Shetland faces an eight-year wait before its £1 billion community windfarm can be fully up and running, it has emerged.
The target of 2015 was revealed by Scottish and Southern Energy (SSE) chairman Sir Robert Smith on Friday at the historic signing in Busta House of the power company’s partnership agreement with SIC-owned Viking Energy.
The expected timescale before the 200 turbines are in place is three years longer than previously indicated to councillors and the Shetland public.
Sir Robert said very little work would be done on the ground until possibly 2011. The subsea cable, which the entire venture depends on, would be the first major works before the turbines could be built and posted in the hills above the Lang Kames, north of Voe and possibly along the side of Dales Lees.
Viking Energy has stated that the actual construction work will take over two-and-a-half years from when the first road goes in to when the last turbine is commissioned.
A connection to the National Grid will only become available post-2012 if and when the controversial Beauly-Denny pylon line is upgraded.
Viking Energy has said that extended delays in getting the windfarm into action could be crippling for a number of reasons, such as the need to get a head start on possible large-scale rivals, not just those in windpower but in wave and tidal too as they catch up in the technology race.
Although the mood at the Busta signing was wholly upbeat, Sir Robert made it clear that the windfarm is still a dream because of the hurdles in its way. He could only say he was “optimistic” that the joint vision would “become a reality”.
His estimate of the cost of the Viking Windfarm may also raise a few eyebrows, the ballpark figure previously having been around £450 million and, most recently, £600m.
He said the windfarm itself would cost around £600m but he added in the connecting cables with a price tag of around £400m, amounting to a £1 billion venture which investment would have to be raised for.
Asked where it was going to come from, he said some would be borrowed from investors in the City of London or overseas and some would be in the form of equity capital from SSE shareholders.
Speaking to The Shetland Times, he revealed that four cables, not two, will be required to transport power down to the National Grid and, during times of calm weather, for sending a supply back up to Shetland instantly.
The cables would be laid in pairs a good distance apart so that in the event of a cut, perhaps caused by a ship’s anchor, there would not be a catastrophic break in supply.
In his speech at the signing, Sir Robert said the partnership was “the largest community joint venture project anywhere in the world”. It is Scottish and Southern’s only such partnership.
“For us, this is very exciting, very historic,” he said. “We look forward to playing our part.”
The 600-megawatt windfarm massively outguns SSE’s recent power developments, including the new hydro-powered station Glendoe at Loch Ness which is rated at 100mw. Sir Robert said the Shetland windfarm would have around 15 times more output. “That’s big!” he said.
Shetland currently consumes 45-50mw provided by the Lerwick Power Station, the power station at Sullom Voe and the feed from the windfarm above the Dale golf course.
Councillor Drew Ratter, the chairman of Viking Energy, revealed at the signing how the joint venture might never have been born had it not been for a chance encounter with SSE chief executive Ian Marchant.
He said the two had been at a meeting in Inverness and got chatting in the toilet, “as you do”. As Mr Ratter put it: “Mighty oaks from small acorns grow.”
Friday’s event was choreographed to mimic the historic signing of the Busta House Agreement in 1988. That event marked the end of a 10-year dispute over leasing the Sullom Voe Terminal site, finally bringing together the 32 oil companies and the SIC in a complex financial deal which pumped some £150 million in rent and other fees into Shetland’s coffers.
The era of energy from oil through Shetland was supposed to end around the year 2000 but has been extended by perhaps another 25 years.
The agreement at Busta this time around joins SSE and Viking Energy to take forward as a single business what had been two parallel plans for windfarms in the Central and North Mainland.
They will own it 50-50, splitting the profits. Last week it was revealed that these could amount to more than £25m a year each before tax.
Around 40 people (all but three male) witnessed Friday’s signing, including councillors and SIC officials, MSP Tavish Scott and several of the pioneers of wind generation in Shetland, including Michael Thomson, David Thomson and Angus Ward of Shetland Aerogenerators, who have a 10 per cent stake in Viking Energy.
Four council representatives sat at the top table in Busta’s Long Room with Scottish and Southern representatives: They were convener Sandy Cluness, Mr Ratter and Viking Energy directors Bill Manson and Alastair Cooper, the head of development resources and along the other half of the table were Sir Robert, SSE’s head of projects Dr Brian Smith and its project manager Dr Chris Marden.
Mr Cluness said Shetland’s long-standing relationship with oil companies had demonstrated its ability to work in partnership with some of the biggest companies in the world.
SSE is the third biggest electricity and gas supplier in the UK, valued at £13 billion on the stock market.
The famous Shetland wind was posted missing on the morning of the signing, although not for long. As the convener said, it is always a feast or a famine.
Complimenting all those who had worked hard to get the windfarm to this stage, he said: “This is a great day for Shetland and for all of us.”
He added later: “The Shetland community at the end of the day will make the decision one way or the other.”
Mr Ratter also heralded it as “an historic day”. He said that in 2007 it would be a struggle to find anyone in Shetland who regretted the islands’ involvement with the oil companies down the years and he hoped the same would be true in the future for renewable energy.
He said: “Shetland has the best natural energy resources in the world and it is important that these are developed in a way that leaves a significant financial and environmental legacy in the community for generations to come.
“I am very pleased that a company as big as Scottish and Southern Energy have recognised our ambition and feel that our objectives are compatible with their own.”
Talks so far with SSE had been “quite stiff”, he said, but “unfailingly constructive”.
There would undoubtedly be some rocky times ahead but a good relationship should carry both sides forward, he believed.
He warned of the importance of keeping green organisations onside, such as Scottish Natural Heritage and the RSPB, while the windfarm plan progresses because if they went against it it could fail.
He continued: “Our next big challenge is to bring along the public of Shetland and this will happen before anything major is committed.”
Although a small poll has shown good public confidence in the plan, he said the community’s support must not be taken for granted and the council and Viking Energy would have to live up to that expectation.
On SSE’s behalf, Sir Robert said the company had ambitious plans for the future in renewable energy and the Shetland project could be “a world leader in terms of scale, the richness of the natural resources being harnessed and the involvement of the local community”.
During Friday’s ceremony, Mr Scott MSP said it was a very important day for Shetland for decades to come. He said it was “an investment for the next generation of Shetlanders”.
Afterwards, Green MSP Eleanor Scott commented from afar, calling the proposal “very positive”, although she admitted she knew little of the detail.
She said: “Shetland Islands Council should be congratulated for bringing this forward. As well as contributing to the battle against climate change, community-owned wind farms help ensure that profits and benefits stay in the locality.”
By John Robertson
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