Ofgem to help fund Moray Firth subsea link

Energy firm SSE will install the Moray Firth subsea cable. Picture: PA
Energy firm SSE will install the Moray Firth subsea cable. Picture: PA
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A NEW subsea link which will connect the electricity grid on either side of the Moray Firth has been given the go-ahead from regulator Ofgem, which has offered £1.1 billion of funding for the scheme.

Developer SSE said its plans to complete the project by 2018 ­remained on track despite getting £173.9 million less than it had hoped for from Ofgem, which accused the firm of budgeting for an “over-allocation of staff” and “high average day rates”.

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The 100-mile connector, which will run under the ground and sea between Caithness and Moray, is needed to transmit a large volume of electricity from renewable sources in the north of Scotland.

Connecting 1.2GW of new ­renewable electricity generation to the grid will increase the resilience of Britain’s energy

infrastructure, Ofgem said.

Scottish Hydro Electricity (SHE) Transmission, an arm of Perth-based energy giant SSE, had asked for £1.2bn to carry out the project.

But Ofgem said it had carried out its own costings and did not think that the ­projected cost was justified “on the evidence presented”.

In July, Ofgem published its decision to accept the “needs case” for the transmission project proposed by Scottish Hydro Electric Transmission, subject to there being no material increase in project costs.

“The regulator’s proposal is £173.9m less than the funding request from Scottish Hydro Electricity Transmission to­ ensure consumers pay no more than necessary,” said a statement from Ofgem.

SSE has previously said the project would represent the largest investment in the north’s electricity network since the hydro development era of the 1950s.

A spokesman said: “While SHE Transmission is disappointed with the level of the allowances proposed today, the consultation does enable­­ ­further engagement with Ofgem to take place on important ­issues, such as the best way for treating contingency and risk-related costs.”

A Scottish Government spokeswoman said: “This project will ensure continued progress towards our renewable energy ambitions, support hundreds of jobs during construction and pave the way for connections to Orkney and Shetland.

“Enabling connections to ­support ­future island generation is a top priority for the Scottish Government.”

However, Lang Banks, director of WWF Scotland, said that the construction of the connector underlined calls for energy transmission charges to be scrapped.

Currently, it costs more for companies to transport electricity to the north of Scotland. The UK pricing structure charges energy companies more the further away their customers are from the main centre of ­demand for the National Grid, in the south of England.

He said: “Scotland is very well placed for the resource from ­renewable power and it’s ­always seen as slightly odd that the resource being further away means Scotland is penalised.”