This letter sets out our initial views on the Needs Case for SHE Transmission’s proposed transmission project in northern Scotland. The project involves a subsea High Voltage Direct Current (HVDC) cable link between Caithness and Moray to be built by 2018 and is estimated to cost £1.3 billion.
We are assessing this proposal under the Strategic Wider Works arrangements introduced as part of the RIIO-T1 price control. We are at the Needs Case stage of our assessment which focuses on the strategic aspects of the proposal to ensure the proposal is the right thing to do for consumers.
Our initial view is there appears to be a need for a reinforcement of the transmission system in northern Scotland in future. The analysis shows existing transmission capacity could be exceeded, with the timing depending on the generation scenario. However, the case for the proposed subsea cable solution is finely balanced. On the one hand, the cost-benefit analysis suggests an alternative combination of onshore reinforcements could provide even greater net benefits to consumers than a reinforcement involving a subsea cable when considered in the context of wider system requirements. On the other hand, issues such as uncertainty over the scope, costs and timing of the onshore options and potential wider benefits of an earlier reinforcement could mean that the proposal’s strategic value might be greater than is currently captured in the cost-benefit analysis.
We consider that now is the right time for us to be consulting given SHE Transmission’s proposed procurement plan as this allows all options to be kept on the table. We are seeking your views on SHE Transmission’s proposal and our initial views set out in this letter and welcome responses by 28 May 2014.