SUBSEA ENERGY CABLE STUDY EXAMINED BY HIE AND PARTNERS

5th June 2007

The case for laying long distance subsea cables from renewable energy projects on Scotland's islands to areas of large population in the south is far from being clear cut under current regulation, according to a key consultants' report.

The review was prepared by TNEI for island authorities together with Highlands and Islands Enterprise (HIE) and the Scottish Executive to investigate the best options for transmitting power generated by island renewable energy projects to the mainland

TNEI described the current situation as a 'Catch-22 scenario' whereby prospective renewable energy developers require confidence that they will be able to connect to the grid, but conversely, investment in grid infrastructure is reliant on securing a guaranteed level of supply. This, claims the report, is acting as a drag anchor on the potential of the
islands' renewable energy industry.

The existing method for assessing connection requirements only allows grid planners to provide for projects currently under construction. The majority of generation capacity from wind and wave developments currently being proposed can be handled without any need for the Scotland/England interconnector to be upgraded. This, says the report, erodes the commercial case for running long underwater cables from the islands to the south of
England, despite the likelihood of increased capacity predicted to come on stream in years to come from tidal schemes.

Under the current method of basing investment on known demand, it is likely that short subsea cable connections to the mainland and reinforcement of onshore cable infrastructure presents as the most viable options for the following island groups:

Orkney - 2 x 180MW 132kV AC cable connecting from Skail Bay on Orkney to Murckle Bay, east of Thurso.

Shetland - 2 x 300MW 300Kv VSC HVDC cable connection from Dury Voe on Shetland to Cullen Bay.

Western Isles - 3 x 330MW 150Kv VSC HVDC cable connection from Lewis to Ullapool and thence along an underground cable to Beauly.

The report considered other options such as taking a cable from Shetland to electricity generating plants at Cockenzie, Hawthorn Pit, Humberside and Walpole but this did not appear cost effective. Also considered was a strategic 'bulk transfer' connection from Peterhead into England which would act as a third interconnector between Scotland and England and which may benefit some projects.

The length of time it takes to co-ordinate supply and demand between projects and transmission capacity could be minimised by planning consents and wayleave agreements being secured ahead of full investment approval for infrastructure, say the consultants.

Elaine Hanton, head of renewable energy at HIE commented: "Together with our local authority partners and the Scottish Executive we recognise the importance of securing robust grid connections from the islands. This report underlines the difficulty of trying to plan for the long term use of assets within the current regulatory environment. However, we are greatly encouraged by this week's publication by Ofgem of some innovative options for the reform of connection regulations and look forward to contributing to the consultation process to select the most effective way ahead."

Consultation submissions will be supported by evidence gained by Xero Energy, which is due to report back to the partners shortly on its investigations into the regulatory constraints impacting on island grid connections and how it sees these being best mitigated.

The report can be viewed at www.hie.co.uk/subsea-cable