A copy of a letter sent to the local papers this morning:
For 20 years now, Comhairle nan Eilean Siar has supported Renewable Energy development because of its transformational socioeconomic and carbon reduction benefits. However, plans to exploit the islands’ considerable Renewable Energy potential have been repeatedly thwarted by the lack of an electricity export connection (an interconnector) between the islands and the National Grid.
Four things are needed before the Transmission Owner for the North of Scotland – Scottish Hydro Electric [Transmission] Limited (SHE-T) – can build this new £800m interconnector:
- a critical mass of consented Renewable Energy generation, contracted to Grid;
- financial underwriting of the cost of the new Radial Connector;
- UK Government confirmation that ‘Contract for Difference’ support will be available to island generators (a ‘Contract for Difference’ is an underwritten minimum Strike Price which makes island schemes viable by supporting the extra cost of their development); and,
- approval by the Energy Regulator, OFGEM, of the Needs Case submitted by SHE-T in respect of the interconnector.
At the moment, sufficient generating capacity is consented and contracted to Grid and the commercial developers have underwritten the cost of the interconnector through a series of very substantial securities and deposits.
To allow a Needs Case to go forward SHE-T requires significant commitments on the underwriting of grid costs. A SHE-T spokesman recently stated in the press: “What we need, before we are able to make any Needs Case, is a firm commitment from the developers and a commitment that they will underwrite the costs of the cable”. To my mind that comment is critical. Millions of pounds of underwriting will be required for the type of cable needed for the Outer Hebrides. At this stage it is only the larger projects with (with planning and grid consents) who have been able to demonstrate the required financial commitment. These large scale projects are therefore absolutely essential to secure the interconnector.
Based on the commitment shown by commercial developers the current timetable means that the interconnector will be in place by early 2021. There is no other process or timetable that will allow the interconnector to be put in place within that timescale; indeed there is no other process that will allow SHE-T to go forward with a Needs Case in the foreseeable future.
An announcement from the UK Government on CfD support is anticipated before the end of this year and SHE-T will then submit their Needs Case to OFGEM for approval. Other than large-scale commercial developers there are no other projects in the islands with the necessary planning consents and grid contracts in place to allow them to compete in the CfD auction.
Community Renewable Energy schemes are vitally important to the Comhairle and, already, there is 21.5MW of community owned generation consented and contracted to Grid. Ideally, we would like to see all island generation in community hands but the simple fact is that only the commercial generators have the resources to underwrite the cost of the interconnector. Without this underwriting, and sufficient consented and Grid contracted generation in place to justify the new link, there would be no interconnector. Failure of the interconnector project would seriously disadvantage our community generators since the current island Grid is at capacity and the only option for connecting future community schemes is the interconnector.
As commercial companies, developers like Lewis Wind Power obviously require a return on their investment. The Comhairle recognises this but has negotiated a very generous additional package of benefits for the community, including the transfer of a sizeable share of the generation produced by these windfarms into direct community ownership – far in excess of the volume needed to supply island demand. This means that ‘Hebrides Energy’, our new, not-for-profit, community owned Energy Supply Company will be able to generate and sell its own electricity to island consumers at as near cost price as the regulatory regime allows. Other benefits will include unprecedented opportunities for the island supply chain, many new jobs, apprenticeships for our young people and revenue benefits for our communities.
Leader, Comhairle nan Eilean Siar