Planning begins now licences confirmed

The name Northland Power will become very familiar over the next few years following the Canadian company’s success in winning two licences to develop offshore windfarms through the ScotWind round.

By Brian Wilson
Thursday, 20th January 2022, 9:18 am
Updated Thursday, 20th January 2022, 9:41 am
Northland are already involved in the 600MW offshore windfarm, Gemini, off the coast of the Netherlands. Pic: Netherlands Foreign Investment Agency.
Northland are already involved in the 600MW offshore windfarm, Gemini, off the coast of the Netherlands. Pic: Netherlands Foreign Investment Agency.

For the time being, the one to the west of Lewis is by far the more significant for two reasons – its proximity to shore and the fact it will use established offshore wind technology rather than floating wind, which is still in its worldwide infancy and much more expensive to develop.

So who are Northland? Founded in 1987, they are a Toronto-based company, listed on the Toronto Stock Exchange and with offices in eight countries. They are active in windpower, solar and natural gas generation in Latin America, Asia and Europe as well as North America.

Northland have been assiduous over the past year in establishing credentials in the Western Isles. They have developed a good relationship with Comhairle nan Eilean Siar and signed Memoranda of Understanding with the Comhairle, Lews Castle College and community-owned west side estates. They have stressed their record of working constructively with indigenous communities in northern Canada.

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Another selling-point is that Northland are operators of assets rather than simply developers. This commits them to a long-term relationship with the islands whereas many developers who obtain licences will at some point “flip” the project to another company making it even harder to ensure that supply chain and community benefit commitments are met.

One of their early conversations will be with Ofgem, the energy regulator, about grid connections and the vexed question of an interconnector between Lewis and the mainland. Potentially, the development of an offshore wind farm close to Lewis could strengthen the case for an interconnector which onshore wind developments also require.

Northland will want to ensure that there is sufficient capacity on an interconnector. However, the indicative route to market given to them by the grid operators – National Grid and SSE – is not via an island interconnector but, as revealed last year by the Gazette, direct to Dounreay. This would have a major impact on potential economic benefits for Lewis.

However both Northland and the Norwegian company, Magnora, which has won the licence to develop the site most immediately north-west of Lewis are likely to ask Ofgem to call for reconsideration of this “indicative route” now the licences have been awarded to developers who have made local commitments.

The fact both Northland and Magnora have indicated that there will be little delay in starting environmental studies and site analysis reinforces the case stated recently by local businesses for investment in port facilities on the west side of the islands.

Comhairle nan Eilean Siar’s response, after the Gazette reported on concerns among vessel-operating businesses that the work would go elsewhere unless facilities are quickly upgraded at harbours like Carloway, Breasclete and Miabhaig, was that there is plenty time due to the timescales of these projects. However Northland’s statement of intent to start work by the summer supports the case for early investment put forward by the local businesses.

They pointed out that the Crown Estate has been taking large amounts of money out of Loch Roag for decades, through fish farming, with very little re-invested. Will history repeat itself? The three “off Lewis” licences will yield a total of xx million, every penny of which will be paid to the Scottish Government as soon as the licences are signed in April. There will be pressure for at least a share of this money to be spent on local infrastructure, without delay.

Because of the longer timescale involved, there will be less of an immediate focus on the other successful bidder, Magnora Offshore, which is based in Oslo and listed on the Norwegian Stock Exchange. It is only within the past two years that the company has transitioned from oil and gas to renewables but has already established global ambitions.

Magnora Offshore chief executive, Kristin Gjertsen, told the Gazette on Wednesday: “We are very happy but also very humble. This is a huge project and we are committed to carrying it through in a responsible and sustainable way.

“Our plan is to re-visit the island within the next few weeks to make contact with potential suppliers and to develop relationships on the island. Stornoway Port is already a commitment partner for the project and that will lead us into other local contacts and involvement”.

Site investigations and environmental studies will start soon with a view to the project being submitted by 2025 for approval the following year. This would allow Magnora to bid for subsidy through the Contract for Difference scheme by 2027 and, if successful, to make a final investment decision in 2028.

Ms Gjertsen said: “It is our very clear ambition to co-operate with Northland Power. There will be opportunities to share costs and also find better solutions, for example with grid connections. The intention would be to cross the island with a cable and it would make sense to co-operate on that.

“As well as exporting power, the total capacity of the projects should also create an opportunity for hydrogen production”. She said they already have a “great relationship with the local council” and look forward to discussing all of these issues and opportunities very soon.

The licence announcements were widely welcomed. Comhairle leader Roddie Mackay, said: “We are very pleased Northland Power and Magnora Offshore have been awarded leases in Hebridean waters. Both have strong sets of values which prioritise benefit for the communities hosting their deployments.

“in our meetings, we have been impressed by the determination of both to deliver lasting benefit to our island community by supporting new energy solutions, creating jobs in the supply chain, building wealth in our communities and helping to retain population through Low Carbon skills development and re-skilling.

“There is an historic affinity between the people of the Outer Hebrides and those of Norway and Canada and today’s announcement marks the start of a strengthened relationship which, we believe, will bring real and enduring benefit to island businesses and communities”