National Grid, the electricity system operator, along with the Scottish monopoly transmission owners, SSE and Scottish Power, are currently carrying out a review of the Offshore Transmission Network prior to leases being awarded under the ScotWind programme.
The review was prompted by the recent Crown Estate leasing round in England and Wales which gave rise to a profusion of separate onshore substations and overhead lines. In an effort to avoid this in Scotland, the Offshore Transmission Network Review (OTNR) is considering whether all ScotWind connections should be grouped into three or four regional hubs.
For the ScotWind North region, including the three areas which are included in the leasing process around the Western Isles (N2, N3 and N4), SSE are already offering to potential developers Grid connections only to the nearest proposed hub at Dounreay, in an apparent attempt to pre-empt the outcome of the review.
This has major implications for the islands which could lead to losing out on most of the economic benefits, even if the three large offshore wind projects go ahead, probably by the end of the decade.
It is also uncertain if the SSE scheme would, if accepted, recognise that there will be spare capacity on the long-awaited interconnector between Lewis and the mainland – thereby undermining the current case for it to be installed.
The energy regulator, Ofgem, ruled in 2019 that, with 420mw of onshore wind consented, a 450mw link could be built but not a 600mw link unless additional generation came forward. Island developers require a 600mw link to avoid crippling Transmission Charges compared to mainland projects.
Councillor Roddie Mackay, leader of the Comhairle, said: “National Grid levy transmission charges to recover the full cost of radial connections like our Western Isles Transmission Link – i..e the interconnector. When you consider that a 600mw link will cost only 15 per cent more than a 450mw link, it is clear island developers will suffer unduly from installation of a smaller cable.
“A 180mw windfarm on a 450mw Transmission Link will pay 40 per cent of the total recovered cost of the cable while the same 180mw windfarm on a 600MW link will pay only 30 per cent of the total recovered cost. With a Transmission Link costing £700m+, that really undermines the economics of these island developments.
“Now there is the opportunity for ScotWind offshore wind developers to put some of their generation into the Western Isles Transmission link, getting a 600mw cable finally over the line, but SSE are resistant.”
Councillor Mackay has written to National Grid, SSE, Ofgem, the Scottish Cabinet Secretary for Energy and the UK Energy Minister to warn against the short sightedness of an OTNR outcome that insists on connection only to Dounreay.
He said: “Why should a developer off the west of Lewis be compelled to run 180km of subsea cable to Dounreay when they can connect to an island Transmission Link 30km away five years sooner?
“Not only does this threaten our interconnector and make no commercial sense but it also undermines our case for community benefit from ScotWind. If these developers landfall on Lewis, they will commit to supporting communities affected and the money involved in offshore wind will mean truly transformational projects in the islands.
“The options we have already been discussing with potential developers range from population retention and climate action to skills development and reduced fuel poverty. If they are forced to bypass the islands to connect to Dounreay, many of these benefits will be lost as developers will have no presence in the islands.”
Meanwhile, the whole issue of Transmission Charges has been the subject of a report by the House of Commons Select Committee on Scottish Affairs which urged Ofgem to complete its review of the grid as a matter of urgency and “prioritise reinforcement where there is potential for a high renewable energy yield”.
The report continued: “Ofgem must consider the financial burden of transmission charges in Scotland. Ofgem should consider the long-term impacts on net zero targets, and ensure renewable energy projects can flourish over the next 30 years, rather than pushing for a short-term, lowest cost view.”
This reflected criticism of the Contracts for Difference system which has been extremely effective in bringing down the cost of subsidising offshore wind with developers bidding against each other to deliver lowest levels of subsidy.
However, one factor which determines bids under CfD is transmission charges based on distance from main markets such as the Central Belt and the London area. On that basis, locational charging disadvantages potential for renewable generation in peripheral areas.
Claire Mack, chief executive of Scottish Renewables, told the Committee: “It was devised 30 years ago in a very different era, when we did not have the renewables-led system we are aiming for now.”
As SSE press ahead with premature assumptions about the Dounreay hub, the Western Isles continue to suffer more than one jeopardy – not only locational charging but also SSE’s plan to by-pass them altogether.
A spokesperson for SSEN Transmission said: “As part of the UK Government’s Offshore Transmission Network Review, the National Grid Electricity System Operator (NGESO) is responsible for developing the Holistic Network Design, in collaboration with GB Transmission Owners, to support the future connection of offshore wind, including the proposed ScotWind sites adjacent to the Western Isles, which have yet to be awarded seabed leases.
“As has already been explained to the Western Isles Council, both verbally and in writing, the NGESO has confirmed it will give ‘due consideration in the Holistic Network Design (HND) process to ascertain whether it may be efficient, co-ordinated and economical to connect some of the successful ScotWind offshore MWs via the Western Isles in future’.
“We remain committed to support the connection of Western Isles renewables, including the proposed 600MW HVDC link which remains subject to Ofgem approval and developer commitment, which to date has not been forthcoming. We would encourage all stakeholders to work constructively if we are to overcome barriers to unlocking the Western Isles renewables potential.”