September 17, 2013

Windfarm developers crunch subsidy numbers

Hebrides News | 17/9/13 |

A new subsidy to encourage the go-ahead island windfarms is being considered by developers.

But the guaranteed price for electricity exported from the Hebrides is only £15 per megawatt per hour more than mainland rates.

The proposed financial incentive of £115 MWh is unlikely to be sufficient to the higher charges to export energy down the national grid to southern markets.

Island developers were hoping for a much higher figure and are now crunching numbers to see if it is financially feasible to build windfarms on Lewis.

Large wind schemes at North Tolsta, Stornoway and at South Lochs on Lewis will not proceed without the link.

The go-ahead of the proposed subsea Minch interconnector cable also hinges on tackling the additional costs of exporting at a distance from major cities.

Transmission charges increase the further from the point of use so it is about 60 times more expensive to export renewable electricity off the islands and down the grid network compared to a generator in the south of England.

Developers hoped the special islands’ strike” or guaranteed price – which replaces the existing Renewables Obligations Certificates (ROC) subsidy – would compensate for the loss of income.

The strike price would see the UK government paying the difference to generators if they are forced to sell their electricity below the level.

If the market price is higher then the energy company will be expected to refund the difference to the government.

UK energy minister Edward Davey said the additional £15 for onshore windfarms on the Western Isles, as well as for Orkney and Shetland reflected “their unique circumstances and potential.”

A consultation on strike prices for onshore wind developments for the islands will last for six weeks.
Mr Davey believes the proposed price will create an extra 400 MWh of energy from the islands.

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