Energy / SSEN welcomes Ofgem decision on ‘standby’ project
SSEN has welcomed a decision in principle from Ofgem regarding its spend on a project which will allow Lerwick Power Station to go into standby mode.
The energy regulator is minded to approve a request from SSEN’s Scottish Hydro Electric Power Distribution arm to spend around £27 million in the period through to 2028 on the ‘standby solution’.
This project involves a proposed battery storage system opposite the power station, essentially keeping the lights on in Shetland if there is a fault or outage on the subsea cable linking the isles to the Scottish mainland.
Under the new set-up, which will be put in place once cabling and other infrastructure work has been completed and the battery system has been installed, Lerwick Power Station will go into standby mode.
The battery system would power Shetland if there was a fault or outage with the new set-up, such as with the subsea interconnector, while the power station moves out of standby mode.
Welcoming the Ofgem draft determination, a spokesperson for SSEN Distribution said: “The innovative battery and network solution is the crucial next step in connecting Shetland’s distribution network to the mainland grid and will maintain security of supply for Shetland homes and businesses with vastly reduced carbon emissions.”
However, Ofgem’s decision document appears to suggest SSEN has highlighted a possible “serious technical risk” with the standby solution where the fault would be irreparable.
It adds that SSEN would have to incur costs in full to cover the “service providers debt and equity costs outstanding at the point of termination”, as well as having to pay to implement a new solution.
The report said SSEN concluded that while the likelihood of this “termination event” is low, the impact would be significant.
It added it is one the company would be “unable to mitigate and ultimately hold without the necessary support from Ofgem”.
Ofgem said in summary that SSEN requested “consumers take on the risk of the solution failing” and the payments which could be required in the event of this failure.
But the regulator said it does not consider it is in “consumers’ interest to bear the risk of additional costs” if the standby solution fails.
A spokesperson for SSEN Distribution said the company is in “constructive discussion on areas such as technical risk”.
“Due to planned mitigation actions, the probability of this risk is very low,” they added.
Ofgem’s draft determination is currently open to consultation.
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