412MW Viking may not add up
For the first time, Viking Energy has acknowledged that its planned 412MW onshore wind farm on Scotland’s remote Shetland Islands may not be economically viable without the Scottish or UK government granting additional financial support.
“With the numbers being mooted by National Grid, we do not think we’d be able to get the project away,” Viking Energy chairman Alan Bryce tells the BBC.
“We have a big advantage in Shetland with regards to the level of output,” Bryce says. “But that’s not enough in itself to overcome the charges that we would be facing if they were as high as they are mooted, and if the level of revenue support was no higher than what you would get for a mainland wind farm.”
Previously Viking had insisted that the projected transmission costs for the project, whose electricity will be flowed to the Scottish mainland via a nearly 300km subsea cable, were not so high as to spoil the economics of the proposed wind farm.
Opponents of project seized on Bryce’s comments, arguing that the economic case for the project – which promises to pour tens of millions of pounds into the local community over the course of its operational life – had never been concretely made.
Viking Energy is owned 50% by the utility SSE, 45% by the Shetland Charitable Trust, and 5% by the private developer Viking Wind.
Renewables projects in remote corners of Scotland must pay significantly more in transmission charges than those sited closer to population centres – a source of controversy in the industry.
On 14 May the UK’s Department of Energy and Climate Change (DECC) published a report which found that while Viking and other wind farms on Shetland and the Orkneys would likely be cheaper than Round 3 offshore wind farms – even factoring in transmission charges – they are “unlikely to be economic” under the current incentive regime.
Given delays to a planned high-voltage power link intended to connect to Shetland, now slated for a 2018 completion, Viking likely would not have been eligible for UK’s Renewable Obligation system anyway, and will instead be offered a Contract for Difference, injecting further uncertainty into the picture.
The final transmission charges for future renewables projects on Scotland’s islands are still under discussion, as government weighs the socio-economic and very high wind and wave potential of such regions against the cost of linking them into the grid.
In addition to higher transmission charges, the cost of building and maintaining wind farms on remote islands will also be significantly higher than on the mainland – at least 20%, but as much as 100% higher, according to DECC’s report.
Supporters of the Viking project argue that much of that cost will be offset by the extremely strong winds on the islands. Shetland’s only existing wind farm, the 3MW Burradale project, has recorded a capacity factor of around 52%, among the highest in Europe.
The Viking project, which has incited fervent support and opposition alike in Shetland, received its consent from the Scottish government last spring.