The people behind the proposed Viking windfarm have moved this week to clarify the potential rewards and risks with the project.
However, councillor Bill Manson, the Viking Energy chairman, said there would be no comment on recent calls for a review of the structure of Shetland Charitable Trust.
Mr Manson said the project’s main concern was creating an opportunity for investment.
“I’d like to remind people about the scale of that opportunity. I’d also like to remind them about the potential costs and risks attached to the opportunity,” he said.
“Shetland Charitable Trust has agreed to purchase the project. At the same time it has created an investment provision of £3 million. This is not a committed expenditure, but it does include everything spent to date.
“Viking Energy has a number of significant ducks that need to line up in a row. Until this happens, trustees cannot, and will not, be asked to make any commitments on the full windfarm project.
“There are many uncertainties. The feasibility and development phase aims to establish that the project can meet the investment criteria of Shetland Charitable Trust, the banks and Scottish & Southern Energy (SSE).
“A decision to proceed with the full project will require a step change in the level of investment to be considered. To be clear, Shetland Charitable Trust is not committed to building a windfarm. It is committed, at this stage, to investigating a potentially lucrative investment opportunity for this community.”
Key points to be clarified include securing planning consent for the windfarm, as well as a transmission connection to export the power.
Turbine supply terms and capital costs also need to be agreed, along with interest rates and financing terms.
Long term arrangements to sell the power also need to be settled on.
Mr Manson said financial details relating to the project had been presented at an Aith public meeting back in April, but said: “All figures are estimates and under going review to be firmed up over time.”
He said the capital cost implication for the trust stands at around £270 million, adding that the bulk of that expenditure would be covered by commercial lenders if the trust could put up 10 or 20 per cent.
It’s expected the project would achieve a cumulative profit for Shetland Charitable Trust in excess of £400 million before depreciation and tax.
The profit is estimated after making assumptions regarding charges to be levied to pay for a transmission connection between Shetland and the national electricity grid.
Admitting those charges are “steeped in uncertainty,” Mr Manson said the windfarm investment could not be made if that uncertainty prevails, or if charges are set at unrealistic levels.
But he said the project would provide further economic returns including upwards of £50 million of rents to local landowners and crofters and upwards of £25 million of community benefit disturbance payments.
Mr Manson said: “The projected extra income to the Shetland community, that the windfarm is envisaged to produce, is substantially more than Sullom Voe has generated directly into the Shetland community purse.”
21 December 2007
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