Shetland windfarm - Viking Energy

[Carlos]

1 Maglev turbine can replace 1000 normal wind turbines ?

[sheepshagger]

the fact that the windmills will be obsolete technology before they are even built will be no barrier to VE who are only interested in lining their own pockets through the salaries they will be paid before the cash runs out.

I've said it before and I'll say it again no trust money, the directors of VE are not putting their own money on the line and it is a limited company so no risk to them

[DavidThomson]

Hi, seemed worth adding a few comments.

 

They came here asking if they could put the wind farm on Shetland

Viking Energy was initiated in Shetland. SSE were proposing a project of their own and it made sense to join the local project with the external project to increase the viability of both.

Can someone tell me what the windfarm will cost me and what return I will get on it?

If the project achieves all the various milestones and the decision is made to proceed with the development the Shetland community would be expected to contribute £30m to £60m representing 10% to 20% of half of the overall capital cost currently estimated around £600m.

With the working basis that nothing would proceed without watertight contracts to guarantee a fixed acceptable price for every unit of electricity produced, we currently calculate that the community could expect to receive community benefit distributions of around £1.5m per year and profits for the community funds of around 18m per year after costs and borrowing repayments. Ignoring the community benefit and any other benefit such as rents, jobs, supply chain business etc, that is an internal rate of return of no less than 25%.

Wouldn't it be more prudent and greener for all to invest in a windfarm on the mainland UK?

Not really. A windfarm in Shetland will produce twice as many units of electricity as an average windfarm on the mainland. Even with the minor electrical losses associated with the cable Shetland’s wind resource is so powerful that it justifies the distance of cable involved and will deliver more units of renewably sourced electricity to the final user. The investment can be viewed in the same light. If windfarms are viable anywhere they will be more viable in Shetland.

What happens if a future government stops the subsidies on windfarms and/or someone else comes along with a cheaper source of power e.g. nuclear?

The UK does have an incentive system but these machines are being built worldwide in places without the incentive mechanism. They would be viable without. Even if they find ‘cheaper’ forms of energy (I would argue whether nuclear was ‘cheap’ even economically) then, as above, the project is protected because it would only happen if there are watertight legal contracts to give a guaranteed income for every unit of electricity produced.

The wind resources offshore the UK mainland are more than sufficient for wind generation and all this crap that we have better wind is just so much sprootle.

The wind resource offshore around the UK is very good and if we could somehow allow unconstrained development it might even be ‘sufficient’ but it is not better than we have here. I’m not sure what evidence would convince you but I’m afraid you are factually incorrect.

[DavidThomson]

a reasonably intelligent man told me that the SIC were planning to borrow £500 million to help finance the windfarm, because the banks won't touch it.

If true, it poses the questions, what is being offered up as security, and who is crazy enough to put up that kind of money for them anyway?

but having to borrow money without knowing for sure that it will be a success is just plain crazy.

A premise of this project is to provide a local equity and borrow the bulk of the capital costs. Such commercial project finance would be borrowed from banks but probably not the high street ones. High street banks won’t normally ‘touch it’ because of the scale. The type of bank likely to be used will normally deal in billions and this would be a small project. The security for any loan would be the project itself. You cannot borrow that level of money without confidence of success. Everything about the project will be based on binding legal contracts to give the bank(s) the confidence that the project can pay back the borrowings. If the project cannot convince the banks that it will succeed then they will not lend the money and the project will not happen. In a related manner, SSE (a private company with shareholders) will also be investing and will not put up their half of the capital costs unless they are convinced that the project will be successful. As an international utility they will not be able to fool anyone about whether the project is viable or not. Furthermore, the energy industry regulator Ofgem will be interested in the project finances to be sure the project is viable before it will be willing to sanction the investment associated with the interconnector. If the project cannot convince the industry regulator that it is viable then there will be no cable. No cable no project. All this external scrutiny can give the Shetland community the confidence to consider making an investment.

the fact that the windmills will be obsolete technology before they are even built will be no barrier to VE who are only interested in lining their own pockets through the salaries they will be paid before the cash runs out.

I've said it before and I'll say it again no trust money, the directors of VE are not putting their own money on the line and it is a limited company so no risk to them

Obsolete to what? Marine technologies are decades away from being commercial. I can argue against any suggestion that nuclear is economic. Do you suggest oil and gas are suddenly going to become easy and plentiful (and non-finite)?

Since at least 90% of the finance for this project will be private money (from commercial banks and SSE) then I’m not clear how you think no-one is putting private money on the line.

If S&S electric and now BT want to build wind farms on Shetland why do we have to invest anything. we could just charge them for the use of our land, no risk to us whatsoever if there is all this money to be made an we supposedly have the best wind I'm sure they will cough up.

We don’t have to invest anything. We can be confident that because of Shetland’s wind resource , these big companies will come to Shetland and look to build big projects but there is no law that says we have to get involved ourselves and keep half the profits in Shetland.

It is extremely unlikely however that Shetland would be able to get better than token handouts otherwise. Unfortunately, very little of Shetland is ‘our land’. While there may be crofting interests, most land in Shetland is owned by private landowners. The Viking Windfarm is centred around the Busta Estate, which is owned by the Council, but most of the site is on various other land estates. If developers reached agreement with those landowners then there is little that can be done to force those developers to share finances with the local community.

The oil companies were forced to benefit Shetland because the Council achieved an Act of Parliament to allow them to compulsorily purchase the land under the terminal.

It is an option that Shetland could try this again but given the prevalence of windfarms nationwide it is unlikely to be successful. Even then we would still only get a ‘good rent’ rather than profits. Better perhaps to do things on our terms and see as much as possible of the real benefits of any project stay in Shetland.

[DavidThomson]

This is interesting (in todays news): "Shetland has been named among the world's top unspoilt island destinations in a new survey" - "unspoilt"... not for much longer!

 

The landscape and visual impact of this project is undoubtedly the most difficult issue to reconcile. Most of the environmental concerns can be avoided, managed, mitigated or compensated but you simply cannot hide all the turbines from everywhere. We have done a lot of work to minimise the visual impact, particularly from neighbouring populated areas, but the windfarm will be a feature of the central mainland landscape while it is there. We make the argument that the positive economic benefits to the community of the project will outweigh the subjective negative impacts that cannot be otherwise avoided.

With regard to the survey, as a Shetlander I welcome it as much as anyone. I bothered myself to actually go and read the article and I don’t see that the recognition is automatically threatened by the windfarm. I encourage differing opinions from others who have read the article but I don’t think they are ranking islands essentially for scenery or attractiveness. The opening paragraphs state they are examining the integrity of islands against the pressures of population pressure, climate change, storm damage, invasive species and tourism overkill. That is quite a different type of ‘unspoilt’.

The comment on Shetland itself is also interesting: “Extremely high integrity in all aspects of heritage and ecology, despite oil developments. Great planning controls and attitudeâ€. This suggests to me that the existence of industrial activity is not in itself a problem so long as it is done right. I also note that while third overall, the score given to Shetland puts it in the “Minor Difficulties†category and not the “Unspoilt and likely to remain so†category.

Without wishing to drag this aspect further my own opinion is actually more centred about the fact that I am surprised people might think Shetland could be so easy spoilt. I am personally not clear how a windfarm would seriously affect the attraction of the “spectacular sea cliffs; pristine beaches; fascinating geology; over a million breeding seabirds; the highest density of otters in Europe; regular sightings of killer whales; and superb displays of rare sub-Arctic flora."

I have always felt that doing something like this would only ever enhance Shetland’s worldwide reputation. Windfarms do not deter tourists anywhere else in the world. I don’t see why they would here.

[Styumpie]

From my perspective, the wind farm will more than likely not benefit me at all either directly or indirectly, so currently I am strongly opposed to the project.

 

Our oil and gas has been removed from our waters for years and we have always paid the highest fuel prices in the UK (which negatively affects me directly). If we have this windfarm forced upon us, I am sure that I will pay either equal or more for my electricity than the rest of the UK, while OUR resources are once again plundered.

 

You can argue that any money generated will be pumped into the shetland economy (more than likely via the SIC), but in reality, all this will achieve is to inflate the already grossly inflated public sector (which only benefits a few at the expense of the rest of us) This will promote waste and will negatively affect our local industries. For a small economy such as ourselves, we need to produce more than we consume in order to be successful in the long term, If the public sector is expanded even more due to more wasteful SIC spending, then we are storing up problems for our economy.

 

If the wind farm can benefit the population through making the cost of living cheaper, then I will be strongly in favour of the project, i.e each and every one of us, plus local business will reap the rewards of OUR resources.

[DavidThomson]

Our oil and gas has been removed from our waters for years and we have always paid the highest fuel prices in the UK (which negatively affects me directly). If we have this windfarm forced upon us, I am sure that I will pay either equal or more for my electricity than the rest of the UK, while OUR resources are once again plundered.

You're opinions about only supporting the windfarm if it directly benefits you personally and not through public services are perfectly valid if that is your feeling.

I personally feel that while not a direct payment into my standard of living, I have benefited (or could) from the existence of leisure centres, care homes, rural schools, upgraded roads, museums, potential cinema/music venues, inter island ferry and air links and other infrastructure that would not exist (or would be a shadow of the existing) without Shetland’s unique community revenues. The windfarm will continue those funds beyond the oil era.

The only point I would bring you up on is the above one.

We pay high fuel costs because Sullom Voe is an oil terminal not an oil refinery. The oil has to be shipped to Grangemouth or somewhere else then back up. We are at the end of the line for refined fuel.

Electricity from wind turbines is completely different. You do not have to ‘refine’ electricity. The energy is converted from the wind in a form that is immediately useable. It will therefore be available in Shetland at exactly the same cost as it is elsewhere. A further aspect is that, unlike fuel supply, electricity supply is a regulated market. You can buy your electricity from anyone. Even if the windmills in Shetland produced electricity at greater cost, there is no requirement that you (or anyone else) has to buy your electricity from the owner of the windfarm. Imagine if you didn’t like the prices at Leask’s you could take the fuel anyway then agree a sale for that volume with a garage in London who had a price you liked. That is how the electricity market works. Most of Shetland’s electricity is produced at Lerwick Power Station, which is owned by Scottish and Southern. If I don’t like their prices I can go to Scottish Power or someone else. That other company doesn’t have to physically deliver me the electricity. The regulated market takes care of that and I get my electricity at the cheapest price. If you are paying more than everyone else in the UK for your electricity then it is your own fault. You should never have to pay more than the average.

I can make the further argument that if we don’t build these types of big project then your electricity bills certainly will be more expensive. Oil and Gas are not going to get cheaper. They have announced that heating bills are due to rise 10% this winter again due to demand for oil and gas. Our best hope for affordable electricity is to maximise indigenous, renewable production. The Viking Windfarm will help keep average UK prices down - not Shetland’s prices up.

[JustMe]

Wind powered electricity generation is probably no bad thing but the UK will still need backup generating capacity to cover 100% of our electricity use for those times when we have a great big high pressure area with no wind over the whole country. That said the surely we should be looking more for reliable alternatives to fossil or nuclear fuelled generators.

[Styumpie]

I will agree that if money is used to provide better links to the UK/Scandinavia and our own isles, I wont have a problem with that, as that should help support local industry and promote trade.

 

We pay high fuel costs because Sullom Voe is an oil terminal not an oil refinery. The oil has to be shipped to Grangemouth or somewhere else then back up. We are at the end of the line for refined fuel.

 

Most of the oil and gas is in our waters, we should have had a much bigger slice of the pie, it's a disgrace how our energy assets have been plundered.

 

I have read that getting fuel here from Grangemouth by boat is actually cheaper than hauling it any distance by road (like the rest of the UK has to do), so the transportation argument probably wont stack up.

 

personally feel that while not a direct payment into my standard of living, I have benefited (or could) from the existence of leisure centres, care homes, rural schools, upgraded roads, museums, potential cinema/music venues, inter island ferry and air links and other infrastructure that would not exist (or would be a shadow of the existing) without Shetland’s unique community revenues.

 

Tax that is/has been taken from shetlanders should have more than paid for the basic services, the rest of the UK manages fine.

 

The museum is a white elephant, there has been far too much money sunk into that building, again an example of how the SIC consistently gets abysmal value from our trust money. That museum is too big, too complex and too expensive, much like the soon to be new AHS, same goes for many excessively expensive public buildings that has gone up over the years.

 

We now have, due to previous years of investment, modern leisure centres, care homes and schools etc, so a need for more and more is now diminishing.

 

 

Electricity from wind turbines is completely different. You do not have to ‘refine’ electricity. The energy is converted from the wind in a form that is immediately useable. It will therefore be available in Shetland at exactly the same cost as it is elsewhere. A further aspect is that, unlike fuel supply, electricity supply is a regulated market. You can buy your electricity from anyone. Even if the windmills in Shetland produced electricity at greater cost, there is no requirement that you (or anyone else) has to buy your electricity from the owner of the windfarm. Imagine if you didn’t like the prices at Leask’s you could take the fuel anyway then agree a sale for that volume with a garage in London who had a price you liked. That is how the electricity market works. Most of Shetland’s electricity is produced at Lerwick Power Station, which is owned by Scottish and Southern. If I don’t like their prices I can go to Scottish Power or someone else. That other company doesn’t have to physically deliver me the electricity. The regulated market takes care of that and I get my electricity at the cheapest price. If you are paying more than everyone else in the UK for your electricity then it is your own fault. You should never have to pay more than the average.

 

I think that the only way left forward now if the average person wants to benefit from renewable energy is to go for micro generation (probably at our own expense). If the VE project could fund this from profits then I would also be in favour. Its a shame that people will have to litter the place with micro turbines in-order to get guaranteed low cost electricity (shelter from inevitable price hikes), the cost of electric over the next few years is going to climb and climb and climb, the 200$ barrel is not all that far away. I can assure you that when prices begin to inflate steeply people will resort to micro.

 

It would be so much better if we could do away with micro and go straight for steady low cost and eventually free electric from a few Shetland owned turbines thats dedicated to serving the isles with a surplus sent down the wire, enough to pay for maintenance on the said turbines and cover periods of light wind. Surely we could do this? The whole system could pay for it's self. And there is no issue of waste, especially when the wind is ours, free and readily available.

[sheepshagger]

The wind resource offshore around the UK is very good and if we could somehow allow unconstrained development it might even be ‘sufficient’ but it is not better than we have here. I’m not sure what evidence would convince you but I’m afraid you are factually incorrect.

 

I never said it was better just that it was sufficient so factually correct.

At least half the cost is for the cable so with twice as much wind it is break even, take the losses in transmision into account and it is no longer viable.

Take out or reduce the subsidy paid for transmision and we are really up turd creek, and I for one have no trust in the politicos to keep the subsidy.

Like I said the distance factor only makes sense if you want to keep the generation system as far away as possible from the users.

[sheepshagger]

And answer this one question David will your money and your house be at risk if the whole thing goes tits up. You are asking us to risk our money, landscape, environment to pay you a very healthy wage so it is only fair that we know just exactly what you are personaly risking for this venture.

[sheepshagger]

The security for any loan would be the project itself. You cannot borrow that level of money without confidence of success. Everything about the project will be based on binding legal contracts to give the bank(s) the confidence that the project can pay back the borrowings. If the project cannot convince the banks that it will succeed then they will not lend the money and the project will not happen.

 

the money in the charitable trust pot will be the security you can be sure the banks will insist that it is wagered on your gamble.

 

SSE are very interested in Nuclear generation so if the wind farm goes tits up a nuclear power station will be quite a nice way for them to use the cable and the grants that are being touted by the government for nuke power are sure to soften any blow that losses on the wind farm create

[sheepshagger]

I also note that while third overall, the score given to Shetland puts it in the “Minor Difficulties†category and not the “Unspoilt and likely to remain so†category.

 

I guess they have heard about the propposed wind farm then

[DavidThomson]

I can see you’re unconvinced. That’s fair enough; but I do feel it necessary to counter inaccurate statements.

I never said it was better just that it was sufficient so factually correct.

You absolutely did not say the wind elsewhere was better. You did say however:

all this crap that we have better wind is just so much sprootle.

That statement is factually inaccurate. The wind here is better. Burradale Windfarm is more productive than an equivalent windfarm anywhere else.

At least half the cost is for the cable so with twice as much wind it is break even, take the losses in transmision into account and it is no longer viable

Would you be prepared to provide the figures and sources to back up that statement? It certainly does not match anything known to Viking Energy. Even if it was true and the project would not be viable then, simply, the project would not happen. SSE would not continue and banks would not lend.

the money in the charitable trust pot will be the security

The whole point of equity is the borrower ‘sharing the pain’ of the lender if the venture is a failure. The interest paid by borrowers is the reward to the lender for taking the risk. Most business loans (even mortgages) need equity and I have stated here repeatedly that it might require a 10 to 20% equity investment from the community resources to convince the banks to lend the rest or our half. If the bank required the entire trust as security and we were prepared to undertake the project with that then we would not need the loan (and would be able to avoid interest payments and a lot of hassle). That is not being proposed.

[sheepshagger]

one answer to one question David will you be risking your money or house?

 

when you are asking us to back your plan you lose your right to privacy so an answer please