The UK’s energy regulator has turned down plans for a subsea electricity distribution link between Shetland and mainland UK.
The cable was intended to replace Lerwick Power Station, which was expected to shut by 2020.
But changes to EU legislation mean the power plant, operated by Scottish and Southern Energy Networks (SSEN), will be able to operate for longer.
Ofgem decided investing in the power station to keep it running until at least 2025 would be cheaper than building a cable from Shetland to Caithness.
It was expected that the power plant would no longer be compliant with the Industrial Emissions Directive (IED) by 2020 and would need to close.
SSEN looked for alternative arrangements for powering Shetland, and in May 2017 went with a proposal by National Grid Shetland Link and Aggreko for a cable.
But subsequent changes to a document that sits under the IED mean that tougher emissions targets will only apply to ‘small isolated systems’ such as Shetland from 2030.
It means the previous deadline of January 1, 2020 for Lerwick Power Station to comply with those targets has now been put back to January 2030.
SSEN has assured Ofgem that the power station can supply Shetland until at least 2025 with less investment than would be needed for the cable.
A recent UK Government decision on green energy supplements also shifted the business case for the power link.
Last month, it said wind farms on remote islands such as Shetland will be eligible to compete for a Contract for Difference (CfD) in the next auction.
A spokesman for SSEN said: “Today’s announcement from Ofgem regarding future energy arrangements for Shetland.
“As part of its decision-making process and following recent changes to legislation, Ofgem sought assurances from SSEN on its ability to ensure security of supply can be maintained until 2025. SSEN has confirmed that, subject to necessary investment in Lerwick Power Station and utilisation of additional measures, this requirement can be met.
“In line with its responsibilities as Distribution System Operator (DSO), SSEN will continue to work constructively with Ofgem to deliver an enduring and reliable energy solution for Shetland.”
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