Ofgem greenlights Scottish subsea energy link

Ofgem has given the go-ahead to a £1.1bn funding package for an undersea transmission link in northern Scotland which would connect 1.2GW of renewable energy to the mainland grid.

However, the regulator has cut £174m from the original proposal from SSE subsidiary Scottish Hydro Electricity Transmission – to “ensure consumers pay no more than necessary”.

Ofgem cut 16% of the original budget, citing an over-allocation of staff, high average day rates and poor risk assessment in the original costings from SSE. Specificall,y the watchdog snipped 38% from ‘resources’ costs, and 60% from the ‘risk’ allowance.

“We think the costs for the residual risk SHE Transmission is managing look very high and are not justified on the evidence presented,” said Ofgem.

Increased resilience

The new subsea link will will connect Caithness and Moray with more than 160km of cabling to transmit a  a large volume of electricity from renewable sources in the north of Scotland.

By connecting 1.2GW of new renewable electricity generation to the grid following completion of the project in 2018, Ofgem hopes the connection will increase the resilience of Britain’s energy infrastructure.

The regulator also accused SSE of a lack of clarity on the impact that mitigation measures have had on risk probability, and having little justification or evidence informing the estimated impacts of risks.

It went on to claim that SSE’s predictions on required manpower included “excessive monitoring of contractors, some duplication of roles, and high average day rates”.

The funding proposal is now under consultation for four weeks, with a final decision to be made in December.

Brad Allen

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