UK regulator approves £1.1bn funding for Moray Firth subsea cable project

17 December 2014 (Last Updated December 17th, 2014 18:30)

UK's power regulator Ofgem has approved £1.1bn funding for setting up a subsea link connecting power grid on both sides of the Moray Firth, in northern parts of Scotland.

UK power regulator Ofgem has approved £1.1bn of funding to set-up a subsea link connecting a power grid on both sides of the Moray Firth, in northern parts of Scotland.

The allocated funding is £105m less than the amount that SSE subsidiary Scottish Hydro Electricity (SHE) Transmission had applied for, however.

"Once operational, the link could increase the grid’s energy capacity by 1.2GW."

Final funding decisions for the project were ultimately made to reduce costs for the consumers, according to Ofgem.

The project is expected to be completed by 2018. Once operational, the link could increase the grid’s energy capacity by 1.2GW.

The cable will cover a distance of 100 miles (161km), with underground sections. It will also partially run on the seabed from Spittal in Caithness to Blackhillock, near Keith in Moray.

SSE was quoted by the BBC as stating: "SHE Transmission will now closely study the decision to assess whether the allowed costs and mechanism for recovering other future costs are, when taken together, adequate remuneration for the risks associated with the project."

Ofgem’s final decision is £56m more than what it earlier estimated in October.

The assessment was based on analysis which involved unit cost benchmarking, detailed project cost review, comparisons with similar projects, and a review of SHE Transmission’s procurement strategy and processes, Ofgem said.