further afield across Europe and the rest of the world. Equally important is the availability of people with the necessary skills and experience.”

Mr Gardner highlighted obstacles in progressing complex engineering projects such as: a clear need for the project in the first place; value for money for the customers who will ultimately pay for the work; planning consents, support from developers and key stakeholders; and a supply chain that can meet delivery timescales.

He said a further update on the subsea cable project will be made in the early months of 2013.